Managing global systems

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Managing global systems

• Think global
• Act local

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• DHL builds a global IT organization
• Overnight and express package deliveries
• Serving 140,000 destinations in over 220
  countries
• 4,400 local offices
• 238 gateways
• 450 hubs, warehouses
• 4.2 millions customers
• Employ 170,000 people
• More than 400 aircrafts

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• Challenges
• Keep track of its own operations
• Customer packages

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• Act local
• Customer employee would see information in
• Local language
• Important country regulations
• Think global
• DHL can check on status and location of any
  package around the world
• Info is current accurate

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• Original IT design
• 50 data centers in each major countries
• Coordinate loosely
• Common set of core database application
• Info exchanged on a messaging and communication
  network
• Operate well until traffic volume expanded

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• Maintain 50 data centers to a single standard was
  difficult
• Raise cost
• Slow down changes
• Upgrades has to deploy in 50 different countries
• Take more than 18 months to complete
• info is more important than the package
• Customer might understand package lost due to
  hurricane
• Customer is intolerable to failure of tracking

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• New configuration
• Global computing infrastructure
• 3 low-cost, regional global centers
• Outsourcing software
• Initially
• India software company
• Changed
• Design USA
• Implementation execution India

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• Benefits
• Cost
• Maintain IT infrastructure fallen by 40
• Deploy new software
• In hours (not months)
• Simplify management communication

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• 15.1 The growth of international info systems
• 15.2 Organizing international info systems
• 15.3 Managing global systems
• 15.4 Technology issues opportunities for global
  value chains

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15.1 Growth of international IS

• Advanced networks info systems
• Global economic system
• International trade
• 22 of US economy
• 1/3 of the worlds total GDP

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• Developing an international info systems
  architecture
• Basic info system
• To coordinate worldwide trade other activities

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International IS architecture
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• Understand global environment
• Business drivers
• Force in the environment which business must
  respond
• Global competition
• Global funds
• Challenges
• Inhibitors or negative factors
• ???? (???????)
• ??????

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• Corporate strategy to compete
• Ignore global market
• Focus on domestic markets
• Sell to globe from a domestic base
• Organizing production distribution around the
  globe
• Structure of organization
• Division of labor across a global environment
• Where to locate
• Production, administration, ..

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• Management issues
• Business processes
• How can you reengineer on a global scale
• Technology platform
• Choose the right technology to support business
  processes

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• The global environment
• Business drivers challenges
• Business drivers
• General culture factors
• Global village
• Telecommunication transportation technology
• Communicate around the globe
• Communication to next block
• moving goods service

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• Global culture
• Common expectations
• right wrong
• desirable undesirable
• heroic cowardly
• Created by TV, Internet, Movie
• Global knowledge base
• used to be
• Developed countries
• US, western Europe, Japan
• Third world
• Now, ????,???

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• Specific business factor
• Global market
• Coca-cola, American sneakers, CNN
• Global production operation
• Location of business activities according
  comparative advantage
• Global coordination
• Global workforce
• Global economies of scale
• Manufacturing has been much more affected than
  services

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• Business challenges of globalization
• Particularism
• Making judgment and taking action on the basis of
  narrow or personal characteristics
• Religious
• Nationalistic
• Ethnic
• Regionalism
• Geopolitical

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• Made in USA
• Found most of goods are foreign made
• European countries prohibit processing financial
  information outside their border
• National laws impact the profit and loss are
  analyzed
• ???????
• Currency fluctuation

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• 15.1 The growth of international info systems
• 15.2 Organizing international info systems
• 15.3 Managing global systems
• 15.4 Technology issues opportunities for global
  value chains

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15.2 organizing international IS

• Global strategies Business organization
• Four main global strategies
• Domestic exporter
• Multinational
• Franchiser
• transnational
• Three organizational governance
• Centralized
• Decentralized
• Coordinated

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• Domestic exporter
• Heavy centralization of corporate activities in
  the home country
• International sales are sometime dispersed
• Ex movie industry
• Multinational
• Centralized financial control,
• Decentralized production, sales and marketing,
• Ex General Motors, ??-??

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• Franchise
• Product is created, designed, financed, and
  initially produced in the home country
• Product-specific reasons must be rely heavily on
  foreign personnel
• Ex McDonalds
• Transnational
• No single national headquarters
• Many regional headquarters
• Ex Citicorp

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• Forces for
• Decentralization
• Protectionism
• Serve local markets better
• Centralization
• Economies of scale
• Power authority

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• Global systems to fit the strategy
• Centralized systems
• Systems development and operation
• Domestic home base
• Duplicated systems
• Development at home base
• Operations over foreign location
• Decentralized systems
• Each foreign units design its own unique solution

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• Networked systems
• Systems development operations in an integrated
  coordinated fashion

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• Reorganizing the business
• principles
• for developing global info systems
• Organizing value-adding activities along lines of
  comparative advantage
• Located where they can best be performed

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• Develop operate systems units at each level of
  corporate activity
• To serve local needs
• Host country systems
• To handle telecommunication, systems across
  national boarder
• Regional systems
• To create linkage, coordinate development
• Transnational systems

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• World headquarter
• Office responsible for development of
  international systems

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• 15.1 The growth of international info systems
• 15.2 Organizing international info systems
• 15.3 Managing global systems
• 15.4 Technology issues opportunities for global
  value chains

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15.3 managing global systems

• Disorganization on a global scale
• Multinational companies
• Dispersed production marketing
• Regional national center
• Centrally financial control
• World headquarter

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• Challenges
• Resistance the efforts to agree on common user
  requirement
• Local needs vs. central interest
• Change local procedures to align other units
• Might interfere local performance
• Difficult to coordinate development across the
  globe

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• Global systems strategy

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• Global systems strategy (?? 1)
• Define the core business processes
• Identify set priority of a list of critical
  core business processes
• Communicate coordinate
• Work
• Information
• Knowledge
• Conduct business process analysis
• How are orders taken?
• How are they shipped?

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• Identify center of excellence
• Division or unit stands out in the performance
• Rank-order them

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• Global systems strategy (?? 2)
• Identify the core systems to coordinate centrally
• Identify a list of core systems to an absolute
  minimum
• Dividing off a small group of systems as
  absolutely critical
• Divide opposition

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• Global systems strategy (?? 3)
• Choose an approach
• Incremental, Grand design, Evolutionary
• Avoid
• Piecemeal approach
• Lack of visibility
• Lack of power to convince senior management
• Grand design
• Require huge resources
• Nothing get done properly
• Evolve translational applications incrementally
• Precise clear vision of the transnational
  capability

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• Global systems strategy (?? 4)
• Make the benefits clear
• Global systems contributions
• Contribute to superior management coordination
• Ability to switch suppliers
• Ability to move production
• Ability to use excess capacity
• Vast improvement in production, operation, and
  supply and distribution
• Locate value-adding activities to most economical
  region

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• Global customers global marketing
• Unleash new economies of scale
• Ability to optimize the use of corporate funds
• Capital in surplus region can be moved
  efficiently
• Cash can be managed more effectively

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• The management solution
• to problems of developing the global IS
• Agreeing on common user requirements
• Establishing short list of
• Core business process
• Core support systems
• Process of rational comparison
• Develop a common language for discussing

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• Introducing changes in business process
• Select a viable change strategy
• Evolutionary but with a vision
• Convincing others that changes is feasible
  desirable
• Assure others that change is in the best
  interests of company their units
• Coordinating applications development
• making incremental steps toward a larger vision
• easier to coordinate

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• Coordinate software releases
• Ensure that all operating units convert to newer
  software updates at the same time

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• Encouraging local users to support global systems
• Dealing resistance from local units
• Cooptation (??? ????)
• Bring the opposition into
• the process of designing
• Implementing the solution
• without giving up control over
• the direction and nature of change

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• How should cooptation proceed
• Permit each country unit the opportunity
• to develop one transnational system
• Sense of ownership
• Downside
• Assume the ability to develop high-quality
  system is widely distributed
• not always the case

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• Develop new transnational centers of excellence
• Initial identification specification of
  business processes
• Define the info requirements
• Perform the business system analysis
• Accomplish all design and testing
• Roll out implementation to other parts of the
  globe

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• 15.1 The growth of international info systems
• 15.2 Organizing international info systems
• 15.3 Managing global systems
• 15.4 Technology issues opportunities for global
  value chains

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15.4 technology issues and opportunities for
global value chains

• Offshore challenges
• Managing global teams global technology
  services
• Technology challenges of global systems
• Standardize a global computing platform
• Finding specific software applications to be used
  worldwide
• Internet reduce network problems
• Info might not flow seamless
• Different application software

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Technology challenges of global systems

• Computing platforms and systems integration
• New transnational systems
• vs.
• Existing suite of applications
• Globally dispersed
• Different division
• Different people
• Different hardware

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• Data standard technical standard
• Ex Beginning end of the fiscal year
• Format of data
• Dates
• Communication infrastructure

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• Connectivity
• Ability to link together the systems and people
  of a global firm
• Internet
• Guarantee of the level of service
• Security
• VPN
• Global intranet
• Governments censorship

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• Software
• How old systems interface with the new?
• Old systems are kept in local area
• Costly messy to build
• Unique business process and definition of data
  from different country
• Human interface functionality
• Easily understand mastered quickly
• Common language
• Knowledge workers vs. clerical

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• What are the most important software application?
• Transaction
• Management reporting
• Supply chain management
• Enterprise systems
• Different language, culture heritages, business
  process
• EDI
• Internet-based tools

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Managing global software development

• Offshore software outsourcing
• Cheap wage
• Lowered cost
• Communication
• Coordination
• Access to world-class complementary technology
• ???????????

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• Major COST components of offshore software
  development
• Contract cost
• Vendor selection cost
• Document the requirement
• Request for proposal
• Travel expense
• Negotiate contract
• Legal fee
• Project management
• take 3 6 months

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• Transition management knowledge transfer cost
• Make sure the vendor thoroughly understand your
  business
• Analyzing clients technology applications
• Offshore employee work parallel with in-house
  employee
• Additional travel expense

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• Domestic human resource costs
• Lay off
• Severance pay ???
• Retention bonus
• Keep staff working long enough to share their
  knowledge with their offshore replacement
• Adversely impact employee morale productivity
• Staff resist to work with the outsourcer

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• Cost of improving software development processes
• In-house process vs. outsourcers process
• Make sure both parties understand thoroughly
• Write clear specifications
• Quality assurance testing
• Test plan
• Review results

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• Cost of adjusting to culture difference
• Value attitude
• American
• Speaking up making suggestions
• Voice concerns
• Offshore
• Keep feeling to themselves
• Try to please clients
• Lead to more reworks
• Need more face-to-face interaction
• Dont interpret things the same way

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• Cost of managing an offshore contract
• Invoicing
• Auditing
• Additional communication costs
• Billing correctly
• Time is properly recorded
• Data security
• Intellectual property rights
• Network security

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