Managing Radical Change in IT for Business Success

1. Chapter 12 Enterprise and Global Management of Information Technology

2. Learning Objectives • Identify each of the three components of information technology management, and use examples to illustrate how they might be implemented in a business. • Explain how failures in IT management can be reduced by the involvement of business managers in IT planning and management. • Identify several cultural, political, and geoeconomic challenges that confront managers in the management of global information technologies.

3. Learning Objectives • Explain the effect on global business/IT strategy of the trend toward a transnational business strategy by international business organizations. • Identify several considerations that affect the choice of IT applications, IT platforms, data access policies, and systems development methods by a global business enterprise. • Understand the fundamental concepts of outsourcing and offshoring as well as the primary reasons for selecting such an approach to IS/IT management.

4. Case 1: Hewlett-Packard: Managing Radical Change in IT to Support New Business Goals • It is important for CIOs to understand not only the technology and how it could be used to improve a business but also how to deliver those benefits. • Companies like Hewlett-Packard face major challenges when implementing changes to make the IT function more efficient and vital contributor to their business success. • Radical changes suggested by the CIO of HP, Randy Mott can lead to thousands of layoffs and changes in their culture. • If these changes are not managed properly, it could lead to a disaster.

5. Case Study Questions • Will the initiatives being undertaken by CIO Randy Mott to implement major changes to the IT function at HP make IT a more efficient and vital contributor to HP’s business success? Defend your position on each of the major initiatives he is implementing. • Do you approve of the change management job Mott is doing, including his meetings with HP employees throughout the world and having “coffee talks” with them? Why or why not?

6. Case Study Questions • Assume you have been hired as a management consultant or coach to CIO Mott. What are several suggestions you might give him to help him successfully implement his ambitious plans for IT changes at HP? Defend your proposals.

7. Real World Internet Activity • Use the Internet to discover the current financial performance of HP and determine if HP’s major changes and spending on IT are being viewed as a positive or negative contributor to its performance. Then investigate HP’s competitive performance in market share, units sold, and other areas compared with Dell, Leveno, Sun, IBM, and any other competitors you find, as well as the reasons given for HP’s current competitive stance.

8. Real World Group Activity • Implementing major changes as CIO Mott is doing causes many employees to lose their jobs and much angst on the part of some of those who remain, whose jobs and work styles may also change. • Discuss how you would handle a change management process at HP or any other company faced with implementing similar decisions.

9. Components of IT Management

10. Managing Information Technology • Managing the joint development and implementation of business and IT strategies • Use IT to support the strategic business priorities • Align IT with strategic business goals • Managing the development and implementation of new business/IT applications and technologies • Managing information systems development • Managing the IT organization and IT infrastructure • Hardware, software, database, networks and other resources

11. Business/IT Planning Process

12. Components of Business/IT Planning • Strategy Development • Developing business strategies that support a company’s business vision • Resource Management • Developing strategic plans for managing or outsourcing a company’s IT resources • Technology Architecture • Making strategic IT choices that reflect an information technology architecture designed to support a company’s business/IT initiatives

13. Information Technology Architecture • Technology Platform • Networks, computer systems, system software and integrated enterprise application software • Data Resources • Operational and specialized databases • Store and provide data and information for business processes and decision support

14. Information Technology Architecture • Applications Architecture • Integrated architecture of enterprise systems that support strategic business initiatives as well as cross-functional business processes • IT Organization • Organizational structure of the IS function within a company and the distribution of IS specialists

15. Organizing IT • Early years: centralization of computing with large mainframes • Next: downsizing trend with a move back to decentralization • Current: centralized control over the management of IT while serving strategic needs of business units • Hybrid of both centralized and decentralized components

16. Organizational Components of IT at Avnet Marshall

17. Application Development Management • Managing activities such as: • Systems analysis and design, prototyping, applications programming, project management, quality assurance, and system maintenance for all major business/IT development projects

18. IS Operations Management • Use of hardware, software, network, and personnel resources in the corporate or business unit data centers of an organization • Includes computer systems operations, network management, production control and production support • Data centers are the computer centers of an organization

19. System Performance Monitors • Software packages that • Monitor the processing of computer jobs, • Help develop a planned schedule of computer operations that can optimize computer system performance, and • Produce detailed statistics that are invaluable for effective planning and control of computing capacity

20. Features of Systems Performance Monitors • Chargeback Systems • Allocate costs to users based on the information services rendered • Process Control Capabilities • Systems that not only monitor but automatically control computer operations at large data centers

21. IT Staff Planning • Recruiting, training and retaining qualified IS personnel • Evaluate employee job performances and reward outstanding performances with salary increases and promotions • Set salary and wage levels and design career paths so individuals can move to new jobs through promotion and transfer as they gain in seniority and expertise

22. IT Executives • Chief Information Officer (CIO) • Oversees all uses of information technology in many companies, and brings them into alignment with strategic business goals • Chief Technology Officer (CTO) • In charge of technology management: all information technology planning and deployment • Managing the IT platform • Second in command

23. Managing User Services • Business units that support and manage end user and workgroup computing • Can be done with information centers staffed with user liaison specialists • Or with Web-enabled intranet help desks

24. Outsourcing • The purchase of goods or services from third-party partners that were previously provided internally

25. Outsourcing’s Top Ten

26. Why outsource? • Save money – achieve greater ROI • Focus on core competencies – organization can focus on the business that they are in • Achieve flexible staffing levels • Gain access to global resources • Decrease time to market

27. Offshoring • Relocation of an organization’s business processes • To a lower-cost location, usually overseas

28. IT Management Failures • IT not used effectively • Computerize traditional business processes • Instead of developing innovative e-business processes • IT not used efficiently • Poor response times and frequent downtimes • Poorly managed application development projects

29. Management Involvement and Governance • Managerial and end user involvement • Key ingredient to high-quality information systems performance • Involve managers in the management of IT • Governance structures such as steering committees

30. Senior management’s involvement in business/IT decisions

31. Case2: IBM Corporation: Competing Globally by Offshoring IT Workers and Giving Away Technology • IBM is expanding their development centers in India to compete with companies like Wipro, Infosys, and TCS. • IBM is also giving away technology and its intellectual property to expand its business. • According to Fortune magazine, IBM gives away at least $150 million worth of technology every year. • The idea that giving things away makes the pie bigger for everybody is being embraced by IBM. • When IBM gives away free tools, it often sells additional software and consulting services. • As long as IT remains hard to use, expensive, and labor intensive, with customers continuing to need help solving business problems, IBM will have the opportunity to thrive.

32. Case Study Questions • Do you agree with IBM’s employment response to competition from software development contractors in India, like Wipro, that are expanding into IT consulting services? Why or why not? • Will IBM’s plan to give away some of its IT assets and intellectual property and increase its support of opensource software products like Linux be a successful growth strategy in the “brutally competitive marketplace” in which it operates? Why or why not?

33. Case Study Questions • Do you agree with IBM researchers’ assumption that IT will remain “hard to use, expensive, and labor-intensive, with customers continuing to need help solving business problems” for a long time to come? Should IBM bet its business on that assumption? Defend your answers to both questions.

34. Real World Internet Activity • Use the Internet to research news on the latest developments in the competition to provide IT consulting services to businesses and governments. Check out IBM’s performance, as well as major players like HP and Accenture, new entrants like Dell, and international competitors like Wipro. Who appears to be winning or losing in this arena? What reasons can you uncover for the results you find?

35. Real World Group Activity • IBM eliminated 14,500 jobs, mostly in Europe, and then reportedly hired thousands of additional IT workers in India. Such cutting of high-cost jobs and offshoring jobs to a subsidiary in a lower-cost country is a controversial business strategy being used by other global companies. • Discuss the implications of this issue for your current or future career choices and the kinds of companies or organizations you would want to work for.

36. Global IT Management • Develop appropriate business and IT strategies for the global marketplace • Develop the portfolio of business applications needed to support business/IT strategies • Determine the technology platform needed • Determine the systems development projects that will produce the required global information systems

37. Global IT Management Dimensions

38. Global IT Management Challenges • Political • Geoeconomic – effects of geography on the economic realities of international business activities • Cultural

39. Political Challenges • Rules regulating or prohibiting transfer of data across national boundaries • Severely restricted, taxed, or prohibited imports of hardware and software • Local content laws that specify the portion of the value of a product that must be added in that country if it is to be sold there • Reciprocal trade agreements that require a business to spend part of the revenue they earn in a country in that nation’s economy

40. Geoeconomic Challenges • Sheer physical distances • Difficult to get good-quality telephone and telecommunications services • Differences in the cost of living and labor costs

41. Cultural Differences • Languages • Cultural Interests • Religions • Customs • Social Attitudes • Political Philosophies

42. Transnational Strategies • Business depends heavily on its information systems and Internet technologies to help integrate global business activities • Develop an integrated and cooperative worldwide IT platform

43. Transnational Business/IT strategies

44. Global Business Drivers • Business requirements caused by the nature of the industry and its competitive or environmental forces • Examples of drivers: • Global Customers • Global Products • Global Operations • Global Resources • Global Collaboration

45. Global IT Platform • Managing the hardware, software, data resources, telecommunications networks, and computing facilities that support global business operations • Technically complex with major political and cultural implications

46. International Data Communications Top 10 Issues

47. Internet as a Global IT Platform • Technology platform free of many traditional international boundaries and limits • Expand markets, reduce communications and distribution costs, and improve profit margins without massive cost outlays for telecommunications

48. Key Questions for Global Websites • Will you have to develop a new navigational logic to accommodate cultural preferences? • What content will you translate, and what content will you create from scratch to address regional competitors or products that differ from those in the U.S.? • Should your multilingual effort be an adjunct to your main site, or will you make it a separate site, perhaps with a country-specific domain?

49. Key Questions for Global Websites • What kinds of traditional and new media advertising will you have to do in each country to draw traffic to your site? • Will your site get so many hits that you’ll need to set up a server in a local country? • What are the legal ramifications of having your website targeted at a particular country, such as laws on competitive behavior, treatment of children, or privacy?

50. Internet Users by World Region