GLOBAL INFORMATION SYSTEMS

1. MIS CHAPTER 9 GLOBAL INFORMATION SYSTEMS Hossein BIDGOLI

2. Chapter 9 Global Information Systems l e a r n i n g o u t c o m e s LO1Discuss reasons for globalization and using global information systems, including e-business and Internet growth. LO2Describe global information systems and their requirements and components. LO3Explain the types of organizational structures used with global information systems. LO4Discuss obstacles to using global information systems.

3. Why Go Global? • Customers demand integrated worldwide services • Example: shoe company • Produces leather and uppers in Italy • Upper shipped to China • Tested in Ireland • Sold in United States • Supply chain logistics managed and coordinated in US

4. Why Go Global? (cont’d.) • 2008 Coca-Cola Company • Generated more than 80% of its revenue from outside United States • Prerequisites to the success of a global information system: • Clear understanding of factors such as customs, laws, technological issues, and local business needs and practices

5. Why Go Global? (cont’d.) • Airline reservation systems • First large-scale interactive global system • Global products • Products or services that have been standardized for all markets • Manufacturer might “regionalize” operations • Globalization • Important factor in purchasing and supply chain

6. Global Information Systems at Rohm & Haas • Part of Dow Chemical • Production units in many different countries • Overhauled its global information system • By upgrading the order entry system • Installed a companywide materials management system tied in with a global demand planning system • Can now provide better service to its customers

7. E-Business: A Driving Force • E-business • Major factor in the widespread use of global information systems • Builds on the advantages and structures of traditional business • The Internet • Simplify communication • Change business relationships • Consumers can engage in comparison shopping more easily

8. E-Business: A Driving Force (cont’d.) • Small companies can conduct business online just as large companies

9. Global Information Systems: An Overview • Global information system (GIS) • Information system that works across national borders • Facilitates communication between headquarters and subsidiaries in other countries • Incorporates all the technologies and applications found in a typical information system • Stores, manipulates, and transmits data across cultural and geographic boundaries

10. Global Information Systems: An Overview (cont’d.) • International company • Can increase control and enhance coordination of its subsidiaries and be able to access new global markets • Strategic planning is a core function • Defined in terms of two dimensions: • Control and coordination

11. Global Information Systems: An Overview (cont’d.) • Control requires: • Centralized architecture for data, standardized definitions used across the organization • Standard formats for reports • Defined behaviors for different processes • Performance-tracking system

12. Global Information Systems: An Overview (cont’d.) • Coordination requires: • Decentralized architecture for data • Standardization within departments • Ability to communicate these standards to other departments • Collaboration systems • Technologies that support informal communication and socialization • Many advantages of high coordination

13. Components of a Global Information System • Basic components: • Network capable of global communication, including transmission equipment and communication media • Global database • Information-sharing technologies • Large versus small companies: • Custom applications or outsourcing

14. Components of a Global Information System (cont’d.) • Information system manager • Faces design and implementation issues when developing a global network • Determines the best communication media to meet global performance and traffic needs • Chooses the best transmission technology for the global network’s needs • Considers the company’s objectives when determining the network architecture • Keeps in mind that standardized software and hardware are always ideal but not always feasible

15. Components of a Global Information System (cont’d.) • Technical challenges in GIS design: • Designing and implementing global databases • Transborder data flow (TDF) • Restricts what type of data can be captured and transmitted

16. Requirements of Global Information Systems • Must be capable of supporting complex global decisions • Multinational corporations (MNCs) environment includes many variations in different forces • Legal • Cultural • Economic • Political

17. Requirements of Global Information Systems (cont’d.) • Operational requirements: • Global data access • Consolidated global reporting • Communication between headquarters and subsidiaries • Management of short-term foreign exchange risks • Strategic requirements: • Strategic planning support • Management of conflicts and political risks • Management of long-term foreign exchange risks • Management of global tax risks

18. Goals of Global Information Systems • Issues: • Identify business opportunities in global marketplace • Justify investment in GIS • Information systems personnel must have technical and business expertise • Coordinate migration carefully • Categories: • Intelligent systems • Transnational management support systems • Global competitive intelligent systems

19. Organizational Structures and Global Information Systems • Four commonly accepted types of global organizations: • Multinational • Global • International • Transnational

20. Multinational Structure • Production, sales, and marketing are decentralized • Financial management remains the parent’s responsibility • Example: Tyco Corporation • Focus on local responsiveness • Reduces the need for communication between subsidiaries and headquarters • Each subsidiary operates on a different platform

21. Exhibit 9.1 A Multinational Structure

22. Global Structure • Highly centralized information system • Subsidiaries have little autonomy • Sometimes called a “franchiser” • Extensive communication network necessary • Difficult and impractical • Heavy reliance on headquarters for new products and ideas • Examples: • McDonald’s, Mrs. Fields’ Cookies, General Motors

23. Exhibit 9.2 A Global Structure

24. International Structure • Operates much like a multinational corporation • But subsidiaries depend on headquarters more for process and production decisions • Information systems personnel are regularly exchanged among locations • Encourages a cooperative culture in geographically dispersed personnel • Example: Caterpillar Corporation

25. Exhibit 9.3 An International Structure

26. Transnational Structure • Parent and all subsidiaries work together in designing policies, procedures, and logistics • Usually focuses on optimizing supply sources and using advantages available in subsidiary locations • Architecture requires a higher level of standardization and uniformity for global efficiency • But must maintain local responsiveness • Examples: Citigroup, Sony, Ford

27. Exhibit 9.4 A Transnational Structure

28. Global Information Systems Supporting Offshore Outsourcing • Offshore outsourcing • Alternative for developing information systems • Organization chooses an outsourcing firm in another country • Used for many information technology tasks • GIS plays an important role in supporting offshore outsourcing

29. Table 9.1 Top Offshoring Countries in 2008

30. The Internet and Globalization in Action • The Internet allows entrepreneurs in developing countries to start and expand businesses without making large investments • Muhammad Hassaan Khan, a young entrepreneur, established a design and consulting business called Zuha Innovation that is based in Faisalabad, Pakistan • As Adam Toren, president of YoungEntrepreneur.com, puts it, “The Internet brings all continents, races, cities, and villages together into a global network of trade and communications”

31. Obstacles to Using Global Information Systems • Lack of standardization • Can also include differences in time zones, taxes, language, work habits, etc. • Cultural differences • Diverse regulatory practices • Poor telecommunication infrastructures • Lack of skilled analysts and programmers

32. Lack of Standardization • Lack of international standards impedes developing a cohesive system that’s capable of sharing information resources across borders • Too much standardization can prevent flexibility in responding to local preferences and even time differences • Only 5% to 15% of a company’s applications are truly global in nature

33. Cultural Differences • Include differences in values, attitudes, and behaviors • Views on using technology • Cultural issues • Best addressed with education and training

34. Diverse Regulatory Practices • Applies to policies on business practices and technological use • Many countries restrict the type of hardware and software • Jurisdiction issues on contents of a GIS • Nature of intellectual property laws • Software piracy • Privacy and cybercrime laws • Censorship and government control

35. Poor Telecommunication Infrastructures • Consider telecommunication infrastructures of the countries where subsidiaries are located • Differences in telecommunication systems make consolidating them difficult • Differences in standards

36. Lack of Skilled Analysts and Programmers • Severe shortage of qualified information systems professionals in the United States and Western Europe • Companies must consider the nature of each culture and differences in skills in other countries • Training and certification programs

37. Summary • Factors contribute to the globalization trend • Global information systems: • Components • Requirements • Uses in multinational structures • Applications • Obstacles