ISM/U4 Topic 3 Managing Global Systems – Strategies, Challenge and Issues
The new world order is sweeping away many national corporations, national industries, and national economies controlled by domestic politicians. Many localized firms will be replaced by fast-moving networked corporations that transcend national boundaries. The growth of international trade has radically altered domestic economies around the globe.
Developing An International Information Systems Architecture
An international information systems architecture consists of the basic information systems required by organizations to coordinate worldwide trade and other activities. The basic strategy to follow when building an international system is to understand the global environment in which your firm is operating. This means understanding the overall market forces, or business drivers, that are pushing your industry toward global competition. A business driver is a force in the environment to which businesses must respond and that influences the direction of the business.
Fig. International Information Systems Architecture
The Global Environment: Business Drivers and Challenges
The global business drivers can be divided into two groups: general cultural factors and specific business factors. Easily recognized general cultural factors have driven interantionalization since World War II. The development of global communications has created a global village in a second sense: A global culture created by television, the Internet, and other globally shared media such as movies now permits different cultures and peoples to develop common expectations about right and wrong, desirable and undesirable, heroic and cowardly.
Responding to demand, global production and operations have emerged with precise online coordination between far-flung production facilities and central headquarters thousands of miles away. The new global markets and pressure toward global production and operation have called forth whole new capabilities for global coordination.
Finally, global markets, production, and administration create the conditions for powerful, sustained global economies for scale. Not all industries are similarly affected by these trends. Clearly, manufacturing has been much more affected than services that still tend to be domestic and highly inefficient. However, the localism of services is breaking down in telecommunications, entertainment, transportation, finance law, and general business.
As a cultural level, particularism, making judgments and taking action on the basis of narrow or personal characteristics, in all its forms (religious, nationalistics, ethnic, regionalism, geopolitical position) rejects the very concept of a shared global culture and rejects the penetration of domestic markets by foreign goods and services. Transborder data flow is defined as the movement of information across international boundaries in any form.
Table 15-2 Challenges and Obstacles to Global Business Systems
State of The Art
There are significant difficulties in building appropriate international architectures. The difficulties involve planning a system appropriate to the firm’s global strategy, structuring the organization of systems and business units, solving implementation issues, and choosing the right technical platform.
Organizing International Information Systems
Three organizational issues face corporations seeking a global position: choosing a strategy, organizing the business, and organizing the systems management area.
Global Strategies and Business Organization
Four main global strategies form the basis for global firms’ organizational structure are domestic exporter, multinational, franchiser, and transnational. The domestic exporter strategy is characterized by heavy centralization of corporate activities in the home country of origin. The multinational strategy concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries. Franchisers are an interesting mix of old and new. On the one hand, the product is created, designed, financed, and initially produced in the home for further production, marketing, and human resources. In a transnational strategy, nearly all the value-adding activities are managed from a global perspective without reference to national borders, optimizing sources of supply and demand wherever they appear, and taking advantage of any local competitive advantages.
Global Systems to Fit The Strategy
Information technology and improvements in global telecommunications are giving international firms more flexibility to shape their global strategies. The configuration, management, and development of systems tend to follow the global strategy chosen.
Fig. Global Strategy and Systems Configurations
Reorganizing The Business
To develop a global company and information systems support structure, a firm needs to follow these principles:
- Organize value-adding activities along lines of comparative advantage.
- Develop and operate systems units at each level of corporate activity – regional, national, and international.
- Establish at world headquarters a single office responsible for development of international systems – a global chief information officer (CIO) position.
Managing Global Systems
It is interesting to note that these problems are the chief difficulties managers experience in developing ordinary domestic systems as well. But these are enormously complicated in the international environment.
Table 15-4 Management Challenges in Developing Global Systems
Global Systems Strategy
The following figure lays out the main dimensions of a solution. First, consider that not all systems should be coordinated on a transnational basis; only some core systems are truly worth sharing from a cost and feasibility point of view. Core systems support functions that are absolutely critical to the organization.
Fig. Local, Regional, and Global Systems
The Management Solution: Implementation
Agreeing on Common User Requirements
Establishing a short list of the core business processes and core support systems will begin a process of rational comparison across the many divisions of the company, develop a common language for discussing the business, and naturally lead to an understanding of common elements.
Introducing Changes in Business Processes
Your success as a change agent will depend on your legitimacy, your authority, and your ability to involve users in the change design process. Legitimacy is defined as the extent to which your authority is accepted on grounds of competence, vision, or other qualities.
Coordinating Applications Development
Choice of change strategy is critical for this problem. At the global level there is far too much complexity to attempt a grand design strategy of change. It is far easier to coordinate change by making small incremental steps toward a larger vision.
Coordinating Software Releases
Firms can institute procedures to ensure that all operating units converts to new software updates at the same time so that everyone’s software is compatible.
Encouraging Local Users to Support Global Systems
The key to this problem is to involve users in the creation of the design without giving up control over the development of the project to parochial interests. The overall tactic for dealing with resistant local units in transnational company is cooperation. Cooptation is defined as bringing the opposition into the process of designing and implementing the solution without giving up control over the direction and nature of the change.
Technology Issues And Opportunities For Global Value Chains
One major challenge is finding some way to standardize a global computing platform when there is so much variation from operating unit to operating unit and from country to country.
Computing Platforms And Systems Integration
The goal is to develop global, distributed, and integrated systems to support digital business processes spanning national boundaries. Briefly, these are the same problems faced by any large domestic systems development effort. However, the problems are magnified in an international environment.
Truly integrated global systems must have connectivity – the ability to link together the systems and people of global firm into a single integrated network just like the phone system but capable of voice, data, and image transmissions.
Table 15-5 Problems of International Networks
|Quality of service|
|Costs and tariffs|
|Poor quality of international service|
Aside from integrating the new with old systems, there are problems of human interface design and functionality of systems. When international systems involve knowledge workers only, English may be the assumed international standard. But as international systems penetrate deeper into management and clerical groups, a common language may not be assumed and human interfaces must be built to accommodate different languages and even conventions. The entire process of converting software to operate in a second language is called software localization.