Chapter 16

1. Chapter 16 Strategies for Global IS Development (A critical review of a critical analysis) MIS 4/680, Chapter 16

2. Basic Ideas of This Section • Developing global systems is risky • There are solutions, but costly • Managing global development teams is risky • Designing and operating global systems are risky ventures • Certain kinds of systems (ERP mostly) are likely candidates with their own problems MIS 4/680, Chapter 16

3. Basic Ideas of the Chapter • Developing global IS is difficult • Strategies are needed to lower risk (which is significant) • Most of what we have to choose from is modeled on existing development strategies • The basic tensions are core vs. periphery, custom vs. package and internal vs. external. MIS 4/680, Chapter 16

4. Basic Ideas of the Chapter -2 • Selection of strategy depends on four sets of characteristics: • Organizational • System • Core/Periphery match • IS Department What else other than the weather could have an influence anyway? MIS 4/680, Chapter 16

5. Global IS Development Strategies Development with a multinational design team (MDT) Parallel development (PD) Central development (CD) Core vs. local development (CL) Best-in-Firm Software adoption (BIF) Outsourced custom development (OD) Unmodified package software acquisition (UP) Modified package software acquisition (MP)* * -- in practice all acquired packages are modified to some extent MIS 4/680, Chapter 16

6. Why This List? • These eight “strategies” actually overlap significantly and do not include all possible “strategies” • Classification scheme is arbitrary, but useful • Primary tensions affect strategic position of organization • Coherence of team and alignment with co. goals are primary quality and cost factors • In fact, organizations evolve through these strategies over time anyway. MIS 4/680, Chapter 16

7. Later, the core and periphery compromise on services implemented: CL In the early corporate stages, all development is handled centrally: CD Later, elements at the periphery develop their own needs and systems: PD Evolution of Global IT Development Next, the firm either adopts best-in-firm (BIF) or puts together a multinational design team Which is really just another way of exercising core control MIS 4/680, Chapter 16

8. Evolution…ct’d • Central development first; countered by • Peripheral parallel development; compromised by • Core vs. local development; then negotiated through either • Best-in-firm or multinational design team • But solution might best be brokered through an outside outsourcer or by buying modifiable packages MIS 4/680, Chapter 16

9. Global IS Development Strategies See previous list IS Success Schedule, budget, user Categorizing and Selecting GIS Development Strategies Domestic vs. International Team Package vs. Custom Approach Internal customization External customization Org’l Characteristics Attitudes, constraints structure System Characteristics Commonality, size, technology appl’n type, criticality HQ/Subs. Diffs Technical, requmts, culture IS Dept. Char’stics Maturity, staff skills MIS 4/680, Chapter 16

10. Hurricane in South Florida Hurricane will destroy our data center Cost to us if data center is destroyed Risk Assessment Risk = Σ (risk factors) Risk Factor = Probability of harmful event * Probability that event will cause harm * Cost of harm. MIS 4/680, Chapter 16

11. Probability of destructive hurricane in any year=0.5 Probability of our data center being destroyed by hurricane = 0.03 Cost to us if data center is destroyed = $1,000,000 Risk Assessment Risk Factor = Probability of harmful event * Probability that event will cause harm * Cost of harm. Our exposure this year to this particular risk factor is the product of 0.5, 0.03 and $1,000,000, which is $15,000. Hence we should spend up to $15,000 to counter or reduce this risk. Note: These numbers and values are not static and may change abruptly or over time. All estimates are controversial and subject to debate. MIS 4/680, Chapter 16

12. McFarlan’s Risk Analysis • Risk is due to three factors: Size of project, technology gap and project definition stability. • Global projects are all “large” • Global projects are all subject to strong technology strains thus increasing “gap” • Global projects are generally fluid and have multiple parties and interests and are subject to many stresses • Thus global project risk is always “High”. MIS 4/680, Chapter 16

13. So What to Do? Know what might happen and its causes • If Risk is High, we need to counter one or all of the three risk factors: • P(harmful events) – managed via planning • P(harm from harmful events) – managed via toughening, skilling, control • Recovery costs – managed by contingency planning, redundancy, control • McFarlan describes these along two dimensions: integration and formalization Take action to prevent harm from event or failure to react appropriately Have plans in place to repair damage, recover operations MIS 4/680, Chapter 16

14. Solutions (á la McFarlan) • Integration (implicit structure) • Internal: team meetings, professional leadership, mutual familiarity • External: user leadership, user communication and direction • Formalization (explicit structure) • Planning: Formal planning methods • Control: Status reviews, change management, organizational learning MIS 4/680, Chapter 16