Chapter 14 enterprise and global management of it-MIS- MBA-1st Trimester- MBS

1. Chapter - 14
Enterprise and Global
Management of
Information Technology

2. Outsourcing
• The purchase of goods or services from third-party
partners that were previously provided internally
• Selective contracting of a broad range of information
technology functions to an external service provider
• Commonly outsourced – software application
development
• Contracting/subcontracting for complete/partial
development
• The purchase of packaged or customized package
software products, activities or resources

3. Outsourcing - top ten aspects

4. Reasons to outsource
• Save Money - Achieve greater ROI
– Outsourcing IS/IT functions to skilled service providers is a
strategic approach to stretching strained budget
– A well-managed approach to outsourcing can gain cost
savings of more than 40%-80%
• Focus on Core Competencies
– Focusing IS professionals on identifying and solving
business problems
– Not focusing on programming and prototyping new
applications

5. Reasons to outsource
• Save Money - Achieve greater ROI
– Outsourcing IS/IT functions to skilled service providers is a
strategic approach to stretching strained budget
– A well-managed approach to outsourcing can gain cost
savings of more than 40%-80%
• Focus on Core Competencies
– Focusing IS professionals on identifying and solving
business problems
– Not focusing on programming and prototyping new
applications
– Improve company focus

6. Reasons to outsource
• Achieve Flexible Staffing Levels
– Business growth without increasing overhead
– Unique skill set required is difficult to find and expensive
to maintain
• Gain Access to Global Resources
– “…success is hinged to resources and talent you can access”
– Access to global skilled labor, regardless of location
– Significantly increase the quality of deliverables
• Create opportunities for smaller businesses

7. Reasons to outsource
• Decrease time to market
– Allows smaller organizations to compete effectively against
bigger firms
– Offshore support could allow for productivity 24 hours a
day
– Access to resources able to work on key projects even
when local employees are asleep
– Advantage of reduction in Time to market

8. Offshoring
• Relocation of an organization’s business processes to
a lower cost location
– This location is typically overseas
– Can be either production or service
• Growth of services offshoring is linked to
– Availability of large amounts of reliable
and affordable communication infrastructure
– Digitization of many services to shift the actual
delivery location of services to low-cost locations
• Offshoring is enabled by the transfer of valuable
information & training to offshore sites
• Offshoring has resulted into serious job losses

9. The International Dimension
• Companies around the world are developing
new models to operate competitively in a
digital economy
– These models are structured, yet agile,
global, yet local
– They concentrate on maximizing the risk
adjusted return from both knowledge and
technology assets

10. Global IT Management Dimensions

11. Global IT Management Challenges
• Political challenges
– Many countries regulate or prohibit the
transfer of data across their national boundaries
– Others severely restrict, tax, or prohibit imports of
hardware and software
– Some have 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
– Others require a business to spend part of the
revenue they earn in a country in that nation’s
economy

12. Global IT Management Challenges
• Geoeconomic challenges
– Physical distances are still a major problem
– It may take too long to fly in specialists
– It is difficult to communicate in real time
across 24 time zones
– Many countries do not have quality telephone
and telecommunications services
– It may be hard to find skilled local workers or
relocate specialist
– There can be great differences in the cost of living
and labor costs between countries

13. Global IT Management Challenges
• Cultural challenges
– Languages
– Cultural interests
– Religions
– Customs
– Political philosophies
– Global IT managers need cultural training
before they are sent on assignment
– Different work styles and business relationships

14. Transnational Strategies
• Companies are moving toward a transnational
strategy
– Business depends heavily on information
systems and Internet technologies to help
integrate global business activities
– Requires an integrated and cooperative worldwide
IT platform

15. Transnational Business/IT Strategies
Chapter 14 Chapter 14
Enterprise and Global
Management of Information