FREE online courses on Information Technology - Chapter 5 MANAGING
INFORMATION TECHNOLOGY - Business Models and IT Management
Based on this case and their research, Ives and Jarvenpaa
(1992) suggest that an international firm goes through the following stages in
developing its management of information technology.
Independent
Operations: In the 1960s many multinationals gave considerable autonomy to
foreign subsidiaries, which acquired hardware and software from local vendors.
The applications implemented differed considerably across countries. There was
little interaction with headquarters or the IT staff there. Headquarters might
impose a chart of accounts or financial reporting standards on subsidiaries,
however, these data were rarely transmitted electronically.
Headquarters Driven:
During the 1980s the focus of multinationals turned to efficiency in Information
Technology operations. Headquarters based in the
U.S.
sought to implement worldwide applications on subsidiaries to reduce development
and operating costs. The apparent motivation for this approach was efficiency,
and local subsidiaries did not see much to be gained.
Intellectual Synergy:
This approach to IT returns control to the local subsidiary. Headquarters
tries to use influence to guide the choices of the subsidiaries. The firm might
host worldwide planning conferences. If this model is working, the subsidiaries
should request advice from headquarters. Headquarters tries to coordinate the
subsidiaries to reduce duplicate development efforts and encourage resource
sharing.
Integrated Global IT:
This approach is often adopted because of pressure from global customers.
The firm must provide more consistent customer service internationally. Systems
design requires input from around the world. The firm must standardize its data
and will probably consolidate data centers. Headquarters will specify certain
applications as common systems, such as order entry. There will be limited
customization of these systems to fit a subsidiary.
Ives and Jarvenpaa, based on the APC case study, suggest that
there is a relationship between approach to IT management and the business
models presented earlier. See Table Below:
The multinational firm is expected to favor independent
operations. A great deal of autonomy on information technology decisions is
given to the local subsidiary. The focus of the strategy is on local response.
Table: Business and IT Management Approaches
Business model
IT management approach
Multinational
Independent operations
Global
Headquarters driven
International
Intellectual synergy
Transnational
Integrated global IT
The global business model stresses efficiency. We would
expect to find a headquarters driven technology strategy with this approach to
business. Headquarters will try to coordinate an centralize to reduce
duplication and encourage common systems. An international business model will
probably be combined with an IT strategy of intellectual synergy. Subsidiaries
depend on headquarters for guidance and for new knowledge. Headquarters tries to
influence subsidiary technology policies through planning and sharing
information. The transnational firm is most likely to follow an integrated,
global IT strategy. Headquarters will define core systems that will provide
uniform customer service in a global market. Management of the firm realizes
that information technology is an important element in its strategy.
