Today electronic companies
are assigning the distribution and production of their products to other
countries. International information
systems architecture consists of the basic information systems required by organizations
to coordinate worldwide trade and other activities. The levels for developing an international
information systems architecture are the global environment, the corporate
global strategies, the structure of the organization, the management and business
processes, and the technology platform. The
global environment the firm is operating in is the first place to start when
building an international system. The
overall market forces, or business drivers, that are pushing the industry
toward global competition must be understood.
A business driver is a force in the environment that businesses must
respond and that influences the direction of the business. A corporate strategy for competing in that
environment will then need to be considered.
Once a strategy is developed, how to structure the organization so it
can pursue the strategy is considered.
Management issues must then be considered in implementing the strategy
and making the organization design come alive.
The final issue is to consider the technology platform.
The global environment
includes business drivers and challenges.
Global business drivers can be divided into two groups: general cultural factors and specific
business factors. General cultural
factors include global communication and transportation technologies, development
of global culture, emergence of global social norms, political stability, and
global knowledge base. Specific business
factors include global markets, global production and operations, global
coordination, global workforce, and global economies of scale. Business challenges on a global level include
cultural particularism (regionalism, nationalism, language differences), social
expectations (brand-name expectations, work hours), and political laws
(transborder data and privacy laws, commercial regulations). Business challenges on a specific level
include standards (different Electronic Data Interchange (EDI), email,
telecommunications standards), reliability (phone networks not uniformly
reliable), speed (different data transfer speeds, many slower than US), and
personnel (shortages of skilled consultants).
International companies
often times are behind in the most up-to-date applications and systems. Significant difficulties are faced in
building appropriate international architectures. These 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.
Corporations seeking a
global position face three organizational issues: choosing a strategy, organizing the business,
and organizing the systems management area.
Four main global strategies form the basis for global firms’
organizational structure: domestic
exporter, multinational, franchiser, and transnational. Each of these strategies is pursued with a
specific business organizational structure.
Three kinds of organizational structure are centralized (in the home
country), decentralized (to local foreign units), and coordinated (all units
participate as equals). A domestic
exporter strategy is characterized by heavy centralization of corporate
activities in the home country of origin.
Most international companies begin this way. Production, finance/accounting,
sales/marketing, human resources, and strategic management are set up to
optimize resources in the home country.
A 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 a mix of old and new. The product is created, designed, financed,
and initially produced in the home country, but for product-specific reasons
must rely heavily on foreign personnel for further production, marketing, and
human resources. Transnational strategy
is where 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. They take the globe as their
management frame of reference and there is a strong central management core of
decision-making.
Configuration, management,
and development of systems tend to follow the global strategy chosen. Four types of systems configurations are
considered. Centralized systems are those
in which systems development and operation occur totally at the domestic home
base. These are found in domestic
exporters. Duplicated systems are those
in which development occurs at the home base but operations are handed over to
autonomous units in foreign locations.
These are found in franchisers.
Decentralized systems are those in which each foreign unit designs its
own unique solutions and systems. These
are found in multinationals, and somewhat in domestic exporters and
franchisers. Networked systems are those
in which systems development and operations occur in an integrated and
coordinated fashion across all units.
These are found in transnationals, and somewhat in multinationals.
To develop a global company
and information systems support structure, firms need to follow the following
principles: (1) Organize value-adding
activities along lines of comparative advantage. (2) Develop and operate systems units at each
level of corporate activity—regional, national, and international. (3) Establish at world headquarters a single
office responsible for development of international systems. Not only does the success of companies rely
on the proper organization of activities, but also a management team that can
understand the risks and benefits of international systems and that can devise
strategies for overcoming the risks.
Management faces problems by
developing international systems. These
problems are also the main difficulties managers experience in developing
ordinary domestic systems, but they are enormously complicated in the
international environment. They include
agreeing on common user requirements, introducing changes in business
processes, coordinating applications development, coordinating software
releases, and encouraging local users to support global systems.
Management needs to have
solutions to face these challenges. They
need to realize that not all systems should be coordinated on a transnational
basis, but only some core systems are truly worth sharing from a cost and
feasibility point of view. Core systems
support the functions that are absolutely critical to the organization. Step one is to define a short list of
critical core business processes by conducting a business process
analysis. The second step is to conquer
the core systems and define these systems as truly transnational. The third step is to choose an approach. The last step is to make the benefits
clear. Although each system offers
unique benefits to a particular budget, the overall contribution of global
systems lies in four areas: contribution
to superior management and coordination; vast improvement in production,
operation, and supply and distribution; global customers and global marketing;
the ability to optimize the use of corporate funds over a much larger capital
base.
The problems faced by
managers developing the global information systems architectures now have
solutions. 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: success as a change
agent will depend on legitimacy, authority, and ability to involve users in the
change design process; involving people in change, assuring them that change is
in the best interests of the company and their local units, is a key
tactic. Coordinating applications
development: choice of change strategy
is critical for this problem.
Coordinating software releases:
firms can institute procedures to ensure that all operating units
convert to new software updates at the same time so that everyone’s software is
compatible. Encouraging local users to
support global systems: the key 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 is a transnational company is cooptation,
which is bringing the opposition into the process of designing and implementing
the solution without giving up control over the direction and nature of the
change. Several alternatives are
possible for cooptation to proceed. One
is to permit each country unit the opportunity to develop one transnational
application first in its home territory, and then throughout the world. Another is to develop new transnational
centers of excellence, or a single center of excellence.
Once a global business model
and systems strategy has been defined, firms must select hardware, software,
and networking standards, along with key system applications to support global
business processes. Hardware, software,
and networking pose technical challenges in an international setting. One 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.
Another is finding specific software applications that are user friendly
and that truly enhance the productivity of international work teams. Overcoming these challenges requires systems
integration and connectivity on a global basis.
The goal with computing platforms is to develop global, distributed, and
integrated systems to support digital business processes spanning national
boundaries. Data standards and other
technical standards with which sites are to comply must be established. In addition, integrated global systems must
have connectivity, which is the ability to link together the systems and people
of a global firm into a single integrated network.
Challenges for application
software also need to be addressed. The
old system interfacing with the new is one issue. If new systems are to be built and tested,
this could be costly and messy. Also, it
should be taken into consideration to build software that can be realistically
used by multiple business units form different countries. Problems also arise of human interface design
and functionality of systems with language becoming a barrier.