• Managing Global Information Systems and IT Infrastructure

Module-5
• Globalization and the Role of Information Systems in International Business
• Strategies for Expanding Businesses on a Global Scale
• Challenges in Managing Global Information Systems and Possible Solutions
• IT Infrastructure: Key Components and Architecture
• Emerging Trends in Computer Hardware and Software Platforms
• Issues and Challenges in IT Infrastructure Management
Globalization and the Role of Information Systems in International Business

• Globalization- Globalization means increasing interdependence, interconnectedness and integration of the

world’s economies, cultures, and populations, driven by cross-border trade, technology, and flows of investment,
people, and information. In the context of international business, globalization is the shift toward a more
integrated and interdependent world economy.
• Characteristics of Globalization:
• Globalization of Markets: This refers to the merging of historically distinct and separate national markets into
one huge global marketplace. Companies no longer view the world as a collection of separate national entities
but as a single global source of demand. Examples include global brands like Coca-Cola, Apple, and McDonald's
offering standardized products worldwide.
• Globalization of Production: This involves sourcing goods and services from locations around the globe to take
advantage of national differences in the cost and quality of factors of production. This allows companies to lower
their overall cost structure or improve the quality and functionality of their product, leading to global supply
chains.
• Removal of Barriers: The dismantling of trade barriers and foreign direct investment (FDI) restrictions through
organizations like the World Trade Organization (WTO) and regional trade agreements facilitates the free flow of
goods and capital.
• Cultural Exchange: While primarily economic, globalization also leads to a greater exchange of ideas, values,
and cultural practices, often facilitated by technology and the movement of people.
Globalization and the Role of Information Systems in International Business

• The Role of Information Systems in International Business-

• Information Systems (IS) are the foundation upon which international business operates. They are not merely
tools but the enabling infrastructure that makes globalization possible, accelerating its pace and extending its
reach.
• An information system (IS) is a set of interrelated components that collect, process, store, and distribute
information to support decision-making, coordination, control, analysis, and visualization in an organization. In a
global setting, these systems transform raw data into knowledge that managers can use to operate across borders.
• 1. Enabling Global Operations and Efficiency-
• The primary role of IS is to integrate and streamline operations across geographically dispersed subsidiaries.
• Enterprise Resource Planning (ERP) Systems: ERPs are central to international business. They integrate key
business processes—including finance, human resources, manufacturing, and supply chain—into a single,
uniform system. This standardization ensures that all global offices operate using the same data and best
practices, dramatically reducing operational costs and increasing efficiency.
Globalization and the Role of Information Systems in International Business

• Transaction Processing Systems (TPS): These systems track the basic operational activities (sales, payments,
shipping) of the firm. A global TPS ensures that every transaction, whether in Shanghai or São Paulo, is instantly
recorded and processed according to corporate standards.
• Supply Chain Management (SCM): IS allows firms to manage complex global supply chains in real-time.
SCM systems track the flow of goods from raw material sourcing, through production in multiple countries, to
delivery to the final customer, optimizing inventory levels and coordinating logistics across international
borders.
• 2. Facilitating Global Communication and Coordination-
• Information systems overcome the challenges of distance, time zones and cultural differences, making global
management feasible.
• Real-Time Collaboration: Tools like video conferencing, secure messaging, and cloud-based collaborative
platforms (e.g., shared document management) allow teams from different countries to work together instantly,
fostering a unified corporate culture and faster decision-making.
Globalization and the Role of Information Systems in International Business

• Knowledge Management Systems (KMS): KMS help multinational corporations (MNCs) capture, store, and
disseminate knowledge and best practices across their global network. This prevents subsidiaries from “reinventing the
wheel” and allows innovations developed in one country to be quickly implemented in others.
• Decentralized Decision-Making: By providing lower-level and regional managers with access to standardized, accurate
global data, IS empowers them to make localized decisions quickly, which is essential for responsiveness in diverse
markets.
• 3. Creating Strategic Competitive Advantage-
• IS enables international firms to gain an edge over competitors by using data strategically.
• Business Intelligence (BI) and Analytics: Global BI systems consolidate data from worldwide operations to provide senior
management with dashboards and reports for strategic planning. This allows managers to identify global market trends,
spot cost inefficiencies, and optimize resource allocation.
• Customer Relationship Management (CRM): Global CRM systems allow a company to maintain a unified, 360-degree
view of its customers, regardless of where they interact with the brand. This facilitates personalized marketing and
superior customer service worldwide.
Strategies for Expanding Businesses on a Global Scale

• When a firm decides to enter international markets, it must select a strategy that dictates how it will structure its operations,
manage its global value chain and compete in diverse environments. The choice of strategy often reflects a trade-off between cost
reduction (achieved through standardization and centralization) and local responsiveness (achieved through customization and
decentralization).
• I. Market Entry Strategies (How to Enter)
• These strategies represent the initial steps a firm takes to enter a foreign market, generally moving from least commitment to
greatest commitment.
Exporting:
• Description: Producing goods in the home country and selling them to customers in foreign markets. This is typically the
first step for most companies.
• Pros: Low cost, low risk, and minimal operational complexity. It is an excellent way to test international demand.
• Cons: Higher transportation costs, potential tariff barriers, and lack of local market knowledge.

Licensing and Franchising:

• Description: The firm (licensor/franchisor) grants a foreign company (licensee/franchisee) the right to use its intellectual
property (e.g., patents, trademarks, brand name) in exchange for a fee or royalty.
• Pros: Minimal cost and risk for the expanding firm, rapid market penetration.
• Cons: Loss of control over manufacturing, marketing, and quality assurance, potential for the foreign partner to become a
future competitor.
Strategies for Expanding Businesses on a Global Scale

• Joint Ventures (JVs):

• Description: Establishing a new business entity that is jointly owned by two or more independent firms, often one
domestic and one foreign.
• Pros: Access to the foreign partner's local knowledge, capital, and political influence; shared development costs and risks.
• Cons: Potential for conflicts over control and strategy; difficulty in integrating management and systems.
• Wholly Owned Subsidiaries (WOS):
• Description: The expanding firm owns 100% of the new foreign operation. This can be established as a Greenfield venture
(building a new operation from scratch) or via an Acquisition (buying an existing foreign company).
• Pros: Maximum control over technology, operations, and strategy; maximum protection of proprietary knowledge; ability
to realize 100% of the profits.
• Cons: Highest cost and risk; complex to manage; slow to establish (Greenfield).
Strategies for Expanding Businesses on a Global Scale

• II. The Role of Information Systems in Executing Strategy

• Information Systems (IS) are crucial for executing whichever strategy is chosen:
• Supporting Global Standardization: IS, particularly centralized ERP systems and global SCM,
enforce uniform processes and data standards across all locations. This consistency is what allows
the firm to achieve maximum economies of scale and control costs globally.
• Supporting Localization: IS must be flexible and modular to allow for Localization and
Customization. Global CRM systems must handle local languages, currencies, and unique product
features, providing local managers with the data they need to respond to their specific markets.
• Supporting Transnational Strategy (The IS Challenge): This strategy demands the most complex
IS architecture. It requires systems that are both centralized (for cost control and knowledge
retention) and decentralized (for local responsiveness and skill sharing). Knowledge Management
Systems (KMS) and real-time collaboration platforms are vital to ensure the effective horizontal flow
of knowledge and skills across the entire global network.
Challenges in Managing Global Information Systems and Possible
Solutions

• Managing a Global Information System (GIS) requires balancing the need for worldwide efficiency (standardization)
with the necessity of local market adaptation (customization). This balancing act creates three primary areas of
challenge: regulatory, technical, and cultural.
• I. Core Challenges
• A. Regulatory and Compliance Conflicts: The most critical hurdle is navigating conflicting global laws. Issues
include strict Data Privacy regulations (like GDPR and national data residency requirements) which dictate where
data must be stored and how it must be protected. Additionally, the GIS must manage diverse Accounting and
Auditing Standards (e.g., GAAP vs. IFRS) and varying Trade Controls across different jurisdictions. Non-compliance
risks significant legal penalties and reputational damage.
• B. Technology and Infrastructure Variability: Global operations must contend with stark differences in internet and
power reliability—known as Infrastructure Variability. Furthermore, integrating inherited Legacy Systems from global
acquisitions into a single, unified ERP platform is technically complex and costly. The GIS must also be built for
robust Scalability and Resilience across all time zones.
• C. Cultural and Organizational Barriers: The classic conflict of Standardization vs. Customization remains
organizational. Headquarters pushes for standardized processes for cost efficiency, while local teams require system
adaptation to match local Cultural Norms, Languages, and Work Habits. This lack of User Acceptance can render an
efficient system ineffective if it doesn't fit the local context.
Challenges in Managing Global Information Systems and Possible Solutions

• II. Strategic Solutions

• Effective management focuses on flexibility and compliance:
• Hybrid Cloud Architecture: Use a combination of a core, centralized ERP (for finance/SCM) and
decentralized data storage via a hybrid cloud model. This supports both global control and adherence
to local data residency laws.
• Compliance by Design: Implement a universal Data Governance Framework and build security and
regulatory requirements directly into the system's design from the start.
• Global Process Template: Standardize core business processes (e.g., payment, order-to-cash) but
allow controlled flexibility in peripheral functions and user interfaces (e.g., language, currency
display) to ensure local acceptance.
• Global Talent Investment: Develop cross-cultural IT Training Programs and establish regional
centers of excellence to distribute technical expertise and promote localized system support.
IT Infrastructure: Key Components and Architecture

• IT Infrastructure- An IT infrastructure includes investment in hardware, software and

services-such as consulting, education and training—that are shared across the entire firm
or across entire business units in the firm. A firm’s IT infrastructure provides the
foundation for serving customers, working with vendors, and managing internal firm
business processes.
• Defining IT Infrastructure-An IT infrastructure consists of a set of physical devices and
software applications that are required to operate the entire enterprise. But an IT
infrastructure is also a set of firmwide services budgeted by management and comprising
both human and technical capabilities. These services include the following:
• IT infrastructure today is composed of seven major components. These 7 components
constitute investments that must be coordinated with one another to provide the firm with
a coherent infrastructure.
IT Infrastructure: Key Components and Architecture
IT Infrastructure: Key Components and Architecture

• Computer Hardware Platforms-The marketplace for computer hardware has increasingly

become concentrated in top firms such as IBM, HP, Dell and Sun Microsystems (acquired by
Oracle) and three chip producers: Intel, AMD and IBM. The industry has collectively settled on
Intel as the standard processor for business computing with major exceptions in the server market
for Unix and Linux machines, which might use Sun or IBM processors.
• Operating System Platforms-Microsoft Windows Server comprises about 35 percent of the
server operating system market with 65 percent of corporate servers using some form of the
Unix operating system or Linux an inexpensive and robust open source relative of Unix.
Microsoft Windows Server is capable of providing enterprise wide operating system and
network services and appeals to organizations seeking Windows-based IT infrastructures.
• At the client level, 90 percent of PCs use some form of the Microsoft Windows operating
system to manage the resources and activities of the computer.
IT Infrastructure: Key Components and Architecture

• Google’s Chrome OS provides a lightweight operating system for cloud computing using
netbooks. Programs are not stored on the user’s PC but are used over the Internet and accessed
through the Chrome Web browser. User data reside on servers across the Internet.
• Android is an open source operating system for mobile devices such as smartphones and tablet
computers developed by the Open Handset Alliance led by Google.
• iOS, the operating system for the phenomenally popular Apple iPad, iPhone, and iPod Touch,
features a multitouch interface, where users employ one or more fingers to manipulate objects
on a screen without a mouse or keyboard.
• Enterprise Software Applications-The largest providers of enterprise application software are
SAP and Oracle. Also included in this category is middleware software supplied by vendors
such as IBM and Oracle for achieving firmwide integration by linking the firm’s existing
application systems.
IT Infrastructure: Key Components and Architecture

• Data Management and Storage-Enterprise database management software is responsible for

organizing and managing the firm’s data so that they can be efficiently accessed and used. The leading
database software providers are IBM (DB2), Oracle, Microsoft (SQL Server) and Sybase (Adaptive
Server Enterprise), which supply more than 90 percent of the U.S. database software marketplace.
• In addition to traditional disk arrays and tape libraries, large firms are turning to network-based storage
technologies. Storage area networks (SANs) connect multiple storage devices on a separate
high-speed network dedicated to storage. The SAN creates a large central pool of storage that can be
rapidly accessed and shared by multiple servers.
• Networking/Telecommunication Platforms-Telecommunications platforms are typically provided by
telecommunications/telephone services companies that offer voice and data connectivity, wide area
networking, wireless services, and Internet access. Leading telecommunications service vendors
include AT&T and Verizon. This market is exploding with new providers of cellular wireless,
high-speed Internet and Internet telephone services.
IT Infrastructure: Key Components and Architecture

• Internet Platforms-Internet platforms overlap with, and must relate to, the firm’s general
networking infrastructure and hardware and software platforms. They include hardware, software,
and management services to support a firm’s Web site, including Web hosting services, routers, and
cabling or wireless equipment. A Web hosting service maintains a large Web server, or series of
servers, and provides fee-paying subscribers with space to maintain their Web sites.
• Consulting and System Integration Services-Implementing a new infrastructure requires
significant changes in business processes and procedures, training and education, and software
integration. Leading consulting firms providing this expertise include Accenture, IBM Global
Services, HP, Infosys, and Wipro Technologies.
• Software integration means ensuring the new infrastructure works with the firm’s older, so-called
legacy systems and ensuring the new elements of the infrastructure work with one another. Legacy
systems are generally older transaction processing systems created for mainframe computers that
continue to be used to avoid the high cost of replacing or redesigning them.
Emerging Trends in Computer Hardware and Software Platforms

• The exploding power of computer hardware and networking technology has dramatically changed how
businesses organize their computing power, putting more of this power on networks and mobile handheld
devices. We look at eight hardware trends: the mobile digital platform, consumerization of IT, grid
computing, virtualization, cloud computing, green computing, high-performance/ power-saving processors
and autonomic computing.
• The Mobile Digital Platform-Smartphones and tablet computers are becoming an important means of
accessing the Internet. These devices are increasingly used for business computing as well as for consumer
applications.
• Consumerization of IT and Bring your own Device (BYOD)- BYOD is one aspect of the consumerization
of IT, in which new information technology that first emerges in the consumer market spreads into business
organizations. Consumerization of IT includes not only mobile personal devices but also business uses of
software services such as Google and Yahoo search, Gmail, Google Apps, Dropbox and even Facebook and
Twitter that originated in the consumer marketplace as well.
• Consumerization of IT is forcing businesses, especially large enterprises, to rethink the way they obtain and
manage information technology equipment and services.
Emerging Trends in Computer Hardware and Software Platforms

• Grid Computing-Grid computing involves connecting geographically remote computers into a single
network to create a virtual supercomputer by combining the computational power of all computers on the
grid. The business case for using grid computing involves cost savings, speed of computation, and agility.
• Virtualization- Virtualization is the process of presenting a set of computing resources (such as
computing power or data storage) so that they can all be accessed in ways that are not restricted by
physical configuration or geographic location. Virtualization enables a single physical resource (such as a
server or a storage device) to appear to the user as multiple logical resources.
• Cloud Computing- Cloud computing is a model of computing in which computer processing, storage,
software and other services are provided as a pool of virtualized resources over a network, primarily the
Internet. These “clouds” of computing resources can be accessed on an as-needed basis from any
connected device and location.
Emerging Trends in Computer Hardware and Software Platforms

• Green Computing- By curbing hardware proliferation and power consumption, virtualization has become
one of the principal technologies for promoting green computing. Green computing or green IT, refers to
practices and technologies for designing, manufacturing, using and disposing of computers, servers, and
associated devices such as monitors, printers, storage devices and networking and communications
systems to minimize the impact on the environment.
• High Performance and Power Saving Processors-Another way to reduce power requirements and
hardware sprawl is to use more efficient and power-saving processors. Contemporary microprocessors
now feature multiple processor cores on a single chip. A multicore processor is an integrated circuit to
which two or more processor cores have been attached for enhanced performance, reduced power
consumption and more efficient simultaneous processing of multiple tasks.
• Autonomic computing- Autonomic computing is an industry-wide effort to develop systems that can
configure themselves, optimize and tune themselves, heal themselves when broken and protect themselves
from outside intruders and self-destruction.
Emerging Trends in Computer Hardware and Software Platforms

• Software Platforms- There are four major themes in contemporary software platform evolution:
• Linux and open source software
• Java, HTML, and HTML5
• Web services and service-oriented architecture
• Software outsourcing and cloud services
• Linux and open source software- Open source software is software produced by a community of several hundred
thousand programmers around the world. According to the leading open source professional association,
[Link], open source software is free and can be modified by users. Works derived from the original code
must also be free and the software can be redistributed by the user without additional licensing.
• Linux Perhaps the most well-known open source software is Linux, an operating system related to Unix. Linux
applications are embedded in cell phones, smartphones, netbooks and consumer electronics. Linux is available in
free versions downloadable from the Internet or in low cost commercial versions that include tools and support
from vendors such as Red Hat.
Emerging Trends in Computer Hardware and Software Platforms

• Software for the Web: JAVA, HTML and HTML5- Java is an operating system-independent, processor-independent,
object-oriented programming language that has become the leading interactive environment for the Web.
• HTML and HTML5- HTML (Hypertext Markup Language) is a page description language for specifying how text,
graphics, video and sound are placed on a Web page and for creating dynamic links to other Web pages and objects. Using
these links, a user need only point at a highlighted keyword or graphic, click on it, and immediately be transported to
another document.
• HTML5,embed images, audio, video and other elements directly into a document without processor-intensive add-ons.
• Web services and service-oriented architecture- Web services refer to a set of loosely coupled software components
that exchange information with each other using universal Web communication standards and languages. They can
exchange information between two different systems regardless of the operating systems or programming languages on
which the systems are based.
• A service oriented architecture (SOA) is set of self-contained services that communicate with each other to create a
working software application. Business tasks are accomplished by executing a series of these services. Software
developers reuse these services in other combinations to assemble other applications as needed.
Emerging Trends in Computer Hardware and Software Platforms

• Software outsourcing and cloud services-Today, many business firms continue to operate legacy systems that continue
to meet a business need and that would be extremely costly to replace. But they will purchase or rent most of their new
software applications from external sources. There are three external sources for software: software packages from a
commercial software vendor, outsourcing custom application development to an external vendor and cloud-based
software services and tools.
• Software outsourcing enables a firm to contract custom software development or maintenance of existing legacy
programs to outside firms, which often operate offshore in low-wage areas of the world.
• Cloud-based software and the data it uses are hosted on powerful servers in massive data centers, and can be accessed
with an Internet connection and standard Web browser.
Issues and Challenges in IT Infrastructure Management

• Creating and managing a coherent IT infrastructure raises multiple challenges: dealing with platform and technology
change, management and governance and making wise infrastructure investments.
• IT infrastructure is a major investment for the firm. If too much is spent on infrastructure, it lies idle and constitutes a
drag on the firm’s financial performance. If too little is spent, important business services cannot be delivered and the
firm’s competitors will outperform the under-investing firm.
• Cloud computing may be a low-cost way to increase scalability and flexibility, but firms should evaluate this option
carefully in light of security requirements and impact on business processes and workflows. In some instances, the cost
of renting software adds up to more than purchasing and maintaining an application in-house. Yet there may be benefits
to using cloud services, if this allows the company to focus on core business issues instead of technology challenges.