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Chapter 12 Transnational IT Issues N GLOBAL STRATEGIES & BUSINESS ORGANIZATION DOMESTIC EXPORTER: Centralization in Home Country MULTINATIONAL: Central Home Base; Decentralized Production, Sales, Marketing in Other Countries

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chapter 12

Chapter 12

Transnational IT Issues

N

global strategies business organization
GLOBAL STRATEGIES & BUSINESS ORGANIZATION
  • DOMESTIC EXPORTER:Centralization in Home Country
  • MULTINATIONAL:Central Home Base; Decentralized Production, Sales, Marketing in Other Countries
  • FRANCHISER:Product Created, Initially Produced in Home Country; Relies Heavily on Local Workers to Produce, Market in Other Countries

*

Dr. Chen,Transnational IT Issues and IT Buiness

TM -2

global strategies business organization3
GLOBAL STRATEGIES & BUSINESS ORGANIZATION
  • TRANSNATIONAL:Truly Global Firm; No National Headquarters; Value-added Activities Managed From Global Perspective; Optimizes Supply & Demand, Taking Advantage of Local Competitive Strengths

*

Dr. Chen,Transnational IT Issues and IT Business

TM -3

global international transnational information systems infrastructure
GLOBAL (INTERNATIONAL, TRANSNATIONAL) INFORMATION SYSTEMS INFRASTRUCTURE

BASIC INFORMATION SYSTEMS

REQUIRED TO COORDINATE

WORLDWIDE TRADE

& OTHER ACTIVITIES

Dr. Chen,Transnational IT Issues and IT Business

TM -4

global information systems infrastructure
GLOBAL INFORMATION SYSTEMS INFRASTRUCTURE

GLOBAL ENVIRONMENT: BUSINESS DRIVERS & CHALLENGES

CORPORATE GLOBAL STRATEGIES

ORGANIZATIONAL STRUCTURE

MANAGEMENT & BUSINESS PROCEDURES

TECHNOLOGICAL PLATFORM

GLOBAL INFORMATION SYSTEMS INFRASTRUCTURE

Dr. Chen,Transnational IT Issues and IT Business

TM -5

the impact of information technology on transnational firms
The Impact of Information Technology on Transnational Firms
  • Geographic transfer of work
  • Global networking and expertise sharing
  • Global service levels
  • Time-based competition
  • Cost reduction

Dr. Chen,Transnational IT Issues and IT Business

TM -6

N

country diversity
Country Diversity
  • Sociopolitical
  • Language
  • Local constraints
  • Economics
  • Currency issues
  • Autonomy
  • National Infrastructure

Dr. Chen,Transnational IT Issues and IT Business

TM -7

N

issues in the national it environment
Issues in the National IT Environment
  • Availability of IT professional staff
  • Central telecommunications
  • National IT strategy
  • General level of IT sophistication
  • Size of local market
  • Data export control
  • Technological awareness
  • Border opportunities

Dr. Chen,Transnational IT Issues and IT Business

TM -8

N

corporate factors
Corporate Factors
  • Nature of firm’s business
    • degree of integration and on-line update
  • Strategic impact of IT
  • Corporate organization
  • Company technical and control characteristics
    • level of functional control
    • technology base
    • corporate size

Dr. Chen,Transnational IT Issues and IT Business

TM -9

N

transnational it policy issues
Transnational IT Policy Issues
  • Guidance on architecture
    • a corporate international data dictionary
    • common communication technology
  • Central hardware/software concurrence or approval
  • Central approval of software standards and feasibility studies
  • Central software development

Dr. Chen,Transnational IT Issues and IT Business

TM -10

N

transnational it policy issues cont
Transnational IT Policy Issues (Cont.)
  • IT communications
    • regular interunit meetings
    • corporate–subsidiary exchange visits
    • newsletters
    • education
  • Staff rotation
  • Consulting services
  • Central IT processing support

Dr. Chen,Transnational IT Issues and IT Business

TM -11

N

information technology and globalization

Drivers of

Change

Competitive

Environment

Business/IT

Strategy

Business

Implementation

Information Technology and Globalization

Globalization

Emerging

Global

Markets

Internetworking

The Global

Enterprise

Global Business

Operations &

Alliances

Information

Technology

N

Dr. Chen,Transnational IT Issues and IT Business

TM -12

slide13

Alignment of Global Vision with IT using Global Drivers

N

Dr. Chen,Transnational IT Issues and IT Business

TM -13

the major dimensions of global it management

Global IT

Management

Cultural, Political,

and Geoeconomic

Challenges

Business/IT

Strategies

Application

Portfolios

Technology

Platforms

Data

Management

Systems

Development

The Major Dimensions of Global IT Management

N

Dr. Chen,Transnational IT Issues and IT Business

TM -14

global business drivers general cultural factors
GLOBAL BUSINESS DRIVERSGeneral Cultural Factors:
  • GLOBAL COMMUNICATION & TRANSPORTATION TECHNOLOGIES
  • DEVELOPMENT OF GLOBAL CULTURE
  • EMERGENCE OF GLOBAL NORMS
  • POLITICAL STABILITY
  • GLOBAL KNOWLEDGE BASE

Dr. Chen,Transnational IT Issues and IT Business

TM -15

global business drivers specific business factors
GLOBAL BUSINESS DRIVERSSpecific Business Factors:
  • GLOBAL MARKETS
  • GLOBAL PRODUCTION & OPERATIONS
  • GLOBAL COORDINATION
  • GLOBAL WORK FORCE
  • GLOBAL ECONOMIES OF SCALE

Dr. Chen,Transnational IT Issues and IT Business

TM -16

challenges obstacles to global business systems
CHALLENGES & OBSTACLES TO GLOBAL BUSINESS SYSTEMS

GENERAL:

  • CULTURAL PARTICULARISM
  • SOCIAL EXPECTATIONS
  • POLITICAL LAWS

SPECIFIC:

  • TELECOMMUNICATION STANDARDS
  • NETWORK RELIABILITY
  • DATA TRANSFER SPEEDS
  • SHORTAGE OF CONSULTANTS

*

Dr. Chen,Transnational IT Issues and IT Business

TM -17

slide18

IT Characteristics of TransnationalCompanies

  • Logically Consolidated, Physically Distributed
  • Common Data
  • Integrated Systems
  • Specialized Workstation-Based Applications
  • Transnational IT Policies and Standards

Dr. Chen,Transnational IT Issues and IT Business

TM -18

global business strategy structure

DOMESTIC

EXPORTER

GLOBAL BUSINESS STRATEGY & STRUCTURE

STRATEGY

MULTI-

NATIONAL

TRANS-

NATIONAL

FRANCHISER

FUNCTION

PRODUCTION

CENTRALIZED

DISPERSED

COORDINATED

COORDINATED

FINANCE/ACCOUNTING

CENTRALIZED

CENTRALIZED

CENTRALIZED

COORDINATED

SALES/MARKETING

MIXED

DISPERSED

COORDINATED

COORDINATED

HUMAN RESOURCES

CENTRALIZED

CENTRALIZED

COORDINATED

COORDINATED

STRATEGIC MANAGEMENT

CENTRALIZED

CENTRALIZED

CENTRALIZED

COORDINATED

Dr. Chen,Transnational IT Issues and IT Business

TM -19

global information systems
GLOBAL INFORMATION SYSTEMS
  • CENTRALIZED:Domestic Home Base
  • DUPLICATED:Copies of Home System Used in Foreign Locations
  • DECENTRALIZED:Each Unit has Unique System
  • NETWORKED:Integrated & Coordinated at all Locations

Dr. Chen,Transnational IT Issues and IT Business

TM -20

slide21

Global Considerations for IT

Import

Restrictions

Tariffs

Global

IT

Issues

Compatibility

and

Documentation

Transborder

Data Flows

Government

Approval

Level of

Local Service

Dr. Chen,Transnational IT Issues and IT Business

TM -21

global information systems configurations
GLOBAL INFORMATION SYSTEMS CONFIGURATIONS

STRATEGY

SYSTEM

DOMESTIC

MULTI-

TRANS-

CONFIGURATION

EXPORTER

NATIONAL

FRANCHISER

NATIONAL

CENTRALIZED

X

DUPLICATED

X

DECENTRALIZED

x

X

x

NETWORKED

x

X

X : DOMINANT PATTERNx : EMERGING PATTERN

Dr. Chen,Transnational IT Issues and IT Business

TM -22

reorganize the business
REORGANIZE THE BUSINESS
  • ORGANIZE VALUE-ADDING ACTIVITIES FOR COMPARATIVE ADVANTAGE
  • DEVELOP & OPERATE SYSTEMS AT EACH LEVEL: National; Regional, International
  • ESTABLISH SINGLE WORLD HEADQUARTERS: Have Global Chief Information Officer

Dr. Chen,Transnational IT Issues and IT Business

TM -23

strategy divide conquer appease
STRATEGY: DIVIDE, CONQUER, APPEASE
  • DEFINE CORE BUSINESS PROCESSES
  • IDENTIFY CORE SYSTEMS TO COORDINATE CENTRALLY
  • CHOOSE AN APPROACH: Incremental, Grand Design, Evolutionary
  • MAKE BENEFITS CLEAR

Dr. Chen,Transnational IT Issues and IT Business

TM -24

main technical issues
MAIN TECHNICAL ISSUES
  • HARDWARE & SOFTWARE INTEGRATION
  • CONNECTIVITY
  • SOFTWARE: Languagescan be a Barrier

Dr. Chen,Transnational IT Issues and IT Business

TM -25

technology appraisal program
Technology Appraisal Program
  • Technology appraisal program: as an audit function
    • first visit: appraise existing services and raise general concerns that local management could effectively pursue
    • second visit: assess problems of:

1. Government restrictions

2. Quality and quantity of available human skills

3. Present and planned communication services

    • at least three alternatives should be prepared
      • Expansion of present system
      • Transfer of all or portion of IT work to a neighboring country
      • Transfer of all or portion of IT work to a regional headquarters.

Dr. Chen,Transnational IT Issues and IT Business

TM -26

summary
Summary
  • Coordinating international IT is extraordinary complex. Corporate IT management may have maximum responsibility for, but only limited authority over, distant staff and technologies.
  • Demand leadership on:
    • persuasion and cajoling
    • being will informed on new technologies
    • the corporate culture, and
    • the wide diversity of cultures existing in the world

Dr. Chen,Transnational IT Issues and IT Business

TM -27

N

chapter 13

Chapter 13

The IT Business

Is IT business in the electronic-based computer, telecommunications, and desk support business?

manageable trends six major themes
Manageable Trends(Six Major Themes)
  • Strategic Impact of IT
  • Integrating Changing Technology Platforms
  • Assimilating Emerging Technologies
  • Sourcing Policies for the IT Value Chain
  • Applications Development Process
  • Partnership of Three Constituencies

TM -29

TM -29

Dr. Chen, The Trends of the Information Systems Technology

N

the it business analogy
The IT Business Analogy

“Information Technology ... is in the business of bringing a sustained stream of innovation in information technology to companies’ operations and, in many cases, products.”

  • IT strategy formulation = Marketing mix
  • IT steering committee = Board of directors
  • IT director = Chief executive officer

TM -30

Dr. Chen,Transnational IT Issues and IT Business

N

changes in it product line
Changes in IT Product Line

Dr. Chen,Transnational IT Issues and IT Business

TM -31

N

changes in it consumer profile
Changes in IT Consumer Profile

Dr. Chen,Transnational IT Issues and IT Business

TM -32

N

changes in consumer costs
Changes in Consumer Costs

Dr. Chen,Transnational IT Issues and IT Business

TM -33

N

changes in the it channels of distribution
Changes in the IT Channels of Distribution

Dr. Chen,Transnational IT Issues and IT Business

TM -34

N

competitive challenges
Competitive Challenges

1. Consumers ignoring IT’s manufacturing and distributing capacity

2. Consumers failing to recognize that they have problems or opportunities that can be addressed by IT

To deal with 1., be prepared to limit manufacturing role and place resources with the consumer

To deal with 2., educate consumers as to benefits/costs of IT solutions, especially new technologies

N

Dr. Chen,Transnational IT Issues and IT Business

TM -35

promotion
Promotion
  • “Phase-2 learning by consumers is at the core of a successful IT business.”
  • Key promotional activities:
    • price discounts — introductory offers
    • branch offices — decentralized analysts
    • central IT sales force and coordination
  • Be prepared to deal with direct marketing to consumers
  • Consider change to market structure from product structure

N

Dr. Chen,Transnational IT Issues and IT Business

TM -36

price i
Price I
  • Market inefficiencies affect evaluation of external vendor’s prices
    • difficulty of assessing quality of product
    • differences in vendor’s strategic position
    • by-product vs. main product pricing
    • excess capacity and loss-leader pricing
  • Introductory offers

N

Dr. Chen,Transnational IT Issues and IT Buiness

TM -37

price ii
Price II
  • Monopoly position of the central IT unit
    • most evident in confidential data management, centralized databases
  • Unbundling
    • separate pricing for development, maintenance, operations, and special turnaround
    • state prices in consumer units
  • Profit

N

Dr. Chen,Transnational IT Issues and IT Business

TM -38

slide39

Board of Directors

A Business

Products/Services

Customers

Suppliers

Competitors

CAIT: Figure 9-6

Dr. Chen,Transnational IT Issues and IT Business

TM -39

slide40

Board of Directors

Information

Systems

Organization

Customers

Suppliers

Competitors

CAIT: Figure 9-7

Dr. Chen,Transnational IT Issues and IT Business

TM -40

slide41

Needs and Priorities

Steering Committee

Opportunities

Direction

Wants & Needs

Justification

Real Dollars?

IT Needs,

Real Dollars

Information

Systems

Organization

Users

Suppliers

Products,

People

Products & Services

Constraints Costs

Pressures on

IT Products

and/ Services

Real Dollars

Competitors

CAIT: Figure 9-8

Dr. Chen,Transnational IT Issues and IT Business

TM -41

role of the board of directors the it steering committee
Role of the Board of Directors(The IT Steering Committee)
  • Appoint and assess the performance of IT CEO
  • Assure that appropriate standards are in place and being adhered to
  • Ensure that (IT) board is structured appropriately
    • level of members appropriate to strategic importance of IT
    • representative of diverse user needs
    • appropriate technical persons
  • Provide broad guidance for IT to ensure it supports corporate strategy
    • presentations by IT about its markets, products, and plans
    • summary documentation of overall IT direction
    • briefings by (non-IT) board members on IT support
    • internal and external review of IT

Dr. Chen,Transnational IT Issues and IT Business

TM -42

N

role of the it chief executive officer
Role of the IT Chief Executive Officer
  • Maintain personal relationships with board members and customers
  • Ensure that new technologies are evaluated early
  • Pay close attention to human resource management issues for IT staff
  • High priority to manufacturing security
  • Balance among marketing, manufacturing, and control
  • Develop IT esprit de corps

Dr. Chen,Transnational IT Issues and IT Business

TM -43

N

making it happen
Making It Happen!

Business Leadership Technology Leadership

Competitive

Vision Tactics

Strategy

Crisis

Management

Process

Improvement

Action Initiators

Executive

Power

CAIT: Figure 9-5

Dr. Chen,Transnational IT Issues and IT Business

TM -44

change issues between it organization and its customers

IT

Change

Change

Change Issues between IT Organization and its Customers

IT

Organization

Customers

IT is not in the electronic-based computer, telecommunications, and desk support business.

Rather, it is in the business of bringing a sustained relevant stream of innovation in IT to companies’ operations and, in many cases, products and services.

Dr. Chen,Transnational IT Issues and IT Business

TM -45

N

ten commandments for digital products companies
Ten Commandments for Digital Products Companies
  • 1. Create early visibility and market presence
  • 2. Invest in building trust
  • 3. Don’t make it difficult for buyers to assess you and your products
  • 4. Provide signals about product quality
  • 5. Make it easy for buyers to express their needs.

Dr. Chen,Transnational IT Issues and IT Business

TM -46

N

ten commandments for digital products companies47
Ten Commandments for Digital Products Companies
  • 6. Don’t forget product quality
  • 7. Customize content and presentation
  • 8. Be nimble, be quick with customer care
  • 9. Don’t treat customers with a one-size-fits-all strategy
  • 10. Offer bundled products in a world of synergy

- TEXAS, The Business School Magazine, Spring 1999 (pp. 10)

Dr. Chen,Transnational IT Issues and IT Business

TM -47

N

how to be successful
How To Be Successful?
  • “… Other entrepreneurs have told us that LUCK, LUCK, LUCK, and HARD (SMART) work are the four things it takes to be successful.”
  • You definitely need a lot of luck, but you also need to be smart enough to take advantage of the apparently lucky situations that arise.”
    • TEXAS, The Business School Magazine, Spring 1999 (pp.18)

Dr. Chen,Transnational IT Issues and IT Business

TM -48

slide49

Figure 03.08

Dr. Chen,Transnational IT Issues and IT Business

TM -49

slide50

Alignment of Global Vision with IT using Global Drivers

N

Dr. Chen,Transnational IT Issues and IT Business

TM -50

slide51

Figure U03.13

Dr. Chen,Transnational IT Issues and IT Business

TM -51

information systems organization
Information Systems Organization

IS Vice-President

Planning

Finance &

Administration

Database

Administration

Development &

Maintenance

Systems

Support

Computer

Operations

Network

Management

Project

Management

Systems

Programming

System

Analysis

Programmers

Development

Center

Information

Center

Figure 13-1

Dr. Chen,Transnational IT Issues and IT Business

TM -52

future is organization

Client Interface

General and

Administration

IS Utility

Telecommunications

Competitive

Systems

Administration

Data

Center

Data

Network

Performance

and Planning

Finance

Professional

and Technical

Support

Voice

Systems

Client Systems

Groups

Development

Center

Equipment

Future IS Organization?

IS Executive

CIO

Figure 13-2

Dr. Chen,Transnational IT Issues and IT Business

TM -53

slide54

Managing Information Technology

Business Pressures

Technology Base

Business

Pressures

Managing

Information

Technology

IT

Developments

Supplier

Customer

Dr. Chen,Transnational IT Issues and IT Business

TM -54

internetworked enterprise
Internetworked Enterprise

Company

Boundary

Suppliers and Other Business Partners

Extranets

Procurement, Distribution, and Logistics

Engineering &

Research

Accounting,

Finance, and

Management

Manufacturing

and

Production

Advertising Sales Customer Service

Extranets

Customer and Business Customers

Dr. Chen,Transnational IT Issues and IT Business

TM -55

N

transnational
TRANSNATIONAL
  • Truly globally managed firms that have no national headquarters; value-added activities are managed from a global perspective without a global borders, optimizing sources of supply and demand and taking advantage of any local competitive advantage.
multinational and franchiser
Multinational and Franchiser
  • Multinational: a global strategy that concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries.
  • Franchiser: a firm where product is created, designed, financed, and initially produced in the home country, but for product-specific reasons must rely heavily on foreign personnel for further production, marketing, and human resources.
topics for the how paper
Topics for the “HOW” Paper
  • Marketing the solution
  • Architecture
  • Risk assessment
  • Implementation plan (coding, testing, cutover, training, conversion)
  • Results control architecture