IS Strategy Lecture Notes

Alex Domínguez
alexdfar@yahoo.com
jadoming@mail.unitec.mx
www.unitec.mx
Lecture notes, Grenoble Graduate School of Business,
France, May 2008.

Objective and Contents
1. Organisation
Components
2. IS, IT, and all
That
3. Types of IS 4. IS Strategy
5. Project
Identification,
Justification
and Planning
6. IS
Architecture
7. Business
Process
Reengineering
8. IS
Acquisitions
9. IS Testing,
Installation,
and Integration
10. IS
Operations,
Maintenance,
and Updating
11.
Internetworks
12. Enterprise
IS: ERP, CRM,
and SCM
13. Managing
International IS
2
From the point of view of non-IT management, the main objective of this
course is to analyse, represent and apply the theoretical models and
frameworks which support the strategic analysis and development of an
organisation‘s Information Strategy and Information Systems

Information Technology Requirements
3
• Lap Top computer, if possible
• Speakers
Hardware
• Acrobat Reader – Version 7 or higher
• Windows Media Player – Version 9 or higher
• Real Player – Version 6 or higher
Software applications
• Internet Connection
Telecommunications

Bibliography
• Applegate, L.M., R.D. Austin, and F.W. McFarland. Corporate Information
Strategy and Management. 7th Edition. McGraw-Hill, USA, 2007.
• Carr, N.G. Does IT Matter: Information Technology and the Corrosion of
Competitive Advantage. HBS Press, USA, 2004.
• Laudon, K.C., and J.P. Laudon. Management Information Systems: Managing
the Digital Firm. 10th Edition. Prentice-Hall, USA, 2007.
• Lutchen, M.D. Managing IT as a Business: A Survival Guide for CEOs. John
Wiley & Sons, USA, 2004.
• O‘Brien, J.A. and G.M. Marakas. Enterprise Information Systems. 13th Edition.
McGrah-Hill International Edition, USA, 2007.
• Smith, H.S. and P. Fingar. IT Doesn´t Matter: Business Process Do. Meghan-
Kiffer Press, USA, 2003.
• Turban, E., E. McLean, and J. Wetherbe. Information Technology for
Management. 6th Edition. Wiley, USA, 2008.
Books
• BRINT: www.brint.com/
• CIO: www.cio.com/
Websites
4

An organisation is made of …
OrganisationComponents
must posses knowledge and skills required to perform assigned
tasks and job positions must be fulfilled by appropriate people
Other people participating in organisation:
• Customers
• Suppliers
• Partners
• Outsourced people
PEOPLE
5

An organisation is made of PEOPLE, …
6
INFORMATION
PEOPLE
uses
is required by
must be self-consistent
and normalised
Major types of information in organisation:
• Human resources information
• Finance and accounting information
• Manufacturing and production information
• Sales and marketing information
Information = data + meaning
= (symbols + structure) + meaning
• It provides answers about ―who‖, ―what‖, ―where‖, and ―when‖
• It is independent of the way it is obtained

An organisation is made of PEOPLE,
INFORMATION, …
• Human resources processes
• Hiring employees
• Evaluating employees‘ job performance
• Evaluating employees‘ in benefits plans
• Finance and accounting processes
• Paying creditors
• Creating financial statements
• Managing cash accounts
• Manufacturing and production processes
• Assembling the product
• Checking for quality
• Producing bills of materials
• Sales and marketing processes
• Identifying customers
• Making customers aware from the product
• Selling the product
INFORMATION
PROCESSES
PEOPLE
respond
feeds
must be normalised
and controlled
defines
respond
7

An organisation is made of PEOPLE,
INFORMATION, PROCESSES, …
INFORMATION
PROCESSES
PEOPLE
PRODUCTS /
SERVICES
modify
produce
• Products are made; services are delivered
• Products are used; services are experienced
• Products possess physical characteristics we
can evaluate before we buy; services do not
even exist before we buy them
• Products are impersonal; services are personal
modify
feeds define
feedback
8

An organisation is made of PEOPLE, INFORMATION,
PROCESSES, PRODUCTS/SERVICES, and …
INFORMATION
PROCESSES
TECHNOLOGY
PEOPLE
PRODUCTS /
SERVICES
is fed by and interacts
with each component
• Technology is the relationship that an
organisation has with its tools and crafts,
and to what extent organisation can
control its environment
• Technology is machines, equipment, and
systems considered as a unit
It refers to technological side of systems
9

The organisation as a system
INFORMATION
PROCESSES
TECHNOLOGY
PEOPLE
PRODUCTS /
SERVICES
Complexity of model:
• 30 communication channels
• Each component must be linked
with itself as well as among other
4 components
Complexity reveals the intrinsic
systemic nature of a organisation
A system is a set of interacting or
interdependent entities, real or
abstract, forming an integrated
whole
10

Organisation’s internal and external attributes
Standard
operating
procedures
Internal
politics
Internal
structure
Internal
culture
EnvironmentCustomers
Government
Communities
SuppliersCompetitors
Worker UnionsStakeholdersRegulatory Agencies
11

Information Systems (IS)
An Information System (IS) collects, processes, stores, analyses, and
disseminates information for a specific purpose
Inputs
Information
(input)
Processing
Processing
Information
Output
Information
(output)
Control
Control
Information Feedback
Environment
12
IS,IT,andAllThat

Types of IS
13
Information Systems
Formal
Information features
Agreed-upon
procedures
Standard inputs and
outputs
Fixed definitions
Strategic information
Long-range planning
policies
Decision Support
Systems
Managerial information
Policy implementation
and control
Management
Information Systems
Operational information
Information needed to
operate business
Data processing
Systems
Informal
Office gossip networks
Group of friends
Information exchange
Chat systems
Computer-based
Based on computers
Used for handling
business applications
IS,IT,andAllThat

14
Computer-based IS (CBIS)
A CBIS is a IS that uses computer technology to perform
some or all of its intended task
Hardware Software Network
Databases Procedures People
IS,IT,andAllThat

Computers versus IS
An IS involves much more than computers
The successful application of an IS requires an understanding
of the business and its environment that is supported by the IS
Organisation
Management
Technology
• Computer-
Based
Information
Systems
15
IS,IT,andAllThat

Information Technology (IT)
IT is the organisation‘s collection of information systems,
their users, and the management to oversees them
IT is also known as:
• Information and Communication Technology (ICT)
• Information Technology and Telecommunications (IT&T) in Australia
• Infocomm in Asia
16
IS,IT,andAllThat

17
Paper - IT Doesn’t Matter
Before lecture: Read the
paper
Create multidisciplinary
international teams
(3 people)
Review the paper
(5 minutes)
Discuss the paper in your
own team
(10 minutes)
Explain your conclusions to
other teams
(3 minutes by team)
Free discussion
(10 minutes)
Objective
Dimension the importance of IT into organisations
DIRECTIONS

Sales and
Marketing
Manufacturing
& Production
Finance and
Accounting
Human
Resources
KIND OF IS GROUPS SERVED
Strategic
Level
Senior
Managers
Management
Level Middle
Managers
Knowledge
Level
Knowledge &
Data Workers
Operational
Level
Operational
Managers
IS versus Groups served
Source: Laudon & Laudon, Chapter 2 18
TypesofIS
Executive Support Systems
Management Information Systems
Decision Support Systems
Knowledge Work Systems
Office Automation Systems
Transaction Processing Systems

IS definitions
• Address non-routine decisions requiring judgment, evaluation,
and insight because there is no agreed-on procedure for arriving
a solution
Executive
Support
Systems
(ESS)
• Support non-routine decision making, focus on problems
that are unique and rapidly changing, for which the
procedure for arriving at a solution may not be fully
predefined in advance
Decision-
Support
Systems (DSS)
• Provide managers with reports and, in some
cases, with online access to the organisation‘s
current performance and historical records
Management
Information Systems
(MIS)
• Promote the creation of a new knowledge
and ensure that new knowledge and
technical expertise are properly integrated
into the business
Knowledge Work Systems
(KWS)
• Increase productivity by supporting
the coordinating and communicating
activities of the typical office
Office Automation Systems (OAS)
• Perform and record the daily
routine transactions
necessary to conduct
business
Transaction Processing Systems (TPS)
19
TypesofIS

Kind of IS Type of IS Information Inputs Processing
Information
Outputs
Groups
Served
Strategic
Level
Executive
Support
Systems (ESS)
Aggregate data,
external, internal
Graphics
Simulations
Interactive
Projections
Responses to
queries
Senior
Managers
Management
Level
Decision-
Support
Systems (DSS)
Low-volume data
Analytic models
Data analysis tools
Interactive
Simulations
Analysis
Special reports
Decisions analyses
Responses to
queries
Professionals
Staff
managers
Management
Information
Systems (MIS)
Summary transactions
data
High-volume data
Simple models
Routine reports
Simple models
Low-level analysis
Summary
Exception reports
Middle
Managers
Knowledge
Level
Knowledge Work
Systems (KWS)
Design specifications
Knowledge base
Modelling simulations
Models
Graphics
Professionals
Technical staff
Office
Automation
Systems (OAS)
Documents schedules
Document management
Scheduling
Communications
Documents
Schedules
Mail
Clerical
workers
Operational
Level
Transaction
Processing
Systems (TPS)
Transactions
Events
Sorting
Listing
Merging
updating
Detailed reports lists
Summaries
Operations
personnel
Supervisors
Systemic nature of IS
20
TypesofIS

Kind of IS Type of IS
Sales and
Marketing
Manufacturing
& Production
Finance Accounting
Human
Resources
Groups
Served
Strategic
Level
Executive
Support
Systems (ESS)
N-year sales
trend
forecasting
N-year
operating plan
N-year
budget
forecasting
Profit
planning
Personnel
planning
Senior
Managers
Management
Level
Decision-
Support
Systems (DSS)
Sales region
analysis
Production
scheduling
Cost
analysis
Pricing /
profitability
analysis
Contract cost
analysis
Middle
ManagersManagement
Information
Systems (MIS)
Sales
management
Inventory
control
Annual
budgeting
Capital
investment
analysis
Relocation
analysis
Knowledge
Level
Knowledge
Work Systems
(KWS)
Engineering IS Graphics IS Managerial IS
Knowledge
and Data
WorkersOffice
Automation
Systems (OAS)
Word processing Document imaging Electronic calendars
Operational
Level
Transaction
Processing
Systems (TPS)
Order
tracking
Order
processing
Machine
control
Plant
Scheduling
Material
movement
control
Securities
trading
Cash
management
Payroll
Accounts
payable
Accounts
receivable
Compensation
Training and
development
Employee
record
keeping
Operational
Managers
The six major types of IS
21
TypesofIS

IS and decision making
New Products
New Markets
TPS
OAS MIS
KWS
DSS
ESS
Organisational Level
Type of Decision Operational Knowledge Management Strategic
Structured Accounts
Receivable
Electronic
Scheduling
Production
Cost Overruns
semi-structured
Budget
Preparation
Project
scheduling
Facility
Location
Unstructured Product
Design
22
TypesofIS

Interrelationships among IS
ESS
MIS DSS
KWS
&
OAS
TPS
23
TypesofIS

24
Video case - UPS International Distribution
What external factors affect international operations at UPS? How do these factors
cause UPS to adjust its operations?
Explain how ISPS facilitates the ability of UPS to ship packages internationally.
Describe the type and role that the Delivery Information Acquisition Devise (DIAD:
a handheld computer) plays in UPS business processes.
How important is information to the global expansion of UPS? What advantages
does UPS gain by carefully capturing information?
Discuss the role of volume in the business activities of UPS.
Before lecture: Watch the
video
international teams
(3 people)
Review the video
(10 minutes)
Discuss the video in your own
team
(10 minutes)
other teams
(3 minutes by team)
Free discussion
(10 minutes)
DIRECTIONS

25
IS Management Lens
Context Filter
Alignment
•Performance Measurement
/ Analysis / Reporting
•Business Management
Liaison / Service Level
Agreement
•Governance and
Leadership Resiliency
•Data Quality and
Management
•Business Continuity /
Disaster Recovery
•Security /Confidentiality /
Privacy
Futures
•Emerging Technologies
Support
•Organisation / People /
Skills
•Marketing Communications
•Sourcing Management &
Legal Contract Issues
•Finance / Budgeting
Leverage
•User Technology
Competencies & Skills
Operations
•Service Delivery
(Operations & Initiatives)
•Enterprise Core Systems
• 6 IS business risk
drivers
• 14 main
competencies
• Qualitative and
quantitative focus
ISStrategy

26
Managers of IS
ISStrategy
IS
Management
CEO & CIO
Managing
Business
Managing IS
Strategy
CIO & CTO
Managing
Application
Development
Managing
Technology
CIO & IT
Managers
Managing the
IT
Organisation
Managing the
IT
Infrastructure

27
The Chief Information Officer (CIO)
CIO: A senior strategic-level management position that oversees all IS and
personnel for an organisation, concentrating on long-range IS planning and strategy
ISStrategy

28
The CIO yesterday and today
ISStrategy

29
Strategy and IS
ISStrategy
• Business Decisions
• Objectives and Direction
• Change
Business Strategy
Where is the business going and
why
• Business Based
• Demand Orientated
• Application Focused
IS Strategy
What is required
• Activity Based
• Supply Orientated
• Technology Focused
IT Strategy
How it can be delivered
Direction for
business
Needs and
priorities
Supports
business
Infrastructure
and services
IS IMPACT AND
POTENTIAL
Business
Strategies
Business
Processes
Data Classes
Information
Architecture
Organisational
Databases
Applications

30
5 major steps in IS strategy and planning
ISStrategy
IS and enabler Identify IS projects
From business goals to information needs Justify IS investment
System-required functionalities
Need to solve problems
Step 1 - Project Identification, Justification, and Planning
Information Architecture Technical Architecture
Data Architecture Organisation Architecture
Application Architecture Feasibility
Step 2 – IS Architecture
Testing Installation
Integration Training
Security Conversion
Deployment
Step 4 – Testing, Installation, and Integration
Operations Maintenance
Updating Replacement
Step 5 – Operations, Maintenance, and Updating
Build – How, which methodology
Buy – What, from whom
Lease – What, from whom
Partner – Which partner, how to partner
Outsource – Where to outsource
Step 3 – Acquisition /Development) Options
Business
Process
Reengineering
Business
Partners
Business
Partners
Vendor Management
Project Management
Evaluation
Management
IT
Infrastructure
Business
Partners

31
Video case - Cisco and Centrica: E-working and IS
Transformation
What are Centrica's guiding principles?
How does Centrica's CIO define a network?
What are the components of Centrica's E-working model?
What are some of the challenges that Centrica faces in maintaining effective
networking systems?
What are some of the specific tools that Centrica has implemented?
Provide examples of quantifiable benefits that Centrica has experienced as a result
of its Cisco initiatives
How does Centrica plan to extend the benefits of its E-working systems?
video
international teams
(3 people)
Review the video
(10 minutes)
team
(10 minutes)
other teams
(3 minutes by team)
Free discussion
(10 minutes)
DIRECTIONS

32
Step 1 - IS strategic planning process
Business Objectives
Business Strategic
Plan
IS Objectives
IS Vision
IS Strategic
Initiatives
IS Activities Portfolio
IS Strategic Plan
Financial Investment
(Cost/Benefit)
Risk Assessment
(Project Risks)
Personnel Requirements
(Skills needed)
Internal Efforts
(Activities)
External Efforts
(Environment trends)
Project Schedule Analysis
Gantt Chart
Time and Links among activities
First Year Budget
First Year Profits
Understanding of
Organisation
Strategy
Identifying IS
Vision
Defining IS
Strategic
Objectives
Analysing IS
Objectives
Portfolio
Analysing IS
Objectives
Portfolio
ProjectIdentification,Justification,andPlanning

33
Step 1 – IS strategic planning (growth model)
Initiation
• When
computers
are initially
introduced
Expansion
(Contagion)
• Centralised
growth takes
place as users
demand more
applications
Control
• In response to
management
concern about
cost versus
benefits, systems
projects are
expected to show
a return
Integration
• Expenditures on
integrating (via
telecommunications
and databases)
existing systems
Data
Administration
• Information
requirements rather
than processing drive
the applications
portfolio

34
Step 1 – Determining Critical Success Factors
Ask
What
objectives are
central to the
organisation?
What are the
critical factors
that are
essential to
meeting these
objectives?
What
decisions or
actions are
key to these
critical
factors?
What
variables
underlie these
decisions, and
how are they
measured?
What IS can
supply these
measures?

35
Step 1 – Defining scenarios
• Descriptions of alternative coherent and plausible futures
• ―Narratives‖ of the evolving dynamics of the future
• Specific strategy-focused views of the future
• The combination of tacit and explicit knowledge
They are
• Predictions
• Variations around a midpoint/base case
• Generalised views of feared or desired Futures
• The product of outside futurists or consultants
They are
not
• The short to medium term prognosis is unstable / uncertain
• You need to understand ―why‖ something is happening
• You need to create a shared understanding of key issues and uncertainty
• You need to create a more outward looking open and customer focused culture
• You need to have a strategic conversation with stakeholders, employees, users, etc.
Do use
them if
…
• The scenarios aren‘t designed to address a clear strategic question
• You can‘t get a reasonable level of support or visibility within the organisation
• You can‘t ensure a reasonable level of involvement in the process
Do not
use them
if …

36
Step 1 – Scenario planning
Develop a
Strategic Vision
• Balance Commitment
• Flexibility
Monitor in Real
Time
• Adjust Dynamically
Develop Multiple
Future Scenarios
• Embracing
• Uncertainty
Identify Key
Success Factors
Generate Strategic
Options
Implement
Effectively

37
Step 1 – From scenarios to strategy
Actions that are needed
whatever the scenario
(Imperatives)
Involves assessing actions against capabilities and
competencies, identifying opportunities and reviewing
risks
Drivers of
change
Scenarios
Strategic
implications
Recommen-
dations for
future
strategy &
action
Actions needed to reach
a preferred future outcome
(Preferences)

Lead-time Inventory
Labour
absence
Defective rate
of products
Setup time
Budgets
Priority of
investment
Product cost
Market
research
ROI & profit
level
Competitive
Advantage
Quality and
image
improvement
Improve
customer
relationship
Securing
future
business
Teamwork Existing IS
Data
migration
User‘s
perception
Servers
System
integration
Performance
indicators
generating
data
Evaluation
methods
Security
Involvement
of senior
managers
Strategic
objectives of
investment
in IS
Support to
corporate
strategy
Top
management
support
Competitive
performance
objectives
Long-term-
costs and
benefits
38
Step 1 - Why invest in IS projects
Strategic
Considerations
Tactical
Considerations
Operational
Considerations
Intangibles
Tangibles
• Financial
• Nonfinancial

39
Step 1 – Project identification
Project
Identification
1. Identification of IS project
(Project ownership)
Requestor and/or
department
2. Project description
(What is the project?)
Project's objectives
and deliverables
Outcome(s) to be
realised
Stakeholders for
this project?
Impacted on
organisation
Timetable
Impact of not doing
this project
“Best practice" to
be used as guidance
3. Project value
(Benefits)
Strategic
criteria
Organisational
excellence
Communication
improvement
Leadership
development
Customer service
learning
Affordable &
accessible
products/services
Risk reduction
Technical
criteria
Intra- or Inter-
dependencies
Organisational
prioritisation
Architecture &
infrastructure
dependencies
4. Project costs
(Anticipated costs)
Anticipated
resources and
funding needed
IS and IT needed
Staff effort
required

40
Step 1 – Project types
Type 2 Projects
(product-development-
like
projects)
Project Management
Style: Coach
Type 1 Projects
(engineering-like
projects)
Project Management
Style: Conductor
Type 4 Projects
(research-and-
organisational-change-
like projects)
Project Management
Style: Eagle
Type 3 Projects
(systems-development-
like
projects)
Project Management
Style: Sculptor
GOAL WELL DEFINED
METHODSWELLDEFINED
YES
NO
YES NO

41
Step 1 – Why projects fail
Failure to define
objectives
17%
Project Management Problems
32%
Technical
issues
14%
Inexperience
in scope and
complexity
17%
Lack of
communication
20%

42
Step 1 - Constraints in planning
A
Resources
Performance
CostTime
A: An IS project
is managed
As an IS
project is
managed
Performance
Time
B: An IS project
stumbles on crisis
B
Resources
Overrun
Cost

43
Videocase - Blue Rhino Slows Down to Get
Ahead
What is Blue Rhino's business strategy? How well was that strategy supported
by information systems?
Why did Blue Rhino have to revamp its systems and business processes?
What management, organisation, and technology issues did the company have
to deal with as it built its new systems?
What management, organisation, and technology issues did the company have
to deal with as it built its new systems?
How successful has Blue Rhino been in responding to the requirements of the
Sarbanes-Oxley legislation?
Before lecture: Read the case
international teams
(3 people)
Review the case
(10 minutes)
Discuss the casein your own
team
(10 minutes)
other teams
(3 minutes by team)
Free discussion
(10 minutes)
DIRECTIONS

44
Step 2 – IS architecture framework
What is an Architecture? A definition of the IS via models
What is an Architecture
Framework?
A representation of the IS via views of
models
How does this relate to an IS
implementation?
The architecture model guides the
implementation
ISArchitecture

ISArchitecture
45
Step 2 – Building a 2D IS business architecture
Functioning Enterprise (User’s View)
Functioning Enterprise Evaluation
Detailed Representation - Out of Context (Builder
Subcontractor)
As Built Deployment
Technology Model - Physical (Implementer)
Physical Models
Solution Definition and
Development
System Model – Logical (Designer)
Logical Models Requirements Definition
Enterprise Model - Conceptual (Business Owner)
Business Process Models
Scope (Planner)
External Requirements and
Drivers
Business Function Modeling
Why
Motivation
When
Time Schedule
Who
People Role
Where
Location Network
How
Process
What
Data
versus

46
Step 2 – IS architecture rules
Rule 1:
• Each column
has a simple,
basic model
Rule 2:
• Basic model
of each
column is
unique
Rule 3:
• Each row
represents a
distinct view
Rule 4:
• Each cell is
unique
Rule 5:
• Combining the
cells in one
row forms a
complete
description
from that view
What
(Data)
How
(Function)
Where
(Locations)
Who
(People)
When
(Time)
Why
(Motivation)
Scope
(Contextual)
Planner
Enterprise Model
(Conceptual)
Business Owner
System Model
(Logical)
Designer
Technology Model
(Physical)
Implementer
Detailed Representation
(Out-of-Context)
Subcontractor
Functioning System
Basic Model = Entities and Relationships
Entity
Relationship
Entity
ISArchitecture

47
Step 2 - Zachman Enterprise Architecture
Framework
What
(Data)
How
(Function)
Where
(Location)
Who
(People)
When
(Time)
Why
(Motivation)
Scope
(Contextual)
Planner
List of things
important to
the business
List of
processes that
the business
performs
List of locations
in which the
business
operates
List of
organisations
important to the
business
List of
events/cycles
important to
the business
List of
business
goals/strategi
es
Enterprise Model
(Conceptual)
Business Owner
e.g., Semantic
Model
e.g., Business
Process Model
e.g., Business
Logistics
System
e.g., Workflow
Model
e.g., Master
Schedule
e.g., Business
Plan
System Model
(Logical)
Designer
e.g., Logical
Data Model
e.g., Application
Architecture
e.g., Distributed
System
Architecture
e.g., Human
Interface
Architecture
e.g., Process
Structure
e.g., Business
Rule Model
Technology
Model
(Physical)
Implementer
e.g., Physical
Data Model
e.g., System
Design
e.g.,
Technology
Architecture
e.g.,
Presentation
Architecture
e.g., Control
Structure
e.g., Rule
Design
Detailed
Representation
(Out-of-Context)
Subcontractor
e.g., Data
Definition
e.g., Program
e.g., Network
Architecture
e.g., Security
Architecture
e.g., Timing
Definition
e.g., Rule
Definition
Functioning
System
e.g., Data e.g., Function e.g., Network
e.g.,
Organisation
e.g., Schedule e.g., Strategy
ISArchitecture

Step 2 - General enterprise IS architecture
Source: Laudon & Laudon, Chapter 2
Knowledge
Management
Systems
Customer
Relationship
Management
Systems
Enterprise
Systems
Processes
Processes
Processes
Customers &
Distributors
Customers &
Distributors
Enterprise IS automate
processes that span
multiple business
functions and
organisational levels and
may extend outside the
organisationSales and
Marketing
Manufacturing
& Production
Finance and
Accounting
Human
Resources
Supply
Chain
Management
Systems
48
ISArchitecture

Step 2 - Specific enterprise IS architecture
Suppliers, Distributors,
Resellers
Customers, Resellers
Supply Chain Management
(Sourcing, Procuring)
(Delivering)
Logistics Production Distribution
Marketing Sales
Customer
Service
Enterprise Resource Planning IS
Customer Relationship Management IS
Decision Support IS
Enterprise Application
Integration
KnowledgeManagementIS,CollaborationIS,
DecisionSupportIS,AdministrativeControl
IS,HumanResources/ProcurementIS,
Employees
Financial(Accounting/AuditingIS,Partner
RelationshipManagementIS,(Selling,
Distribution),ManagementControlIS
Partners,
Stakeholders
49
ISArchitecture

50
Step 2 – A simple network architecture
Network consists of two or more connected computers
Router (bridge) is a special
communications processor used to
route packets of data through different
networks, ensuring that the message
sent gets to the correct address
Network interface device
(NIC) is the connection
point between one
computer and the network
Network operating system (NOS)
routes and manages communications on
the network and coordinates network
resources (saving or retrieving files on
your hard drive versus a network drive)
Hub connects network
components, sending a packet of
data to all other connected devices
Switch has more intelligence than
a hub and can forward data to a
specified device or destination.
The switch is used within a given
network to move information
Number of possible connections on a network
composed of N computers is N×(N-1)
If there are 10 computers on a network, there
are 10×9 = 90 possible connections
ISArchitecture

51
Step 2 – IS feasibility
• To find out if an IS development project can be done
• ...is it possible?
• ...is it justified?
Objectives
• Alternative 1: Insourcing (Build)
• Alternative 2: Buy
• Alternative 3: Lease
• Alternative 4: Partner
• Alternative 5: Outsource
To suggest possible alternative solutions
• Whether the project can be done
• Whether the final product will benefit its intended users
• What the alternatives are
• Whether there is a preferred alternative
To provide management with enough information to know
• After a feasibility study, management makes a ―go/no-go‖ decision
• Need to examine the problem in the context of broader business strategy
A management-oriented activity
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52
Step 2 – IS feasibility analysis
Feasibility
Analysis
Operational
Feasibility
•It is the measure of how
well particular IS will
work in a given
environment
•It is people-oriented
Technical
Feasibility
•It is the measure of the
practicality of a specific
technical IS solution
and the availability of
technical resources
•It is computer oriented
Economic
Feasibility
•It is the measure of the
cost-effectiveness of an
IS solution
Legal Feasibility
•It is the measure of
legal aspects such as
contracts, liability,
violations, and legal
other traps frequently
unknown to the
technical staff
Schedule
Feasibility
•It is a measure of how
reasonable the project
timetable is
ISArchitecture

53
Step 2 – Feasibility study contents
1. Purpose & scope of the study
•Objectives (of the study)
•Who commissioned it & who did it
•Sources of information
•Process used for the study
•How long did it take,…
2. Description of present situation
•Organisational setting, current system(s)
•Related factors and constraints
3. Problems and requirements
•What‘s wrong with the present situation?
•What changes are needed?
4. Objectives of the new system
•Goals and relationships between them
5. Possible alternatives
•…including ‗do nothing‘
6. Criteria for comparison
•Definition of the criteria
7. Analysis of alternatives
•Description of each alternative
•Evaluation with respect to criteria
•Cost/Benefit analysis and special implications
8. Recommendations
•What is recommended and implications
•What to do next
•E.g. may recommend an interim solution and a permanent solution
9. Appendices
•To include any supporting material
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54
Whitepaper – Developing a Enterprise
Architecture
whitepaper
international teams
(3 people)
Review the whitepaper
(5 minutes)
Discuss the whitepaper in
your own team
(10 minutes)
Write team‘s conclusions
other teams
(3 minutes by team)
Free discussion
(10 minutes)
Objective
Discus the growing role and importance of enterprise architectures in the
management of organisations
DIRECTIONS

BusinessProcessReengineering
55
Steps 1 and 2 - Business Process Reengineering
(BPR)
BPR refers to the redesign of
business processes, its
associated systems and
organisational structures
The aim of BPR is to achieve
dramatic improvement in
process performance
Business
Operations
Outcomes
Process
oriented
approach to IS
implementation
Workflow
management
Streamlined
business
processes
Cost
Reduction
Continuous
improvement

56
1. Preparation &
coordination of a
BPR project
Duration: 2 days
Participants: BPR team,
BPR consultants
Objectives:
• · To establish a strong management support
• · To explain to the members of the BPR implementation team the
implementation details of the project and their role in the successful
outcome in the BPR effort
2. Business
diagnosis &
measurements
(AS-IS model)
Duration: 4
weeks
BPR consultants,
personnel involved with
processes
Objectives:
• To diagnose & identify problematic areas in the current processes
• To measure the performance characteristics of the current processes
based on measurable factors such as average cycle time, delays,
number of mistakes or number of customer complaints
3. Selection of
processes for
change &
modelling
Duration: 7
weeks
BPR consultants
Objectives:
• To identify the strategic processes that are feasible to change
• To redesign and model the selected processes
4. Technical
design of the
solution using IT
(TO-BE model)
Duration: 10
weeks
BPR consultants, IT
experts
Objectives:
• To automate modelled business processes (step 2) using networks and
workflow tools
5. Personnel
adjustment &
training
Duration: 10
weeks
Participants: Process team
members, process
coordinator, trainers
Objectives:
• To train personnel in the new ways of working using IS in the
redesigned processes.
6. Management
of change &
employee
empowerment
Duration: 1 week
BPR consultants, process
team, executive
management
Objectives:
• To establish a positive attitude for the change between employees
• To minimise the resistance to change between employees by
empowering their position based on performance appraisal and bonus
systems
7. Introduction of
new processes
into business
operations
Duration: Day
and time are set
by executive
management
Participants: The whole
business organisation
Objectives:
• To set the time and date of operating under the new processes,
emphasising the fact that working under the old processes is not an
acceptable practice
8. Continuous
improvement
Duration: Runs
dynamically and
continuously
after the end of
the project
Participants: BPR
implementation team
Objectives:
• To capitalise from the BPR project and develop internal experts for
other BPR projects

57
Steps 1 and 2 - The 3 R’s of reengineering
Redesign
• Simplify
• Standardise
• Empowering
• Employeeship
• Groupware
• Measurements
Retool
• Networks
• Intranets
• Extranets
• Workflow
Reorchestrate
• Synchronise
• Processes
• IS
• Human Resources
Customer focus
Speed
Comprehension
Flexibility
Quality
Innovation
Productivity

58
So … who needs BPR?
Is Information Management just another hype?
(alternative link: http://www.youtube.com/watch?v=vxmuhzLzubM&feature=related)
video
international teams
(3 people)
Review the video
(10 minutes)
team
(10 minutes)
other teams
(3 minutes by team)
Free discussion
(10 minutes)
DIRECTIONS

59
Step 3 – IS acquisition options
Insourcing
(Build)
Buy
Lease
Partner
Outsourcing
IS
Acquisition
Options
IS
Acquisition
Options
Insourcing
(Build)
Buy
LeasePartner
Outsourcing
ISAcquisitions

Strategy
Recruit,
Hire,
Train
Processes
Management
Tracking &
Reporting
60
Step 3 – Insourcing environment
Infra-
Structure
Desktop
Computers
Phones
Inter-
networking
Computer
Servers
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61
Step 3 – Insourcing types
Insourcing
(building)
From
scratch
Considered only for
specialised applications
(Components are not
available)
Expensive and slow
process, but it will provide
the best fit
From
components
Companies with
experienced IS staff can
use …
Standard components
Some software languages
Third-party subroutines
From a software
standpoint
It offers the greatest flexibility and can be the
least expensive option in the long run
It may also result in a number of false starts
and wasted experimentations
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62
Step 3 – Reasons for insourcing
Strategic Considerations
Strengths Weaknesses
Enable staff to develop professionally Project resources/timeline may not allow time for re-skilling
Use existing best-in-class abilities
• Opportunity cost of resources time may be high
• Best use of resources may be elsewhere
Maintain control over important agency projects
Internal management and skills are insufficient to achieve
project success
Minimise risks of managing a vendor relationship
• Must continue to resolve internal resource problems and
weaknesses
• If resources leave, project deadlines may be jeopardised
Responsiveness to change – no contract adjustments
needed
Difficulties with addressing scope change may be still affect
project timelines and budgets
Financial Considerations
Costs are more defined and explicit, and more easily
controlled
Time and labour overruns may occur in the environment, and
cost impact on overtime, etc. may vary significantly from
month-to-month
Leverage the use of existing IT equipment and skills
An optimal solution may require newer technologies and
skills
Extra costs of contract management overhead are foregone Day-to-day, detailed management costs are experienced
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63
Step 3 –Insourcing System Development Life
Cycle (SDLC) and its deliverables
Planning &
Requirements
Analysis Phase
Identify business;
functional and technical
requirements
Design &
Development Phase
Complete system
design, build, and test
prototype
Integration, Test &
Implementation
Phase
Deploy pilot and
production system
System Operation
Phase
Execute and control
support operations plans
Project Management Plan
Project Schedule
Feasibility Study
Requirements Traceability Matrix
Systems Boundary Document
Requirements Document
High Level Design and Development Project Schedule
High Level Design Document
Detailed Design Document
Test Plan Document
Prototype Test Results Document
Support, Implementation, and Training Plan Documents
Design and Development Project Management Plan and Schedule
High Level Implementation Project Schedule
Perform User, Administration and Support Training
Execute and Test Pilot Implementation
Post-Pilot Reconciliation
Execute, Production System Implementation
Execute Acceptance Testing
Prepare As-Built Documentation
Initiate System Operations and Support Plan
Execute Change / Configuration Management Plan

64
Step 3 – In house building pitfalls
ISAcquisitions

ISAcquisitions
65
Step 3 – Buying advantages and disadvantages
Advantages of the ―buy‖ option
Many different types of-the-shelf
software are available
Much time can be saved by buying
rather than building
The organisation can know what it is
getting before it invests in the software
The organisation is not the first and only
user
Purchased software may avoid the need
to hire personnel dedicated to the project
The vendor updates the software
frequently
The price is usually much lower for a buy
option
Disadvantages of the ―buy‖ option
Software may not exactly meet the
organisation‘s needs
Software may be difficult or impossible
to modify, or it may require huge
business process changes to implement
The organisation will not have control
over the software improvements and
new versions (may only recommend)
Purchased software can be difficult to
integrate with existing (legacy) systems
Vendors may drop a product or go out of
business

ISAcquisitions
66
Step 3 – Buying cycle (example on software)
Source: http://www.stratimind.com/buying_process_moves_online.htm
Become aware of a need
Become aware that solutions exist to address the need
Feel urgency to address the need
Decide to seek a solution for a need
Start Looking
Research
Alternatives
Manage Risk
Negotiate
Purchase
Pilot Solution
Deploy
Solution
Broadly
Develop plan and schedule for deployment
Purchase/develop training programs
Set up systems for solution operation
Deploy solution broadly
Manage solution deployment process
Contact trusted colleagues for initial information and recommendations
Research alternative solutions, costs, include extensions to current solutions
Issue RFI to known vendors (formal process only)
Justify and allocate resources to address the need
Identify risk of purchase
Develop risk mitigation needs
Contact reference customers provided by vendors
Request formal quote (RFQ) from select vendors
Negotiate with top few vendors for best value solution
Choose vendor and gain approval to purchase
Contract to purchase and receive delivery of solution
Train pilot program participants
Deploy solution in pilot program
Review pilot program results
Defining
Requirements
Develop prioritised requirements for a solution
Request form proposal (RFP) to vendors for more information and pricing
Compare vendors, eliminate vendors that cannot address the need
Request presentation, demonstration of vendor solutions

67
Step 3 - Leasing
Leasing can be
done in one of
two ways
Leasing the application
from an outsourcer and
install it on the
organisation‘s premises
The vendor can help with the installation
and frequently will offer to also contract for
the operation and maintenance of the
system
Many conventional applications are leased
this way
Using an application
system provider (ASP),
is becoming more
popular
Lease
An agreement whereby the owner of something (the Lessor) grants the right of
possession to another party (i.e., the Tenant or Lessee) for a specified period of time
(i.e., the Lease Term) and for a specified consideration (i.e., rent)
Application Service Provider (ASP)
•An organisation that hosts software applications on its own servers within its own facilities
•Customers access the application via private lines or the Internet
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68
Step 3 – Reason to lease
Reasons to Lease
• Help smooth budget spikes
• Facilitate rapid technology deployment
• Facilitate standardisation efforts
• Provide an effective disposal strategy for used
equipment
Reasons not to Lease
• Lack of an in-house IS asset management
program
• Unacceptable risks of signing a multi-year
contract committing to one technology or vendor
• Lack of negotiation and contract management
skills
• Inability to strictly adhere to contract length,
terms, and conditions
• Lack of a strong architectural plan for
technology
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69
Step 3 – How to decide to lease (example)
Source: Gartner, Inc. Leasing Decision Drivers for PCs, Laptops and Distributed Equipment, January 1999.
Replacement
Cycle
Is the desktop cycle
36 moths or less for
notebooks and high-
end workstations?
Asset
Management
Are routines in place
to track machines,
order replacements,
and facilities returns
at the end of the
lease term?
Strategic
View
Is there a leveraged
payback from
acquiring equipment
immediately?
Stable
Applications
• Reasonable stable
applications
software?
• Risk of early
obsolescence an
issue?
Stop!
Leasing may not be the low-cost
solution for your organisation
Yes
No
Yes
Yes
No
No
No
LEASE
Yes
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70
Step 3 – How to lease
Lessee of IS
Leasing Entity
(Intermediary)
Lessor1. Chosen IS provider
3. Lessee Analysis
2. Leasing request
4. Leasing agreement
5. Buy IS6. Deliver IS
7. Choose Final Option
•Return
•Buy
•New Lease
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71
Step 3 – Some questions & answers about
leasing
• Attempt to match your lease term to the useful or optimum life of the
equipment you are leasing
How do I decide how long my
lease term should be?
• It is permissible to upgrade leased equipment as long as the upgrades
do not diminish the value of the equipment
• Remember that the leased item belongs to the Lessor in an operating
lease, the Lessee only has the right to use the item
Can upgrade be made to the
leased equipment?
• It is always prudent to plan your end of lease options in advance to
avoid future surprises or inconvenience
• Leases typically have a variety of end-of-term options: Return the
equipment, extend the lease, and purchase the equipment for fair
market value or residual value
What are my options at the end of
the lease?
• Be aware that leasing companies are entitled to fair market
compensation for the expected income and administrative costs related
to the termination of your lease
• In the extreme, terminating a lease can result in your requirement to
completely fulfil the obligations of the lease equipment
How do I terminate or buy the
equipment before the lease term
is over?
• This is a complex situation and the course of action will vary depending
on your particular circumstances
• First contact the supplier of the equipment to have the issues attended
to and to determine what remedies are available under the warranty
What happens if I am unsatisfied
with my equipment and wish to
return it?

72
Step 3 – Partnership
Partnership
A cooperative relationship between people or groups (partners) who agree to
share responsibility for achieving some specific goal
Supplies
and
Suppliers
Manufacturing
Assembly
Production, HRM,
Finance,
Accounting,
Engineering
Sales,
Customer Service
Distribution,
Marketing
Channels
Customers
e-Commerce
Back
Office
Front
Office
Integration
Business Partners
ISAcquisitions

73
Step 3 – Partnership models
Commodity
Vendor
Preferred
Vendor
Value
Added
Vendor
Alliance Cooperation
Strategic
Partnership
Maturity
ISAcquisitions

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74
Step 3 – Internal partnership advantages
Education, Information, and Experiences
• Bi-directional exchange of know-how
• Personnel attend, participate, and report on key conferences world-wide
• Project attracts visits by world‘s leading experts
• Regular seminar series and working group meetings
• Early access to scientific publications, journals and technical report series
• Relationship with other partners provides intelligence about world-wide activities
• Video, computer, and paper library of key internal and external research work and results
Demonstrations of and Experimentation with Advanced Systems
• Dedicated demonstration facilities for prototyping of new systems
• Field trials provide hands-on experience with advanced products and prototypes
Technology Acquisition, Intellectual Property
• Intellectual property policy enabling and encouraging technology transfer to partners
• Prototype builds and deployment industry partner sites
Access to Expertise
• Recruitment of experts
• Opportunity to involve leading academics in industry lead projects
Alliance with World-Wide Partners
• Build business alliances with other partners having complementary skills

75
Step 3 - Outsourcing
Outsourcing involves the transfer of the management and/or day-to-day
execution of an entire business function to an external service provider
Information Technology Outsourcing (ITO), therefore, is a subset of business process outsourcing
ITO falls under the domain of the CIO
Business Process Outsourcing (BPO) is the outsourcing of a specific business process task, such
as payroll
Back office outsourcing – It includes internal
business functions such as billing or purchasing
Front office outsourcing – It includes customer-
related services such as marketing or tech support
ISAcquisitions

ISAcquisitions
Step 3 – Reasons for outsourcing
76
Strategic Considerations
Can be leveraged to improve operating efficiency, and migration to
better and more efficient methods of computing can be facilitated
Loss of control over day-to-day decision-making
Enable changes in an organisation‘s culture and processes
Risk of becoming tied to one vendor or technology, making
responsiveness to changes more difficult
Allows IS personnel to focus on strategic planning and new areas of
development/core processes
• Outsourcing agreement must be managed effectively by
knowledgeable staff to ensure vendor‘s ability to deliver services
and products
• Identification of core processes may change over time
Provides access to expert knowledge in old and new technology
areas
Ensure knowledge transfer so that reductions in staff skills and staff
knowledge of IS needs/systems is minimised
Can be leveraged to respond quickly to legislative mandates, new
technologies, and new business needs
• High exist barriers
• Once a contract is entered, it can be difficult to back out
Financial Considerations
Cost savings on equipment and staffing through vendors economies
of scale
May become tied to obsolete technology so vendor can achieve
economies of scale
Smother cash flow as predetermined amounts go to the vendor, who
buys material and equipment
Locking in to one vendor without the ability to take the program in-
house or switch to another vendor will cause price increases when
the contract is renewed
Access to technology without capital investment
• Cost of outsourcing agreement is dependent upon contract terms
and conditions for changes, maintenance, etc.
• Cost may spiral quickly
Management time and money savings through reduced need to
oversee day-to-day operations
Costs to organisation in terms of staff time for contract management
may be higher than anticipated

ISAcquisitions
77
Step 3 – Outsourcing top 10Top 10 Reasons to Outsource Top 10 Factors in Vendor Selection
Reduce and control operating costs Commitment to quality
Improve organisation focus Price
Gain access to world-class capabilities Reference/reputation
Free internal resources for other purposes Flexible contract terms
Necessary resources are not available internally Scope of resources
Accelerate reengineering benefits Additional value-added capability
Function is difficult to manage internally or is out of control Cultural match
Make capital funds available Existing relationship
Share risks Location
Cash infusion Other
Top 10 Factors for Successful Outsourcing Top 10 IS Areas Being Outsourced
Understand company goals and objectives Maintenance and repair
A strategic vision and plan Training
Selecting the right vendor Applications development
Ongoing management of the relationship Consulting and reengineering
A properly structured contract Mainframe data centres
Open communication with affected individuals/groups Client/server services and administration
Senior executive support and involvement Network administration
Careful attention to personal issues Desktop services
Near term financial justification End-user support
Use of outside expertise Total IS outsourcing

78
Step 3 – Outsourcing decision flowchart
Are you
evaluating all IS
services or one
activity?
• Gather information on
IS needs
• Identify IS activities,
strengths, weaknesses
Gather information on
organisation needs and
priorities
Is this activity
required?
Does the
organisation
need to own the
activity?
Does the
organisation
need to perform
the process?
Evaluate
business needs
by activity
Consider Outsourcing
Activity Measurement-
Benchmarking
Possibility of
improvement?
Accurate
measures/understanding
of activity?
Keep internal, but
evaluate performance
• If no possibility for improvement, keep in house
• If no accurate measures, or understanding
exists, these must be known before
outsourcing can proceed
Choice of options
Determined by cost-
benefit analysis,
business case
All other options:
reengineering, leasing,
etc.
Outsource activity
Prepare for vendor
selection, contract, etc.
All activities One activity
For each activity For the activity
No Yes Yes
No
Yes
Yes to both No to either
Or Or
No
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79
Step 3 – Outsourcing process
Define
organisation
needs and
outcomes
Analyse options
to achieve
outcomes
Establish
measurements/
requirements
Select vendors
Negotiate
contract
Manage
transition to
outsourcing
Manage,
evaluate, monitor
contract
Manage
transition at end-
of-contract
All other options
Organisation
Strategy Plan
Organisation
Information
Resources Strategy
Plan
Outsourcing
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80
Step 3 – Offshoring
Offshoring is a type of outsourcing
Offshoring simply means having the outsourced IS business
functions done in another country
Offshoring is done in order to
Reduce labor
expenses
Enter new markets
Tap talent currently
unavailable
domestically
Overcome regulations
that prevent specific
activities domestically
Related terms to Offshoring are
Nearshoring
which implies relocation of
business processes to
(typically) lower cost foreign
locations, but in close
geographical proximity
Inshoring
which means picking
services within a country
Bestshoring
picking the "best shore"
based on various criteria
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81
Step 3 – Key factors to decide where offshore
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82
Step 3 – Offshoring in the world
ISAcquisitions

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83
Step 3 – Insourcing versus Outsourcing (1)
Insourcing Low Level
Outsourcing
MRD = Market
Research
Document
PRD = Priorisation
Research
Document
MRD = Market
Research
Document
PRD = Priorisation
Research
Document

ISAcquisitions
84
Step 3 – Insourcing versus Outsourcing (2)
High Level
Outsourcing
Complete
Technical
Outsourcing
MRD = Market
Research
Document
PRD = Priorisation
Research
Document
MRD = Market
Research
Document
PRD = Priorisation
Research
Document

85
Case: Pilkington PLC
Detail the reasons for the total outsourcing decision at Pilkington. Do you think the decision makes the most
sense or was there an equally or more viable alternative?
From your reading of the case, what do you think are the major business, technical and economic factors a
company needs to take into account when making an IT sourcing decision?
What in-house capability did Pilkington retain? Was this enough? Were there advantages in keeping in-house
greater technical expertise?
Consider the questions at the end of the case, and the problem posed by Jo Boyers. What directions would
you recommend for Pilkington? Give reasons for your answers
Identify any cultural, economic, or political factors that are relevant to this case
case
international teams
(3 people)
Review the case
(5 minutes)
Discuss the case in your
own team
(10 minutes)
Write team‘s conclusions
Explain your conclusions
to other teams
(3 minutes by team)
Free discussion
(10 minutes)
DIRECTIONS

ISTestingInstallation,andIntegration
86
Step 4 – IS Testing
IS Testing is any activity aimed at evaluating an attribute or capability of a IS
and determining that it meets its required results
IS
Testing
Information
Processes
SoftwareHardware
Telecommu
nications
Functionality
(Exterior
Quality)
Engineering
(Interior
Quality)
Adaptability
(Future
Quality)
Correctness Efficiency Flexibility
Reliability Testability Reusability
Usability Documentation Maintainability
Integrity Structure

87
Step 4 – Testing process
Organise
Testing Project
Design/Build
Test
Processes
Execute
System Test
Execute
Acceptance
Test
Sign off and
Pilot
Design
System Test
Build Test
Environment
IEEE standards
• 829-1983 IEEE Standard for Software Test Documentation
• 1008-1987 IEEE Standard for Software Unit Testing
• 1012-1986 IEEE Standard for Software Verification & Validation Plans
• 1059-1993 IEEE Guide for Software Verification & Validation Plans

88
Step 4 - InstallationINSTALLATION PLAN
1 introduction
1.1 Purpose of this document
1.2 Objectives
1.3 Identification
1.4 References
1.5 Relationship to other plans
1.6 Key Stakeholders
1.7 Points of Contact
2 Installation Plan
2.1 Overview
2.2 Scope
2.3 Environment
2.4 Tasks
2.5 Security
2.6 Site Specific Information
2.7 Site Name [x]
2.7.1 Schedule
2.7.2 Software Inventory
2.7.3 Hardware Inventory
2.7.4 Network Inventory
2.8 Installation Procedures
2.9 Entry and Exit Criteria
2.10 Backup Procedure
2.11 Change Control Procedure.
2.12 Installation Test Procedure
2.13 Constraints
2.14 Issues
2.15 Assumptions
2.16 Dependencies.
2.17 Resource Requirements
3 Training
4 Project Management
4.1 Roles and Responsibilities
5 Appendices
5.1 Glossary of Terms
5.2 Acronyms and Abbreviations

89
Step 4 - Securing
Senior
Management
Commitment &
Support
Security
Policies &
Training
Security
Procedures &
Enforcement
Security Tools:
Hardware &
Software
1st Layer: Perimeter Security
(Network Layer Security)
• Virus scanning
• Firewalls
• Virtual private networking
• Operating system protection
2nd Layer: Authentication
(Proof of Identity)
• User name/password
• Password synchronisation
• Biometrics
• Single sign-on
3rd Layer: Authorisation
(Permissions Based on Identity)
• User/group permissions
• Enterprise directories
• Enterprise user administration
• Rules-based access control

90
Step 4 - Enterprise Application Integration (EAI)
During the next 10 years, enterprises will face unprecedented levels of both business and
technology change. Accordingly, IS organisations' primary value discipline must be agility
EAI is a Technical foundation to support flexible information exchange by providing enterprise
wide application connectivity on any system on any platform
The mission of EAI is to control a heterogeneous computing environment in such a way it
behaves as one system
ENTERPRISE
APPLICATION
INTEGRATION

91
Step 4 - EAI purposes
Data (information)
integration
• Ensuring that information
in multiple systems is
kept consistent
Process integration
• Linking business
processes across
applications
Vendor independence
• Extracting business
policies or rules from
applications and
implementing them in the
EAI system, so that even
if one of the business
applications is replaced
with a different vendor's
application, the business
rules do not have to be
re-implemented
Common façade
• An EAI system could
front-end a cluster of
applications, providing a
single consistent access
interface to these
applications and
shielding users from
having to learn to interact
with different applications

92
Step 4 - Traditional view versus EAI view
EAI View
Focus on
business
processes
Traditional View
Focus on
functional areas
Sales R&D Purchasing Production Distribution
Company
Customer order
Delivery to
customer
Sales F&E Purchasing Production Distribution
Company

Step 4 - EAI helps to reduce complexity
EAI
Reduction of
Complexity
From n×n to n
93

Step 4 - Multi-tiered EAI architecture
94
Successful implementation of consistent, scalable, reliable, incremental, cost-effective EAI
solutions depends on the standards and methodologies that we define for these levels
• Within an application
• Between applications within an enterprise
• Between enterprises
• Directly with customers
It must be
determined how we
need to share
information

95
Step 4 - EAI implementation pitfalls
• The very nature of EAI is dynamic and requires dynamic project managers to manage their
implementation
Constant
change
• EAI requires knowledge of many issues and technical aspects
Lack of EAI
experts
• Within the EAI field, the paradox is that EAI standards themselves are not universal
Competing
standards
• EAI is not a tool, but rather a system and should be implemented as such
EAI is a tool
paradigm
• Engineering the solution is not sufficient. Solutions need to be negotiated with user departments
to reach a common consensus on the final outcome. A lack of consensus on interface designs
leads to excessive effort to map between various systems data requirements
Building
interfaces is
an art
• Information that seemed unimportant at an earlier stage may become crucial laterLoss of detail
• Since so many departments have many conflicting requirements, there should be clear
accountability for the system's final structure
Accountability
In 2003 it was reported that 70% of all EAI projects fail
Most of these failures are not due to the software itself or technical difficulties,
but due to management issues

96
Step 4 - EAI implementation pitfalls
Other potential problems may arise in these areas
Emerging Requirements
EAI implementations should be extensible and
modular to allow for future changes.
Protectionism
The applications whose data is being integrated
often belong to different departments which
have technical, cultural, and political reasons
for not wanting to share their data with other
departments
Advantages of EAI implementation
• Real time information access among systems
• Streamlines business processes and helps raise organisational efficiency
• Maintains information integrity across multiple systems
Disadvantages of EAI implementation
• Prohibitively high development costs, especially for small and mid-sised businesses
• EAI implementations are very time consuming, and need a lot of resources
• Require a fair amount of up front design, which many managers are not able to
envision or not willing to invest in. Most EAI projects usually start off as point-to-point
efforts, very soon becoming unmanageable as the number of applications increase

97
Video case - PeopleSoft's Enterprise
Performance Management (EPM) System
How does PeopleSoft incorporate the concept of immediacy into its Enterprise
Performance Management (EPM) system?
Name the systems integrated into its EPM system?
Concerning the integration of the EPM system, what can you say about EAI architecture
and Internet architecture?
For the EPM system, guess two types of testing and securing process performed before
run EPM broadly?
What kind of role does PeopleSoft assign to analytics in its EPM system?
What kind of businesses are likely to benefit from using PeopleSoft EPM?
video
international teams
(3 people)
Review the video
(10 minutes)
team
(10 minutes)
other teams
(3 minutes by team)
Free discussion
(10 minutes)
DIRECTIONS

98
Step 5 – Operation versus Innovation
Operating versus Innovating
Operating Innovating
Creating today's revenue Creating tomorrow's revenue
Steps are pre-defined Steps are undefined
Steps are mostly linear Steps are mostly non-linear
Single route and result Multiple routes and results
Driven by functional teams Driven by cross-functional teams
Reworking is waste Reworking is part of learning
Clear, shared goals Unclear, often conflicting goals
Clear front end Fuzzy front end
Easy to measure Tough to measure
Rich historical data Poor historical data
Forecasting possible Forecasting almost impossible
Short cycle time Long cycle time
Many common causes Many special causes
Traditional players & roles New players & roles
Doing things right Doing right things
ISOperations,Maintenance,andUpdating

99
Step 5 – Operations management planning
criteria
Control
• By creating and maintaining a positive flow of work by utilising
what resources and facilities are available
Lead
• By developing and cascading the organisations
strategy/mission statement to all staff
Organise
• Resources such as facilities and employees so as to ensure
effective production of goods and services
Plan
• By prioritising customer, employee and organisational
requirements
Maintaining
• And monitoring staffing, levels, Knowledge-Skill-Attitude (KSA),
expectations and motivation to fulfil organisational
requirements

100
Step 5 – Disaster recovering
Disaster Recovery
It is the process, policies and procedures of restoring operations critical to the resumption of
business, including regaining access to data (records, hardware, software, etc.), communications
(incoming, outgoing, toll-free, fax, etc.), workspace, and other business processes after a natural or
human-induced disaster

101
Step 5 – The disaster cycle
Preparedness
Disaster
Event
ReliefRestoration
Rebuilding
Risk
Reduction

102
Step 5 – Disaster recovering strategies and
precautions
• Backups made to tape and sent off-site at regular intervals (preferably daily)
• Backups made to disk on-site and automatically copied to off-site disk, or made
directly to off-site disk
• Replication of data to an off-site location, which overcomes the need to restore
the data (only the systems then need to be restored). This generally makes
use of Storage Area Network (SAN) technology
• High availability systems which keep both the data and system replicated off-
site, enabling continuous access to systems and data
Disaster Recovery Strategies for Data Protection
• Local mirrors of systems and/or data and use of disk protection technology
such as RAID
• Surge Protectors — to minimise the effect of power surges on delicate
electronic equipment
• Uninterruptible Power Supply (UPS) and/or Backup Generator to keep systems
going in the event of a power failure
• Fire Preventions — more alarms, accessible fire extinguishers
• Anti-virus software and other security measures
Precautionary Measures to Prevent a Disaster Situation

103
Step 5 – Business Continuity Planning
Business Continuity Planning (BCP)
It is an interdisciplinary peer mentoring methodology used to create and validate a practiced
logistical plan for how an organisation will recover and restore partially or completely interrupted
critical function(s) within a predetermined time after a disaster or extended disruption
Business Continuity
Planning Life Cycle
1. Initiate BCP
project
2. Identify
business threat
3. Conduct risk
analysis
4. Establish
BCP (establish
recovery team)
5. Design BCP
(design
recovery plan)
6. Define BC
process (define
recovery
process)
7. Test BCP
(test recovery
plan)
8. Review BCP
(review
recovery plan)
Creating a Business Continuity Plan
(alternative link: http://www.youtube.com/watch?v=z8i3nTg-zxw

104
Step 5 –Business continuity & recovery
Total Continuity Program
Management
• Overall project
management
• Risk management
• Crisis management
• Industry benchmark
Business Continuity
Program Design
• Understanding business
and IS requirements
• Evaluate current
capabilities
• Develop continuity plan
IS Recovery Program
Design
• Assess IS capabilities
• Develop recovery
procedures
• Design solutions
IS Recovery Program
Execution
• Recovery tasks
• Testing
• Other functional exercise
plan & procedure

105
Step 5 – Replacement Plan
IS and IT Inventory
• Executive Support IS and IT
• Decision-Support Systems IS and IT
• Management Information Systems IS and IT
• Knowledge Work Systems IS and IT
• Office Automation Systems IS and IT
• Transaction Processing Systems IS and IT
Replacement Plans
• Executive Support IS and IT Replacement Plan
• Decision-Support Systems IS and IT Replacement Plan
• Management Information Systems IS and IT Replacement Plan
• Knowledge Work Systems IS and IT Replacement Plan
• Office Automation Systems IS and IT Replacement Plan
• Transaction Processing Systems IS and IT Replacement Plan
Budget needs to Funds Replacement Plan
• Executive Support IS and IT
• Decision-Support Systems IS and IT
• Management Information Systems IS and IT
• Knowledge Work Systems IS and IT
• Office Automation Systems IS and IT
• Transaction Processing Systems IS and IT

General enterprise IS architecture
Knowledge
Management
Systems
Customer
Relationship
Management
Systems
Enterprise
Systems
Processes
Processes
Processes
Customers &
Distributors
Customers &
Distributors
Enterprise IS automate
processes that span
multiple business
functions and
organisational levels and
may extend outside the
organisationSales and
Marketing
Manufacturing
& Production
Finance and
Accounting
Human
Resources
Supply
Chain
Management
Systems
107
ISArchitecture

Specific enterprise IS architecture
Suppliers, Distributors,
Resellers
Customers, Resellers
(Sourcing, Procuring)
(Delivering)
Logistics Production Distribution
Marketing Sales
Customer
Service
Enterprise Resource Planning IS
Customer Relationship Management IS
Decision Support IS
Enterprise Application
Integration
KnowledgeManagementIS,CollaborationIS,
DecisionSupportIS,AdministrativeControl
IS,HumanResources/ProcurementIS,
Employees
Financial(Accounting/AuditingIS,Partner
RelationshipManagementIS,(Selling,
Distribution),ManagementControlIS
Partners,
Stakeholders
108
ISArchitecture

Components of a simple network
Network consists of two or more connected computers
Router (bridge) is a special
communications processor used to
route packets of data through different
networks, ensuring that the message
sent gets to the correct address
Network interface device
(NIC) is the connection
point between one
computer and the network
Network operating system (NOS)
routes and manages communications on
the network and coordinates network
resources (saving or retrieving files on
your hard drive versus a network drive)
Hub connects network
components, sending a packet of
data to all other connected devices
Switch has more intelligence than
a hub and can forward data to a
specified device or destination.
The switch is used within a given
network to move information
Number of possible connections on a network
composed of N computers is N×(N-1)
If there are 10 computers on a network, there
are 10×9 = 90 possible connections
internetworking

Client/Server computing
Client/server software splits the processing of applications between the
client and server to take advantage of strengths of each machine
E-mail and browsers are examples
110
internetworking

Network topologies (architectures)
Network Topology is the specific physical, logical, or virtual,
arrangement of the network components and devices (nodes)
Network topology is determined only by the configuration of
connections between nodes
111
internetworking

internetworking
PAN, LAN, and CAN networks
Personal Area Network
(PAN)
• Area covered: 4-6 metres
• Features: PAN is used for
communication among
computer devices close to
one person (e.g., printers,
fax machines, telephones,
PDAs or scanners)
Local Area Network (LAN)
• Area covered: Up to 500
meters (half a mile); an
office or floor of a building
• Features: LAN connects
personal computers in a
small office, all the
computers in one building,
or all the computers in
several buildings in close
proximity. Common
topologies are: star, ring,
bus, and tree
Campus Area Network
(CAN)
• Area covered: Up to 1,000
metres; a college campus
or corporate facility
• Features: A number of
LANs interconnected within
multiple buildings or a
geographic area (school
campus or military base)
112

internetworking
MAN and WAN networks
Metropolitan Area Network (MAN)
• Area covered: A city or metropolitan area
• Features: MAN is categorised between a LAN
and a WAN
Wide Area Network (WAN)
• Area covered: Transcontinental or global
area
• Features: WAN connects LANs to each other
and offers the means to provide services and
resources in multiple locations – Internet is a
WAN
113

Communication protocols: TCP/IP
TCP/IP is the
worldwide
standard
protocol
TCP part
Handles the movement of
data between computers
Establishes a connection
between the computers,
sequences the transfer of
packets, and
acknowledges the
packets sent
IP part
Responsible for the
delivery of packets
Includes the
disassembling and
reassembling of packets
during transmission
A protocol is a set of rules and procedures governing transmission
of information between two points of a network
114
internetworking

Internetworks
Internetwork
Any interconnection among or between
public, private, commercial, industrial,
or governmental networks
In practice, a network using the IP
protocol
3 variants of
internetworks
“The”
Internet
IntranetExtranet
115
internetworking

• Person to person messaging
• Document sharing
E-mail
• Discussion groups on electronic bulletin boards
Usenet newsgroups
• Interactive conversations
Chatting and instant messages
• Logging on to one computer system and doing work to another
Telnet
• Transferring files from computer to computer
File Transfer Protocol (FTP)
• Retrieving, formatting, and displaying information (including text,
audio, graphics, and video) using hypertext links
World Wide Web (WWW)
Major Internet services
116
internetworking

How Google works
4500 PCs linked together and
connected to the Internet
A PageRank software measures the
“importance“ or popularity of each page by
solving an equation with more than 500 million
variables and 2 billion terms. These are likely
the “best” pages for the query
Results delivered
to user, 10 to a
page
Small text summaries are
prepared for each Web
page
117
internetworking

Internet governance
No one ―owns‖ Internet
Worldwide Internet policies are established by the following organisations
Abbreviation Key:
• BCBS - Basel Committee on
Banking Supervision
• CERN - European Organisation for
Nuclear Research
• COE - Council of Europe et al.
• FATF - Financial Action Task Force
• GEO - Group on Earth Observations
• ICANN - Internet Corporation for
Assigned Names and Numbers
• ICAO - International Civil Aviation
Organisation
• IETF - Internet Engineering Task
Force
• IMF - International Monetary Fund
• ITU - International
Telecommunication Union
• OECD - Organisation for Economic
Cooperation and Development
• UNCITRAL - United Nations
Commission on International Trade
Law
• UNESCO - United Nations
Educational, Scientific and Cultural
Organisation
• W3C - World Wide Web Consortium
• WIPO - World Intellectual Property
Organisation
• WTO - World Trade Organisation118
internetworking

Unique features of Internet
Technology Feature Business Significance
Ubiquity – Internet/Web technology is available
everywhere: at work, at home, and elsewhere by
using mobile devices, anytime
• The market place is extended beyond traditional boundaries and is
removed from a temporal and geographic location
• Shopping can take place anywhere in a marketplace
• Customer convenience is enhanced, shopping cost reduced
Global reach – The technology reaches across
national boundaries, around the earth
• Commerce is enabled across cultural and national boundaries
seamlessly and without modification
• The marketplace includes potentially billions of consumers and
millions of business worldwide
Universal standards – There is one set of
technology standards, namely Internet standards
Ones set of technical media standards exists across the globe
Richness – It is possible to transmit video, audio,
and text messages
Video, audio, and text marketing messages can be integrated into a
single marketing message and consumer experience
Interactivity – The technology woks through
interactions with the user
Business can engage consumers in a dialogue that dynamically adjust
the experience for each individual consumer and makes the consumers
a co-participants in process of delivering goods to market
Information density – The technology reduces
information costs and raises quality
Information processing, information storage, and communication cost
drop dramatically, while currency, accuracy, and timeliness improve
greatly, information becomes plentiful, cheap, and accurate
Personalisation / Customisation – The
technology enables personalised messages to
be delivered to individuals as well as groups
Business can personalise marketing messages and customise products
and services based on individual consumer characteristics and
preferences
internetworking

Intranets in organisations
• It is a computer network that uses the same technology
and protocols as the Internet but is restricted to certain
users
Intranet
• Boots may have an Intranet in their main offices that is
only available to employees of Boots
Example
• Integrate cross-platforms
• Break down the communication barriers
• Reduce information distribution cost
• Immediate information delivery
• Increase internal communication
• Allow minimal learning curve
• Get the customers involved
• Use of Open standards
• Allow Scalability
Benefits of Intranets
120
internetworking

internetworking
Use of Intranets
F
I
R
E
W
A
L
L
Internet
Extranet
Customers,
Suppliers,
and Partners
Everyone
Intranet
Enterprise
Information
Portal
Employees
Communication and
Collaboration
Communicate and
collaborate with e-mail,
discussion forums, chat
and conferencing
Business Operations
and Management
Secure, universal
access to view and use
corporate and external
data
Web Publishing
Author, publish, and
share hypermedia
documents
Intranet Portal
Management
Centrally administer
clients, servers,
security, directory, and
traffic
Existing e-mail, Voice-
mail Systems
Existing Databases and
Enterprise Applications
HTML, MS Office, XML,
Java, and Other
Document Types
Existing Hardware and
Networks
Source: O‘Brien & Marakas Chapter 6 121

internetworking
• It is a private network that uses Internet protocols, network
connectivity, and possibly the public telecommunication system
to securely share part of an organisation's information or
operations with suppliers, vendors, partners, customers or
other businesses
Extranet
• Fewer phone and fax enquiries
• Less mismatching of orders and invoices
• Accurate information on supplier ability
• Reduced risk of supply and delays
• Improved order fill rates
• Reduced inventory levels
• Reduced downtime and overtime
• Lowered procurement/inventory costs
• Improved asset utilisation
Benefits to Buyers
• Faster order-to-cash cycle
• Fewer phone and fax enquiries
• Insight into own performance
• Better capacity utilisation
• Increased inventory turns
• Increased order fill rates
• Increased revenue
• Lowered costs
• Improved asset utilisation
Benefits to Suppliers
Extranets in organisations
122

How an organisation uses the Internet,
Intranets, and Extranets
Source: Turban, et. al. Chapter 1 123
internetworking

124
Discussion: Network Security
Cisco - Security Training Video
(alternative link:
http://www.youtube.com/watch?v=YyvpS44B_YQ&feature=related)
ATT's Anti Social Engineering Training Video
(alternative link: http://www.youtube.com/watch?v=wxALOksX1us)
internetworking

Corporate internetworking infrastructure
125
internetworking

internetworking
Internetworking: management opportunities
and challenges
• Organisations have opportunities to radically reduce the cost of
communicating with their employees, vendors, and customers
• There are many new opportunities to develop new business models based on
the new telecommunications technologies
Management
opportunities
• Loss of management control
• Distributed resources are harder to control
• Employees have independent sources of computing power
• Use of technology for non-business purposes
• Organisational changes must take place as firms embrace new technologies
• Polices for handling data
• Reliability and security
Management
challenges
126

Enterprise IS – Traditional view
127
EnterpriseIS:ERP,CRM,andSCM
Enterprise Resource Planning (ERP) System
Integrate all departments and functions across a company onto a single computer
system that can serve all those different departments‘ particular needs
AFTERERP

ERP high level implementation framework
Gap Resolution
1. Re-engineer process to agree with ERP
2. Use a Bolt-on (3rd party product)
3. Develop enhancement or extension
4. Interface to legacy or mandated system
5. Process not performed within ERP
(current process remains)
Evaluate
against ERP
functionality
Define
Business
Processes /
Assess
Requirements
Testing
Process or step
not supported
with/in ERP
Process
supported with / in
ERP
Blueprint or
Requirements
Realisation or Construction Phase Final Prep
If 1, 2, 3 or 4
Tailor ERP, and / or
interface as required,
to support new
processes
If 5
Interviews,
workshops,
prototypes, &
demos with
Process
Owners and
Stakeholders
Go-Live
Deployment
Iterate through multiple rollouts, if necessary
Continuous Change Management Activities
128

Cost of implementing an ERP
129
Reengineering
43%
Hardware
12%
Software
15%
Training and
Change
Management
15%
Data
Conversions
15%
ERP Costs
SAP
29%
Oracle
Applications
10%The Sage
Group
7%
Microsoft
Dynamics
4%
SSA Global
Technologies
3%
Others
47%
ERP Market Share

E-mail
Web
Telephone
Fax Prospect
or
Customer
Marketing
and
Fulfilment
Customer
Service and
Support
Retention
and Loyalty
Programs
Contact and
Account
Management
Sales
• Cross-sell
• Up-sell
Customer Relationship Management-IS (CRM-IS)
130

Supporting the 3 phases of CRM with IS
Acquire Enhance Retain
Direct
Marketing
Cross-sell
and Up-sell
Proactive
Service
Sales Force
Automation
Customer
Support
Shared Customer Data Collaborative Service
Partner Organisation Customer
The Internet
CRM Phases
(Customer Life
Cycle)
CRM Functional
Solutions
CRM-IS Integrated
Solution
131

132
CRM-IS business integrated solution

CRM-IS Integrated Solution
Ad Hoc Query
Report
On Line Analytical
Processing (OLAP)
Data Mining
Campaign Mgmt
Churn Analysis
Propensity Scoring
Customer
Profitability Analysis
Web
Call Centre
Store
Automated
Teller Machine
(ATM)
E-mail
Direct Mail
Telemarketing
Mobile devices
133
Data
Warehouse
Operational
Store
DATA
CAPTURE
EXECUTE
PLAN
ANALISE
INTERACT
Extract, Transform,
Load Processes
Implement Plans
Analytical Tools Inbound Touchpoints
Analytical Applications Outbound Touchpoints
Analytical CRM Operational CRM
Capture, store extract,
process, interpret, and
report customer data to a
user, who then analyses
them as needed
Customer services, order
management, invoice/billing,
and sales/marketing
automation and management
MARKETING
AUTOMATION
SALES
AUTOMATION
SERVICES
AUTOMATION
Collaborative CRM
Communication, coordination,
and collaboration between
vendors and customers

Causes of failure of CRM IS
134
Organisational
Change
29%
Company Politics /
Inertia
22%
Lack of CRM
Understanding
20%
Poor Planning
12%
Lack of CRM Skills
6%
Budget Problems
4%
Software
Problems
2%
Bad Advise
1%
Other
4%
CRM Failure

The Supply Chain
An organisation‘s Supply Chain is a network of organisations and business
processes for procuring raw materials, transforming into products, and distributing
them to customers
Parts of a Supply Chain
Upstream
It includes the organisation's
suppliers and their suppliers and
the process for managing
relationships with them
Internal Supply Chain
It includes process for transforming
the materials, components, and
services furnished by suppliers into
finished goods and for managing
materials and inventory
Downstream
It consists of the organisations and
process for distributing and
delivering products to the final
customers
135

The Bullwhip effect in SC
• Inaccurate
information can cause
minor fluctuations in
demand for a product
to be amplified as one
moves further back in
the Supply Chain
• Minor fluctuations in
retail sales for a
product can create
excess inventory for
distributors,
manufacturers, and
suppliers

Supply Chain Management (SCM)
SCM attempts to coordinate the business processes to speed
information, product, and fund flows up and down a supply
chain to reduce time, redundant effort, and inventory costs
SCM Main Processes

SCM-IS
The primary goal of all SCM-IS systems is to automate flow
of information between company and supply chain partners
2 types of
SCM-IS
Supply Chain
Planning IS
Generate demand forecasts for a
product (demand planning)
Help develop sourcing and
manufacturing plans for that product
Order Planning
Advanced Scheduling
Demand Planning
Distribution Planning
Transportation Planning
Supply Chain
Execution IS
Track the physical status of goods,
the management of materials,
warehouse and transportation
operations, and financial information
involving all parties
Order Commitments
Final Production
Replenishment
Distribution Management
Reverse Distribution

Advantages of SCM-IS
Business Value of SCM
business
Improved customer service and
responsiveness (product
availability)
Cost reduction (SCM costs
represent 75% of operating
expenses for many firms; reducing
SC costs can have major impact)
Cash utilisation (improved cash
flows)
Effective and efficient SCM-IS
can enable an organisation to
Decrease the power of its buyers
Increase its own supplier power
Increase switching costs to reduce
the threat of substitute products or
services
Create entry barriers thereby
reducing the threat of new entrants
Increase efficiencies while seeking
a competitive advantage through
cost leadership
Internet-based advantages
Provide standard set of tools
Facilitate global supply chains
Reduce costs
Enable efficient customer response
Allow concurrent supply chains

140
The ideal organisation

141
Multimedia case – Manugistics: Enterprise Profit
Optimisation
Important Notice
You need Internet connection and a Web browser. If your web browser does not have
the Flash plug-in installed, you will need the Macromedia Flash Player to view
What business goals can Manugistics help a company meet?
How does Manugistics promise to achieve these goals?
Explain Manugistics's view of supplier relationship management and supply
chain management
Describe Manugistics's view of pricing and revenue optimisation
Summarise the EPO method

142
IS management challenges
Challenges
Growth of
international IS
Organising
international IS
Managing
global systems
Technology
issues &
opportunities
Business Driver
It is an environmental force to which businesses must
respond and that influence a business‘s direction
ManagingInternationalIS

International IS Architecture
143
International IS Architecture
It consists of basic IS required by organisations
to coordinate worldwide trade and other tasks
Technological Platform
Corporate Global Strategies
Organisational Structure
Management & Business Procedures
Global Environment: Business Drivers & Challenges

Types of global strategies & business
organisation
Domestic Exporter
• Centralisation in home country
Multinational
• Central home base
• Decentralised production, sales, marketing in other countries
Franchiser
• Product created, initially produced in home country
• Relies heavily on local workers to produce, market in other countries
Transnational
• Truly Global Firm
• No national headquarters
• Value-added activities managed from global perspective
• Optimises supply & demand, taking advantage of local competitive strengths
144

Types of global IS
• Each unit has
unique system
• Integrated &
coordinated at
all locations
• Copies of home
system used in
foreign locations
• Domestic Home
Base
Centralised Duplicated
DecentralisedNetworked
145

Global business strategy & structure
Function
Strategy
Domestic
Exporter
Multinational Franchiser Transnational
Production Centralised Dispersed Coordinated Coordinated
Finance /
Accounting
Centralised Centralised Centralised Coordinated
Sales /
Marketing
Mixed Dispersed Coordinated Coordinated
Human
Resources
Centralised Centralised Coordinated Coordinated
Strategic
Management
Centralised Centralised Centralised Coordinated

147
Global IS configurations
System
Configuration
Strategy
Domestic
Exporter
Multinational Franchiser Transnational
Centralised
Dominant
Pattern
Duplicated
Dominant
Pattern
Decentralised
Emerging
Pattern
Dominant
Pattern
Emerging
Pattern
Networked
Emerging
Pattern
Dominant
Pattern

Reorganise the business & develop global IS
Reorganise
the
business
Organise
value-adding
activities for
comparative
advantage
Develop &
operate IS at
each level
• National
• Regional
• International
Establish
single world
headquarters
• Have global CIO
148
Developing
Global IS
Agree on
common user
requirements
Induce
procedural
business
changes
Coordinate
applications
development
Coordinate
software
releases
Encourage
local users to
accept
ownership

Strategy: divide, conquer, pacify
Define core
business
processes
Identify
core
systems to
coordinate
centrally
Choose an
approach
•Incremental
•Grand design
•Evolutionary
Make
benefits
clear
149
GLObal loCAL GLOCAL
CIO need to think globally and act locally

150
Video case: Fedex IWAY Testimonial
What role does WebFocus play in FedEx's operations?
What goals does WebFocus help FedEx meet?
Explain the analogy that Joe Namie uses to compare FedEx's information
technology with the technology upon which the company's pilots rely
Describe the scope of the reporting information that is available to FedEx as a
result of WebFocus
What type of global strategy is behing WebFocus?
What type of global strategy and structure is behing WebFocus?

Conclusion: The strategic role of IS
IS can change goals, operations, products, services, and
environment to gain competitive advantage
Cost
Competitiveness
Physical &
Communications
Infrastructure
Innovation &
Entrepreneurship
Management
Capability
Sustainable
Organisation
Essential
Conditions
Competitive
Advantages
151

IS Strategy Lecture Notes

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