Global Issues

1
Global Issues
2
Topics

• Information Technology impact on transnational
  firms
• Country Diversity
• National IT Environment Issues
• Corporate Factors Affecting IT Requirements
• Transnational IT Policy Issues

3
Background

• Major Chemical Company
• Shuts European data center and runs 1,000
  European based terminals from US. Saves 3M a
  year.
• Large Pharmaceutical Company
• Offshore development in India
• Of 5 projects, 3 are highly successful coming in
  at 50 of cost of building US, 2 are total
  disasters

4
Background

• Major shifts in 1990s
• Transnational organizations impacted by new
  technology that allows new controls and the
  placement of work in very different locations
• Development of IT support has similarly shifted

5
Background

• IT coordination issues are much more complex for
  transnational firms
• Cultural differences
• Labor and technical costs
• Need for and viability of IT support in different
  areas of the world
• India

6
IT Impact on Transnationals

• Geographic transfer of work
• Movement from areas of high-cost labor pools
• Examples
• Citibank NYC to Sioux Falls
• AA data entry from Dallas to Barbados
• India
• Global networking and expertise sharing
• International e-mail, teleconferencing, groupware
• Vital coordination tools as overseas operations
  proliferate
• Global service levels
• Customer expectations of service level have
  increased dramatically

7
IT Impact on Transnationals

• Time-based competition
• Required response time in the global community is
  dramatically shrinking
• Continuous around the clock operations
• More than speeding up the mess
• Cost reduction
• Information integration
• Customers, manufacturing, suppliers
• Reduces slack/inventory

8
Country Diversity

• Sociopolitical
• Industrial maturity
• Form of government
• Balance between investment in technical
  infrastructure and other national priorities
• Language
• Multi-lingual capabilities, especially for senior
  executives

9
Country Diversity

• Local constraints
• Unions, holidays, working hours, tax regulations
• Cross border issues
• Economics
• Country-specific solutions tied to the underlying
  economy of the country/region

10
Country Diversity

• Currency issues
• Currency restrictions
• Exchange rate volatility
• Hedging
• Autonomy
• Drive for autonomy and feelings of nationalism
• Coordination difficulties increase as
• Distance from HQ increases
• Relative economic importance to firm decreases
• If a different spoken language

11
Country Diversity

• National infrastructure
• Cost and availability of utilities
• Transportation
• Absence can present an opportunity to use
  emerging technologies
• Wireless telecom

12
National IT Environment Issues

• Availability of IT professional staff
• Inadequate availability of systems and
  programming resources
• Skilled people often move
• Supplementing with staff from HQ
• Difficulties
• Central telecommunications
• Price, support, and quality vary greatly
• Long lead times in build out
• Alternatives

13
National IT Environment Issues

• National IT strategy
• Choose to buy local H/W and S/W where these
  industries are considered a national priority.
• General level of IT sophistication
• Constraints based on general level of IT activity
  in the country.
• Need to consider current state as well as rate of
  change

14
National IT Environment Issues

• Size of local market
• Influences the number of vendors willing to
  compete in them
• Thriving competitive local IT industry is
  desirable
• Data export control
• Differing regulations
• Technological awareness

15
Corporate Factors Affecting IT Requirements

• Nature of firms business
• What are the requirements for integrated data
  access and how timely must the data be?
• Less integration required means IT in each
  country can be treated as more of a stand-alone
  unit
• High degree of integration requires centralized
  data repository and control
• Strategic impact of IT
• If IT is strategic
• Increased need for overview and for rapidly and
  efficiently introducing new technology to
  outlying areas.
• International Banking Example
• IT is a support role
• Less overview
• International Chemicals Manufacturing Example

16
Corporate Factors Affecting IT Requirements

• Corporate organization
• Phased growth
• International export
• Minimal local support for IT
• International division
• Growing IT support needs
• Matrix organized firms with multiple
  International sites
• Most complex IT support requirements

17
Corporate Factors Affecting IT Requirements

• Company technical and control characteristics
• Level of functional control
• Centralized vs. decentralized
• Technology base
• RD structure
• Corporate size
• More difficult for smaller organizations even
  though their requirements may be less.
• Other considerations

18
Transnational IT Policy Issues

• Guidance on architecture
• Most important central IT role Development and
  implementation appropriate architecture
• Telecom
• Operating Systems
• DB standards
• Central HW/SW approval
• Ensure cost effectiveness
• Bargaining leverage
• Applications transferability
• Controlling vendor issues
• Maintaining relations with local governments
• Level of expertise in central IT

19
Transnational IT Policy Issues

• Central approval of SW standards feasibility
  studies
• Maintainability
• Security
• Quality
• Central SW development
• Reduced cost
• Efficiency
• Standards
• IT communications
• Investments in improving communications between
  various IT units pays dividends

20
Transnational IT Policy Issues

• Staff rotation
• Advantages
• Disadvantages
• Consulting services
• Centralized IT provides consulting to various
  national IT units
• Central IT processing support
• Need depends on type of firm
• Airlines