Each student will write a short research paper for a peer-reviewed research paper that pertains to the week’s assigned reading. This will be a detailed summary of the research paper and what you gaine

Key Issues for Management By: Blake Ives Cox School of Business Southern Methodist University Daiias, Texas 75275-0333 Sirkka L. Jarvenpaa Graduate School of Business University of Texas at Austin Austin, Texas 78712-1175 Abstract Carefully crafted investments in giobai informa- tion technology offer firms an opportunity to in- crease control and enhance coordination, whiie opening access to new global markets and businesses. But engineering such giobai systems presents numerous challenges to management.

In this article, we relate these challenges as they were described to us by 25 senior managers from Fortune 500 firms responsible for implementing and managing global applicaitons of information technoiogy. Among the findings ofthe interviews are four common approaches for managing global information technology.

Keywords: IS management, worldwide MIS, strategic information systems, global information systems, key MIS issues, international business, multinational company ACM Categories:

H.4.0, K.3.2, K.6.0, K.6.4 Introduction Globalization reveals an imposing future for the managers of many firms.

In numerous industries, globalization has already produced dramatic changes in key markets, major competitors, and products. Many of North American's biggest firms have become relatively sniall players in the new global markets (i.e., "the Global 1000"), with in- dustry leaders increasingly headquartered in Asia or Western Europe {Business Week, 1989). Firms operating in these new world markets will in- creasingly be at a serious strategic disadvantage if they are unable to firmly control their worldwide operations and manage them in a globally co- ordinated manner (Bartlett and Ghoshal, 1989).

Exciting opportunities Investments in information technology (IT) can give firms a basis for increased coordination and control or can provide direct competitive advan- tage in world markets. For example, a large computer vendor uses its worldwide network to ensure that products designed in the U.S. are appropriate for customers throughout the world.

Lawyers for a large oil firm use the firm's worldwide office system to prepare international contracts in a fraction of the time previously required.

In a large merchant bank, a global integrated trading system helps the dealers manager their currency risk and calculate profits, while it also permits the firm to operate in a virtual 24-hour currency market. Moreover, traders con- ducting business through the Australian or Japanese subsidiaries, which are located across the international date line from the U.S., enjoy a full extra business day before they must settle with North American and European trading partners.

As these examples demonstrate, information technology on a global scale compresses time and space and permits the duplication and sharing of scarce corporate expertise. Such capabilities provide firms with an opportunity to leverage advantages in both market size and geographical scope while they simultaneously provide the means to respond rapidly to the unique requirements of national markets.

MiS Quarteriy/March 1991 33 Global Information Technology . . . but difficult challenges Misalignment of information technology with global business strategy can severely hamper a firm's efforts to seek global pre-eminence. For instance, a decentralized financial services firm catering to globetrotting customers found it very difficult to enlist the support of its foreign sub- sidiaries in a worldwide customer database. Sub- sidiary managers were reluctant to endorse an integrated corporate solution for fear that in the short-run it would adversely impact their earnings and in the long-run reduce their autonomy.

Similarly, a manufacturing firm sought to ration- alize production across plants in different coun- tries, but found that systems incompatibilities severly restricted the range of products that could be moved from one factory to another.

Harnessing IT on a global scale presents management with problems that are far more challenging than those encountered in sharing systems across domestic divisions. In fact, it is likely that insights gained in studying IT on an internationai level will provide solutions ap- plicable to large, domestic-distributed IT opera- tions.

Unfortunately, progress in the other direction—the exportation of domestic systems solutions—often proves to be less rewarding.

Cash, et al. (1988) note problems related to language, currency, culture, national infra- structure, availability of IT staff, data export control, and trade unions. Hardware, software, and communications costs and availability also pose major challenges—challenges for w^ich domestic solutions are often inappropriate. For instance, a centralized hardware solution may provide the best economics in the U.S. where communications costs are low. Elsewhere in the world, however, the high costs of telecommunica- tions may favor a decentralized or distributed solution.

Information technology vendors are often poorly prepared to support global information require- ments across national boundaries. For instance, a multinational decentralized petroleum company chose to install a worldwide electronic mail system to better leverage its personnel in 45 countries. Management was disheartened to learn that they would require 14 different versions of the hardware vendors' office productivity system, each tailored to a particular language and each varying in functionality. Regional data centers were required to support multiple ver- sions of the software, and for some Asian coun- tries, there was no appropriate language version available.

Key issues for management This article identifies the key issues that a manager charged with managing global IT ap- plications for U.S. multinational is likely to fact- issues that must be mastered if the firm is to use IT successfully in the new global markets. The primary objective of this article is to provide a rich description fo global IT applications and some tentative generalizations.

The foiiowing definition for an application of global information technology serves as the framework for our discussion of the key issues:

A global Information technology application • contributes to achieving a firm's global business strategy • by using Information technology platforms • to store, transmit, and manipulate data • across cultural environments.

Hence, in this article we identify key issues for the following four elements of global IT: (1) the linkage of global IT to global business strategy, (2) information technology platforms, (3) inter- national data sharing, and (4) cultural environ- ments. Previous work pertaining to applications to global IT and to each element of global IT is first reviewed.

Global Information Technology in the Literature The rapid globalization of business and the in- creased role of IT in shaping corporate strategy indicate that global IT is a topic of considerable importance to information systems practitioners.

Our review of previous work suggests that the information systems research community has generally neglected this important area. Cash, et al.

(1988) call international IT "a major, largely unreported, unstudied IT story" (p. 212). Feeny, et al. (1990) argue that the role of information 34 MIS Quarterly/March 1991 Giobai hformatiort Technoiogy technology in supporting and enabiing the giobai- ization of business has been "understated and certainly under-explored" (p. 36). When inter- nationai topics have been addressed by the in- formation systems research community, it has often been as a replication of American research in a different country. This type of work has focused on countries or cuitures as the primary unit of anaiysis. By contrast, the focus of this article is applications of information technology that transcend national boundaries.

A few case studies consider global IT applica- tions.

These include the development and im- plementation of a worldwide sales management information system at Du Pont's Polymer Products Department (Kneitei, 1980), the strategic use of iT at a paper company with 100 woridwide saies offices, agents, and distribution centers and headquartered in Finiand (Reponen and Copeiand, 1986), and two case studies (Selig, 1982) iiiustrating strategic planning ap- proaches for information resources in a multi- national organization. Keen, et al.

(1982) discuss the implementation hurdles of an integrated bank transaction processing system in 40 worldwide locations.

The literature, however, offers little guidance for choosing between local versus common applica- tions.

Keen, et al. (1982) argue that the more standardized the business process across home and foreign iocations, the larger the fraction of the system will consist of the "common core." The larger the core, and therefore, the smaller the need for local taiioring, the more sense a common global application makes. But, Keen, et al.

(1982) warn that relatively minor differences in iocal markets can mean major requirements for local tailoring. Viewing the issue from a higher ievel.

Reck (1989) concludes that a firm should structure its information systems function to operate in a "mixed mode." Reck recognizes that different suites of applications will support dif- ferent business strategies and wiii therefore require varying degrees of commonality across borders.

Global business strategy Some business strategies are more dependent than others on timely, accurate, and complete in- formation on overseas operations (Egelhoff, 1982). For instance, in the past, home offices typically conceded considerabie autonomy to their foreign businesses (Bartlett, 1986).

Worldwide reporting and information require- ments were minimal under these "country- specific" strategies. As information technology advanced into foreign facilities, it was primariiy used to serve local information needs. It is not surprising then that in 1985, Freeman (1985) found that IT activities were relativeiy de- centralized to company units for most U.S.

multinationals.

More recently, firms have begun to adopt globally integrative stratgies in response to increasingly competitive global markets. Among these pressures are the search for global economies of scale and scope, the development of global products, and the increasing requirement to satisfy the needs of woridwide customers. The consequent increased need for global coordina- tion and control has placed greater demands on information and communication between head- quarters and subsidiaries (Carlyle, 1988). In search of global efficiencies, many firms have started to move away from a geographic focus and toward a business operations orientation.

Carlyle (1988) suggests that these changes in corporate strategy and structure may be precipitating more centralized global IT activities:

one common telecommunications network, shared databases, and standardized reporting and planning systems. But, writing in 1987, Keen was unenthusiastic about the pace of the transi- tion to global information systems. He concluded that, "It is absurd that so many international firms have global business strategies but no corres- ponding strategy for managing information technology internationally" (p.1). Others fear that a poorly crafted IT strategy will limit organiza- tional options. Thompson and Taylor (1988), discussing the organizationai repositioning that will be required when Europe unifies in 1992, warn that, "inflexible minds presiding over in- stalled bases of unconnected applications soft- ware and incomparable data wiii retard the organization's ability to redraw its map of Europe" (p. 6).

IT can propagate new business strategies, but a more common goal is to effectively harness IT to an existing global business strategy. Such alignment requires a shared understanding of the firm's overall global strategy. Various authors MIS Quarteriy/March 1991 35 Global Information Technology have presented models of global business strategy (e.g., Levitt, 1983; Perlmutter, 1969; Rowe, et al., 1986), but usually with little or no attention to information processing requirements.

For example. Porter (1986) positions a firm's global business strategy along a spectrum ranging from multidomestics, whose off-shore operations independently set strategy and handle production, marketing, and administrative func- tions, to global multinationals, who integrate their activities on a worldwide basis to capture the linkages between countries, while still maintain- ing some single-country perspective. Shanks (in Freeman, 1985), Carlyle (1990), and Runyan (1989) all agree that some amount of centralized IS is critical for global multinationals.

The global business strategy models of Bartlett and Ghoshal (1989) are among the most de- veloped because they tie business strategy to a set of organizational forces faced by the firm.

Bartlett and Ghoshal indentify four broad strategies that a multinational firm may pursue.

The firm following a multinational strategy operates Its foreign subsidiaries nearly autonomously or in a loose federation so as to quickly sense and respond to diverse local needs and national opportuntities. The requirement for local reponsiveness is the driving organizational force.

The firm following a global strategy closely coordinates worldwide activities through central control from headquarters so as to capitalize on the economies associated with a standardized product design, global scale-manufacturing, and centralized control of worldwide operations. In this strategy, the firm is organized around a requirement for gloval efficiencies. The firm following an international strategy exploits parent company knowledge through worldwide diffusion and adaptation. Rapid deployment of innovation is the prime operating principle. The firm follow- ing a transnational strategy seeks to retain local flexibility while simultaneously achieving global integration and efficiencies as well as worldwide diffusion of innovations. According to Bartlett and Ghoshal (1989, p. 69), "Dynamic inter- dependence is the basis of a transnational company—one that can think globally and act locally." The transnational model appears to be similar to the global multinational model of Porter (1986) and also resembles the global model of Ohmae (1989). According to Ohmae, the global model prevails today because customer "needs have globalized and the fixed costs of meeting them have soared" (p. 161). Ohmae (1989) cautions that this does not mean that firms should necessarily pursue universal products. He argues that the businesses that are most likely to suc- ceed in global markets are those that can devise a short list of iead-country models—a product tailored to the dominant and distinct markets— and can adapt these lead-country models to local preferences at low cost. Ohmae's lead-country models have implications for IT. The common global systems need to be designed to efficient- ly accommodate local add-ons for local respon- siveness. The add-ons might reflect differences in underlying product or marketing and distribu- tion strategies (e.g., sold direct or through shared or exclusive channels), local resource or legal re- quirements, or the strategic importance of sub- sidiaries to headquarters.

Information technology platforms Keen (1987) contends that "... the telecom- munications architecture is generally the strategic driver for evolving a truly international capabili- ty" (p. 9). He suggests that management fund the backbone global communications network as "a corporate business asset, rather than allow- ing local case-by-case, cost-based decisions about communications facilties" (p. 2). But he warns that the builder of a global communication system must tread carefully when designing the infrastructure or seeking out international stan- dards for IT. For example, Japan, Germany, Brazil, and France have used information policy to protect their national computer and telecom- munciations concerns (Lerner, 1984). To operate in such countries, Wiggin (1987) suggests that senior management "finds friends in the PTTs"— the state-owned post office and telecommunica- tions operators that closely regulate the telecom- munications industry. Buss (1984) suggests that corporate contacts with the PTT "show a cor- porate concern for the issues and a willingness to comply with both the letter and the spirit of the law" (p. 118).

Worldwide variations in hardware and software features, i.e., availability and quality, force firms to use different vendor products in different parts of the world. This causes major obstacles in in- tegrating communication networks, hardware.

36 MIS Quarterly/March 1991 Global Information Technology and disparate systems software for global ap- plications. Vendors' protectionist policies for their products are cited as the major barrier for agree- ments on standards such Open Systems Inter- connection (OSi) (Cash, et ai., 1988). Keen (1987) argues that "the fastest way that standards emerge is through the power of key market players" (p.5). Although vendors are usually con- sidered as key market piayers (Quinn, 1987), there have been other suggestions that ap- propriate iT standards wili only deveiop if the user organizations coordinate their demands and play an active roie in "internationai pressure groups" {Datamation, 1988). in the area of eiectronic data interchange (EDI), standards have been developed jointiy by the United Nations and ANSi.

Harrington (1988) projects that 400,000 companies wiii have implemented internationai EDi standards (EDiFACT) by 1995.

strengthened to the point where it may hamper or even compietely staii a company's important operations" (p. 111). A study conducted in 1985 involving 370 service companies reported that 63 percent considered TDF regulations to be a serious potentiai problem, although only 31 per- cent reported problems at the time (Kane and Ricks, 1988).

Globai appiications present other data manage- ment challenges. Because users of global ap- plications often access the same worldwide database or because data from different foreign iocations are intended to be shared and con- solidated, global systems require well-defined and standard data definitions. In fact. Keen, et ai.

(1982) argue persuasively that commonality in global systems should be established primarily through standardization of data rather than stan- dardization of programs.

International data sharing The international flow of data has received atten- tion both in the iiterature and from various legislative bodies. Much of this has been focused on the issues of data privacy and transborder data flows (TDF). TDFs have been defined as "movements of machine-readable data for pro- cessing, storage, or retrieval across nationai boundaries" (Chandran, et al., 1987, p. 75), and have been ciassified by Lerner (1984) into four types:

(1) operationai data inciuding orders, accounting statements and records, or manage- ment directives, (2) personally identifiabie data that pertain to credit records, travel reservations, or employment records, (3) eiectronic transfers of money, and (4) technical and scientific data that inciude instructions for operating machinery in a plant. TDF iaws usually concern the second category, aithough many countries aiso restrict transfer of technical and scientific data (Smith and Heaiy, 1987).

TDF laws originated in the 1970s from concerns about the integrity and confidentiality of personai data.

Since then, severai countries have ex- tended privacy laws to protect "legai persons" such as associations and corporations. As of 1988, 24 nations had privacy legislation on transborder data flows (McCrohan and Lowe, 1988).

The impact of these laws was predicted to be devastating for U;S. multinationals. Buss (1984) argued that "legislation is now being Cultural environment Finaiiy, giobal applications of information technology must be developed for and operate in a heterogeneous cuitural environment. Levitt (1983) proposes that consumers have become alike in aii parts of the world through the homogenization of needs and desires. This homogenization has resuited from the "pro- ietarianization of communication and travel" (p.

83).

It suggests that cuiturai differences across internationai user communities may, to some extent at least, be converging.

Nonetheless, cross-cultural IT research has found major cultural disparities that warrant attention in developing global IT applications.

Dagweil and Weber (1983) conclude that Australian and Swedish systems designers favor a Theory Y orientation in assessing user needs, whereas U.S. and U.K. designers iean instead toward a Theory X view of users. Kumar and Bj0rn-Andersen (1990) found similiar differences in values across Canadian and Danish systems designers. Couger and Motiwalla (1985) found major demographic differences between U.S.

and Singaporean iS professionals; Singaporean IS professionais were younger, less experienced, and better educated than their U.S. counterparts.

Research on group decision support systems has also detected that the assumptions underlying specific information technology features are culture sensitive (Ho, et al., 1989).

MIS Quarterly/March 1991 37 Global Information Technology Global Information Technology in Practice Our exploratory study sought to identify the key problems and opportuntities facing managers responsbile for developing global applications of information technology. These were assessed in terms of (1) the linkage to business strategy, (2) Information technology platforms, (3) international data sharing, and (4) cultural environments. We interviewed 25 senior managers responsbile for the implementation of global applications of in- formation technology in Fortune 500 industrial and service firms. The managers were drawn from 19 organizations that represented a variety of industries including petroleum, computers and electronics, chemicals, motor vehicles, financial services, and management consulting services (see Table 1). The firms in the sample were not randomly chosen. Selections were based on our ability to gain access to a firm's senior manage- ment; many of the firms were associated either with the information systems programs at the University of Texas or Southern Methodist University.

The typical interviewee was either a project spon- sor from the user organization or the individual responsible for project delivery. In seven cases, he or she was either the head of information systems or responsible for a particular suite of applications—e.g., director of worldwide manufacturing systems. Other typicai titles in- cluded:

vice-president for systems deveiopment, senior partner (of a large consulting firm), manager of corporate office automation and in- formation services, coordinator of telecom- munications planning, and so on.

The applications discussed ranged from the worldwide spare parts network of a computer vendor, a global risk management system of a financial services firm, a reservation system of an airline, a worldwide manufacturing planning and control system implemented by a manufac- turer, to the corporate-wide general ledger systems of a petroleum firm and a computer com- pany. Most applications had been completed within the previous two years, though some were still being implemented. All involved at least two countries in addition to corporate headquarters— many spanned several continents including a petroleum application implemented in over 50 countries. Among the applications, some were running on a mainframe at headquarters, some were duplicated for use at multipie regional data Company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Table Industry Computers/electronics Financial services Petroleum Petroleum Petroieum Manufacturing Computers/electronics Transportation Computers/electronics Financiai services Management consulting Chemicais Consumer goods Chemicals Manufacturing Banking Manufacturing Petroleum Freight forwarder 1.

Companies 1988 Revenues in Billions >$25 $11-25 >$25 >$25 >$25 >$25 $1-10 $1-10 $1-10 $1-10 — $1-10 $25-50 $1-10 $1-10 $1-10 $1-10 $11-25 <$1 n the Study % Revenue from Overseas >50% 11-25% >50% >50% 26-50% >50% 11-50% 11-50% >50% 25-50% — <10% <10% 25-50% 25-50% 11-25% >50% 11-25% — Countries Operating in (plants or sales offices) >50 11.25 >50 >50 >50 26-50 11-25 11-25 26-50 11-25 150 offices worldwide <10 26-50 11-25 11-25 11-25 <10 11-25 26-50 38 MIS Quarterly/March 1991 Global Information Technology centers, and some standalone systems were housed on local PCs or mainframes. Others were housed on different-sized hardware, ranging from PCs to mainframes, depending on the business need within the foreign subisidiary. There were applications developed outside the U.S. and subsequently implemented in the U.S. Others had been exported from the U.S., then severely modified by foreign subsidiaries, in this ex- ploratory study, we sought variety in the applica- tion set, industry, and international settings to ensure that we were thoroughly exposed to the phenomenon of global information technoiogy.

Key Issues for Global IT Management In this section the interview resuits for the four elements of global IT applications are reported.

The key issues detailed at the end of each subsection summarize the main management concerns expressed in the interviews.

Linking global applications to corporate strategy The search for systems economies was the intitial driving force for global IT applications in many firms.

One interviewee recalled being told by the CEO, "We have invested so damn much money in these home office systems—iet's get some additional use out of them." Based on their hard won experience, however, the interviewees were nearly unanimous in endorsing the need for a compelling business reason to coordinate and standardize information technology. Many inter- viewees agreed that they had initially eri-ed by assuming application requirements were similar, when the underlying business processes were later revealed to be different in sometimes subtle but significant ways.

For instance, an engineering firm wished to use a common engineering data- base to share project work between its U.S. and European offices. In addition to anticipated variations in engineering codes and the relative costs of materials, management soon discovered that the European project requirements de- manded far more detailed specifications for con- tractors than had traditionally been required of their U.S. counterparts.

Our interviewees offered a range of business drivers for their global applications. Some of these drivers were strongly linked to the needs of the marketplace—e.g., a global customer or a constrained resource—whereas others were driven by regulatory requirements. Many still mentioned the search for system economies as a driver for global applications. Table 2 sum- marizes the global business drivers for the ap- plications discussed.

Except for the economies of scale for systems, similar drivers were often mentioned by respondents in the same industry. Hence, it ap- peared that at least some of the business drivers for global IT are related to an industry in which the firm competes, although others vary by a firm, or even by a strategic business unit.

Aithough the interviewees were typically able to readily identify the business drivers, particuiarly the industry-based drivers, for the giobai applica- tion under discussion, few were able to state the firm's overall approach or strategy for managing global information technology. Consequently, from the discussions on applications of IT and from the interviewees' comments on their firm's global business strategy, we attempted to infer the emerging patterns of managing IT in the respondent fimis. Four generic patterns emerged that seemed to be aligned with the four business strategies proposed by Bartlett and Ghoshal (1989). These four strategies, discussed previously, were multinational, global, interna- tional, and transnational.

Approaches for managing global IT Independent Global IT Operations For a few firms in our sampie, subsidiaries con- tinued to pursue independent system initiatives, often mirroring a relatively independent multi- national strategy. Common systems were few and iargely exceptions in these firms. Technology choices reflected the infiuence of iocal hardware and software vendors as weli as the prevaiiing national communication standards and offerings.

For these firms, headquarter's systems per- sonnel rarely traveled abroad on business and had little knowledge or interest in their sub- sidiaries' system initiatives. Locai profit and loss responsibiiity, coupled with reiiance on local MIS Quarterly/March 1991 39 Global Information Technology Tabie 2. Business Drivers for Globai iT 1.

Globai consumer/ customer 2.

Giobai product 3. Rationaiized operations 4. Flexible operations 5. Joint resource 6. Duplicate facilities 7. Scarce resources 8. Risi( reduction 9.

Legai requirements 10.

Economies of scaie for systems Firms that serve traveling customers—airlines, hotels, rental car, and credit card companies—find it necessary to have worldwide customer databases. A similar requirement is increasingly being imposed by corporate customers with global operations that more and more are demanding integrated worldwide services.

The product is either the same throughout the worid (e.g..

Coca Cola) or is assembied from subsidiaries throughout the worid (e.g., security, currency exchange, or real estate). Information systems can provide the abiiity to manage woridwide marketing programs.

Different subsidiaries buiid different parts of the same product based on availability of skills, raw materials, or favorable business climate.

For exampie, a computer manufacturer might buiid software in the U.K., monitors in South Korea, and circuit boards on the West Coast of the U.S. IT is used to coordinate the operations.

Operations are moved from a piant in one country to a plant in another.

For instance, a computer vendor moves production of personai computers between plants in response to labor strife or raw materiai shortages. Common systems exist across plants, which facilitates the move.

National subsidiaries may share certain facilities or people. For in- stance, the European subsidiaries for a petroleum company jointly own tankers or storage tanks. A material resource system is implemented to track the location of joint resource.

A chemicai company uses nearly identicai piants to produce gases in different countries. Software supporting that production facility can be readily shared.

A chemicai firm requires that high-cost gas compressors be available in case of breakdowns in its identical worldwide plants. High costs prohibit storing them at each faciiity. A parts logistics system coordinates the compressor's use and distribution.

Risks associated with currency conversions, multiple global markets, and multiple traders are alleviated. For instance, a petroleum com- pany develops a global system for bidding on crude oil contracts, or a multinational bank implements a global risk management system for currency trading.

information requirements mandated by laws in one or more countries are consolidated. For instance, financiai or environmental regulations imposed on a subsidiary may necessitate corporate-wide information requirements if the subsidiary intends to sell or use products manufac- tured elsewhere.

One corporate-wide system is used to reduce data center require- ments, duplicate deveiopment activities, and maintenance resources.

40 MIS Quarterly/March 1991 Global Information Technology information systems departments and local technology, resulted in non-integrated technology platforms, databases, and applications. This lack of integration appeared at times to severely impede efforts to implement global business strategies. For instance, a computer vendor who had neither a global ordering or billing system had a difficuit time meeting the needs of a headquarters-based client who sought to design a worldwide system in New York for subsequent implementation in 50 country facilities, with payments to be made from regional offices iocated in London, Tokyo, Rio, and New York.

The independent giobai iT operations best sup- ports the multinationai strategy of Bartlett and Ghoshal.

The focus is ciearly on local respon- siveness, and the applications portfolio is strongly oriented toward iocai requirements.

Headquarters-Driven Global IT A number of firms have imposed corporate-wide iT solutions on subsidiaries, at least for some applications. For many firms the headquarters- driven approach was not oniy desirable but required.

These are Bartiett and Ghoshal's (1989) global firms that strive for woridwide efficiencies, usuaiiy in support of global products. Here the compelling business need and the opportunity to harvest worldwide economies of scaie force the firm toward a giobal systems solution. For in- stance, large semiconductor manufacturers with giobal customers and products, rationalized pro- duction, and stiff international competition have little choice but to seek globai efficiencies. Cen- tralized IT may provide some efficiencies of its own, but, more importantiy, it provides the coor- dination and controi necessary for efficient opera- tions throughout the firm.

Headquarters-driven global IT appeared to run into problems without a strong global business need.

Efforts resulted in overt or covert resistance to the "ugly American" who suddenly appeared at the subsidiary's data center. This was often a frustrating period for a U.S. systems manager assigned overseas. One interviewee assigned to the U.K. confessed to us that "after a year I had finaiiy iearned enough to be useful and not to be bluffed—then I was recalled to the States." For some firms, appiications brought over from the U.S. were successfuiiy impiemented, but many died later from neglect or unmaintainability after the U.S. emissary departed. In other firms, this approach had ended with a recognition that "their business really is different from ours," foiiowed by a hasty retreat to independent giobal IT opera- tions.

For these firms, the only benefit was unplanned—organizationai learning emerging from face-to-face contacts between the sub- sidiaries' and headquarters' systems people and their major users.

Intellectual Cooperation in Global IT For some of the firms in our sample, strong links existed between the home office and foreign sub- sidiaries, but the linkages were those of coop- eration and mutual assistance rather than management fiat, in these organizations, head- quarters personnel attempted to influence rather than control the information technoiogy choices of their foreign subsidiaries. Personnei were ex- changed regularly, and joint appiication develop- ment efforts were initiated. If headquarters had already developed an application that the sub- sidiary now required, the subsidiary might ask for a copy to modify. Alternatively, they might choose to send a group to the U.S. to study the applica- tion thoroughly before developing their own version.

One interviewee described the objective that he and his European IT director shared as an attempt to develop "inteiiectual synergy" be- tween their two groups. This approach to manag- ing iT seems to fit well with Bartlett and Ghoshal's (1989) international siraXegy.

The objective in this case is to rapidly disseminate corporate innova- tion while continuing to provide the flexibility re- quired to be responsive to local business entitites.

Integrated Global IT Barttett and Ghoshal (1989) have proposed that a transnational strategy will supersede the muitinational, internationai, and global strategies currently pursued by different firms. According to Bartlett and Ghoshal, firms wiii seek this transnational status to permit them to simultaneously be globally efficient, provide iocal responsiveness, and quickly diffuse organiza- tionai innovation. The companies in the study had yet to reach the truiy transnational status. Feeny, et al. (1990) have proposed that firms pursuing a transnational strategy wiii require appiications of information technoiogy that reach across national borders to meet the firm's diverse ob- jectives. Here systems soiutions would be in- tegrated using international standards and a MIS Quarterly/March 1991 41 Global Information Technology planned common architecture that will meet the needs of various-sized organizational units operating in diverse environments. Muitinational development teams would ensure that organiza- tion-wide IT solutions also meet the needs of local business units with applications moduies divided into common and locally taiiored code. Global database design teams would ascertain the data entities that wouid be shared across the woridwide organization and deveiop universal data dictionaries and appropriate databases. In- novation in this case would be a two-way street, with headquarters benefiting from the knowledge of subsidiaries. Several of the firms we talked with, who had previousiy based their IT strategy on intellectual cooperation or headquarters- driven global IT, had recently recognized the necessity of moving toward the cooperative development of globally integrated appiications.

Table 3 lists the key issues resuiting from the interviews reiated to the iinkage between IT strategy and business strategy. If no deliberate global IT strategy is deemed necessary or viabie at present, management may wish to assess how important such a linkage might become in the future and how to best prepare for that eventuality.

Table 3. Liniclng IT and Business Strategy:

Key Issues • Understand each business unit's global business strategy.

• Determine the appropriate giobal IT management approach or IT strategy to align with the global business strategy.

• Identify the fundamentai objective or objectives driving the giobal IT strategy and global IT appiications.

• Classify and prioritize applications based on their contributions to giobai business strategy.

• Assign responsibiiity for deveioping and implementing the global IT strategy.

• Assist senior management to under- stand the potential impacts of global IT on corporate strategy.

Information technology platforms Data center consolidation, location operations, vendor relations, and software availability were commonly mentioned concerns related to IT in- frastructure. The interviewees infrequentiy discussed data networks and telecommunica- tions as either barriers, if they had faiien behind their competitors, or competitive advantages, if they perceived themseives as leaders.

In many firms, additional data centers were located outside the U.S. These centers were used to meet nationai or regional needs and sometimes to baiance international workloads via sateilite communications. According to our inter- viewees, establishing locations for internationai data centers presents several challenges:

overlapping working hours; local computing and iabor regulations; potentiai theft; sabotage and terrorism; unreliable power sources; avaiiability of completeiy redundant network backup capabiiity; and the iike.

Our interviewees complained that equipping a local data center can be problematic because of high prices for iocai hardware, the iack of local service for products, the absence of an author- ized distributor, and iong lead times in acquiring both equipment and spare parts. Interviewees complained that in Japan, for instance, iocai distributors hold monopoly positions and charge rates nearly double the price of comparable products purchased in the U.S. Economic and technical barriers set by national governments in- ciude higher prices for computing equipment and communication lines, restrictions on the impor- tation of equipment and services, and rigid hard- ware and software standards. Severe import limitations on assembled hardware in countries such as Brazii forced one firm to enter the com- puter assembly business to outfit their foreign subsidiaries. Even in countries with open trade poiicies, new hardware modeis or software ver- sions may take a year or two to be released to the market because the vendor may not have the resources available to quickly adapt the product, documentation, and support to local conditions.

To support languages such as Japanese requires that a single character from the language be stored in two, rather than the customary one, bytes of computer storage, often necessitating 42 MIS Quarterly/March 1991 Global Information Technology vendors to make costly and time-consuming modifications to software packages.

According to our interviewees, purchased soft- ware packages present unique problems in an international setting. Packages designed to run in Europe may be incompatible with their American or Asian counterparts, even when purchased from the hardware vendor. Packages from software houses are even less universally available than those from hardware vendors— no matter how well known in the U.S. Software houses often rely on licensing agreements with local personnel to handle the sales, distribution, and support of their product. In some countries, local disregard of copyright restrictions has caused vendors to completely ignore or retreat from a particular market. As a consequence, severai firms have restricted package choices to those provided and supported by their hardware vendor. Others buy PC packages in the U.S. and distribute them to their subsidiaries. Firms deal- ing in developing countries face even more challenging problems. A firm with operations in China first selected a hardware platform that they could legally import into the country and then searched for applications that potentially might be of some use to their Chinese business.

Table 4 lists the key issues related to technoiogical infrastructure.

Data In 1988, McCrohan and Lowe (1988) predicted increasing regulation of transborder data flows (TDF), claiming that "the control of transborder data flows will be the trade war of the 199O's" (p.

8). Our interviewees tell us that McCrohan and Lowe's war was never fought. One manager claimed that "transborder data flow is a myth." Another said that "TDF looked very exciting in the 70s, but proved to be a non-event in the 80s." One expert expiained that many transtx>rder data laws are vague and therefore difficuit to follow and to enforce. He explained his policy for deal- ing with the regulators: "The officials charged with enforcement are often as confused about these complex laws as we are and they are not anxious to spend much time interpreting them.

We don't ask their permission. Instead, we tell them what we intend to do and ask them to let us know if there are any problems." Table 4. Information Technology Platforms: Key Issues • Determine the number and locations of regional data centers.

• Ensure 24-hour system avaiiability and support for global applications operating from global data centers.

• Select vendors who can provide support in dispersed iocations.

• Select hardware and software appro- priate for shared data or processing re- quirements.

• Expect delays and incompatibilities from vendors operating outside their own home markets.

• Anticipate a reduced set of hardware and software alternatives.

• identify reiiable local IT distributors and service providers.

Two application categories seemed most vulnerable to TDF or privacy iegislation. The first is payroll systems, which generaiiy do not lend themselves to global use. The second is personnei-record systems. Typcially, the firm must commit to providing the same level of security and access to personnei data stored abroad as is required by privacy iegisiation iocally. Although our IT experts acknowledged the difficulty of transporting personal data from some countries in Europe to the U.S. or from Canada to the U.S., some questioned whether "we even really need it [personai data] in the U.S." Few companies expressed need for a skiils inventory system that spans nationai boundaries.

However, as corporations continue to institute truly transnationai corporate strategies, the need for worldwide personnei systems—at least for senior managers and professionals—is likely to surface.

Although transborder data laws and regulations were not perceived to be a major obstacie to globai iT, worldwide data management and data standardization within the firms were perceived to present significant barriers for internationai data sharing. Defining common data names presents unique problems when multiple languages are used. But, even within countries MIS Quarterly/March 1991 43 Global Information Technology sharing a language, the same word or phrase may take on quite different meanings. Differing nationai standards, rules of thumb, or differences in technology platforms also present problems when, for instance, common part codes are desirable. Data modeling presents further challenges as real world entities and relationships among data entities, as weli as day-to-day plant and field operations, vary from country to country.

According to one executive, "People suddenly just forgot how to speak English" when con- fronted with standards that threatened cherished local operating procedures.

To find an organizational body within the firm that is willing to lead the standardization effort may be difficuit. A major manufacturer of farm equip- ment, for example, installed a worldwide manufacturing system in its piants. The corporate finance group was responsible for developing common standards for general ledger accounts, but nobody was willing to take action to stan- dardize part numbers. Finaiiy, the project manager from the corporate IT group developed a new standard coding scheme for parts. Locai personnei complained, but not enough to catch the ear of top management. The project manager commented: "The systems group became a cataiyst for changes that should have been done long before." The key issues related to international data that were uncovered in the interviews are iisted in Table 5.

Cultural environment "Not Invented Here" and "Unsuitable for Our En- vironment" were commoniy identified barriers that severeiy hampered attempts to standardize on a global or regional application. Several in- terviewees acknowiedged that these concerns had been well founded in the past. We found some signs of them still.

One respondent, for in- stance, was disappointed when system users in his Japanese subsidiary balked at data fieids con- taining dollar signs ($) as substitutes for the yen sign (¥). Nevertheless, the Japanese were recognized as being more accepting of "parachuted" solutions than the Europeans. Ac- cording to severai interviewees, the Japanese, once convinced that an application met their needs, were quick to embrace it. Severai firms interviewed had chosen to distribute deveiop- Table 5. Internationai Data Sharing:

Key Issues • Weigh the desirability of transborder sharing and standardizing against the requirements for local fiexibiiity.

• Understand your responsibilities, limita- tions, and exposures vis-a-vis TDF and privacy laws.

• Assign responsibility for data standard- ization.

• Involve subsidiary users and IT groups in the standardization of common data names and data modeling activities.

• Design and deveiop a giobai data ar- chitecture around giobai business ob- jectives.

• Physically locate databases based on business requirements, legal considera- tions, relative costs, vendor support, organizational politics, etc.

ment between the U.S. and European sub- sidiaries to neutralize subsidiary resistance to an imposed outside solution. This appeared to pro- vide some short-run advantages, but in the long run reduce opportunities for full integration.

Variations in work vaiues were perceived across cultures, some no doubt stereotypic. One inter- viewee ciaimed that employees in one European subsidiary were half as productive as their American counterparts (they were also paid ap- proximateiy haif as much). In another country, where skilled jobs werre at a premium, workers were seen as highly protective of their personal knowledge. The interviewee had found that employees there were generally unwiiiing to share knowledge with others and considerably overstated their own proficiency. Another inter- viewee had been delighted to discover that aithough Japanese systems personnei were in short supply, women were more readily available than men. After the interviewee encouraged her Japanese systems manager to hire severai women, she was later chagrined to discover that he had "turned them into tea ladies." Religion is often another important factor. Prayer breaks and iong holidays must be accommodated. Ob- viously, the cultural stereotyping goes both ways; 44 MIS Quarterly/March 1991 Global Information Technology managers from the European subsidiary of a U.S.

firm described their American counterparts as "indined to do something fast, but likeiy to have to iater sow the seeds of the storm they pianted." The firms' subsidiaries aiso varied in systems si

Severai interviewees noted that the French were skiiied in data modeiing and in the more theoreticai aspects of systems deveiopment.

Other interviewees reported the English to be weii trained in the use of structured deveiopment methodoiogies, whiie the Germans were seen as exceiient project managers. Singaporeans were described by one interviewee as extremeiy hard working, skiiied, and wiiiing to take on any task assigned.

Another manager described them as the consultants of Asia. Austraiia, on the other hand, was seen as iacking in systems skiiis.

Where such observations reflect reai rather than perceived cross-cuitural differences, there may be opportuntities for creatively aiiocating systems work or for fostering organizationai learning across subsidiaries.

The key issues reiated to cultural environment are summarized in Table 6.

Table 6. Cultural Environment: Key Issues • Identify critical systems applications or skiiis competencies (or weaknesses) possessed by foreign subsidiaries.

• Provide opportuntities for giobal organizational learning reiated to these areas of unique competency.

• Recognize the sensitivity of foreign sub- sidiaries to imposed solutions and seek mutually acceptable alternatives.

• Seek new ways to sensitize managers sent abroad (or brought to the U.S.) to cultural, religious, and political differences.

Developing Global Applications of Information Technology Some of the cultural, infrastructure, and data issues that can impede the successfui employ- ment of global information systems were de- scribed above. The importance of tightiy iinking information technology to the firm's giobai business strategy was also highiighted. Next, some additionai, but more specific, issues ex- pressed by the inten/iewees about the develop- ment and maintenance of individual global applications are described. A few generic ap- proaches used to overcome these specific deveiopment-related issues are aiso presented.

The most commoniy mentioned chailenges in the deveiopment of global applications were the determination of giobai versus iocal requirements and the maintenance of high levels of local user involvement and ownership. One interviewee estimated that it takes five to 10 times more time to reach an understanding and agreement on system requirements and deliverabies when the users and developers are in different countries.

This is partialiy explained by travel requirements and language and cuiturai differences, but technical iimitations aiso contribute to the probiem.

In many developing countries, outdated or unreliable communications systems can restrict or totally preclude regular phone calls, fax transmissions, or dial-up computer connections.

One interviewee, who faced a 12-hour time dif- ference in reaching some subsidiaries, claimed that it typically took neariy an hour to establish a phone iink and that the iine wouid often go dead during the caii.

Ongoing maintenance of a functioning appiica- tion presented problems for many respondents.

Our interviews suggested that giobal systems face simiiar, but usuaiiy more extreme, maintenance probiems than do distributed domestic systems.

If the global system is run from one centraiized data center serving different markets, time-zone differences pose probiems for preventive and file maintenance. An interruption during a third shift in New York City wiii present midday service interruptions in Tokyo. One respondent recaiied a decision he had made earlier in his career that eventuaiiy came back to haunt him. "For various reasons we had designed the system so that it had to be down for one day each year. I had chosen the Fourth of July [U.S. Independence Day] because everyone would be on vacation that day." If the global system is to be run on muitiple host computers, a decision must be made whether to MIS Quarterly/March 1991 45 Global Information Technology deveiop a single system reflecting aii the varia- tions required for its target countries or to develop multipie sets of code, each taiiored to a particular environment. The first option ensures a more consistent evolution of the system, but may cause performance degradation and siow response to iocal maintenance requests. Even within one single system, if run from multiple data centers, there tends to be an evolution to multiple locai systems. "Without strong central supervision in maintenance," one of our interviewees argued, "there is a naturai affinity for iocal solutions, no matter how similar the business." The interviews surfaced three approaches for overcoming problems in developing and im- plementing global systems. The most common approach is to transform the home office or "best in firm" appiication into a global system. Some respondents reported better success in bringing a European system to the U.S. than the other way around, because the European systems were already designed to deal with multiple languages and currency conversions. Having indentified the system, it is then modified to meet worldwide requirements. A smaiier version of the system may be created for developing countries where both the required functionaiity and technological resources are modest. Almost without exception, the worldwide roll-out of the application has been gradual.

Typically, the system is first modified to meet the requirements of the European sub- sidiaries. Later, the requirements of the Far Eastern operations might be added, followed by the requirements from South American sub- sidiaries, and so on.

A second development approach requires assembly of a multinationai design team.

Systems and user personnel from headquarters and from local subsidiaries are posted to one design location, often for months at a time. Costs for this approach were reported as high. One respondent noted that the costs to maintain a U.S. systems manager in Japan are approx- imately 2.5 times greater than the U.S. fuiiy costed rated. Some countries restrict the number of foreign personnel assigned to a firm's local office, and the procedures to gain approvai for staff can be time-consuming. Deveiopment out- side the U.S. need not always be expensive, however. For instance, one firm reported that a U.S.-based software engineer costs three times as much as an indian with simiiar qualifications.

Whatever their costs, muitinational design teams ensure that appropriate decisions are made con- cerning allocations of system functionality to common versus local code, adherence to inter- national standards, and, over time, the develop- ment of common tools. The approach also develops personal networks across borders and exposes the home office personnei to the en- vironment of foreign operations (and vice versa).

Parailel development is the third approach. Here, the project is broken into components, with each component developed by a different home office or subsidiary development team. One firm in- ciuded in the study was using this approach with a system cun-ently in the requirements stage. The iocation of particular development sites was seiected based on the availability of appropriate expertise and resources. The home office was scheduled to develop one significant module of the global system, whiie a European systems group was scheduled to develop a second. Each was expected to assist the other with require- ments determination. The respondent hoped that common development methodologies, shared software engineering toois, eiectronic maii, and consistent definitions of data would ensure close coordination and consistency in the resuiting application.

Few of the firms had considered a common methodology for systems development projects to facilitate cooperation in giobai projects, and there was iittie activity in impiementing common automated development tools across sub- sidiaries. Interestingiy, severai of the manufac- turers we interviewed already used common, automated design tools within their product or process engineering groups in different countries, but shared software deveiopment toois appear to lag far behind their engineering equivaients.

In summary, management must realize that giobal applications are expensive and difficult to develop and operate. Even when a home office system is transformed into a global system, designers must fuliy understand the simiiarities and differences in the underlying business pro- cesses across countries. The applications must also often be designed with 24-hour, seven-day- a-week support and operational requirements in mind.

Maintenance must be ciosely orchestrated for duplicated systems. To aiiow development in centers in different parts of the world, common 46 MIS Quarterly/March 1991 Global Information Technology development approaches, tools, and method- ologies must be agreed upon. But perhaps of most critical importance is the need to align the global appiications and application approaches with giobal business objectives.

multiple diverse business units, it is likely that one would find a diversity of both global business strategies and corresponding IT management approaches.

Future Research Directions The purpose of this study was to outline some of the key management issues in global infor- mation technology and broadly examine the phenomenon of giobal IT through semi-structured interviews with a relatively smail number of senior managers. This broad brush approach is ap- propriate given both the complexity of the area and the lack of previous literature. Future re- searchers may find it advantageous to focus on some of the specific "key management issues" identified here.

We have several practicai recommendations for conducting giobai iT research. First, we en- courage researchers to be creative and oppor- tunistic in studying some of the naturaiiy occurring experiments such as Europe 1992 or the opening up of Eastern Europe. "Living" with a muitinationai deveiopment team for a few months provides another fascinating naturai laboratory for studying project management and team management issues in a giobal area.

Moreover, voice maii, electronic mail, and fax messages so common in these international in- terchanges provide artifacts of considerabie potentiai value to the interested researcher. Finai- iy, researchers shouid invoive schoiars located throughout the world in their projects to reduce the costs of research whiie fostering giobal learning.

Our own globai messaging systems give us the infrastructure for coordinating giobal efforts, whiie providing us with experience par- ticipating in and managing our own giobal enterprise.

There are also iimitations of this research that may suggest additionai opportunities for future investigators. Our sampie size was smaii (only U.S.-based), and selected partiaily on the basis of convenience. Our conversations with the inter- viewees, though far ranging, were reiatively short and were biased by the interviewees' current con- cerns and fauity memories. Our starting point was business appiications rather than either the cor- poration or a specific business unit within that corporation. For a iarge, multinationai firm with Conclusion By the year 2000, firms with woridwide operations will use advances in communications and com- puter technoiogy to ieverage their distinctive com- petencies. This may mean providing multinationai customers with a singular woridwide identity or being abie to quickiy adapt products to the re- quirements of different cultures and nationaiities.

It may mean being able to shift production schedules from one country to another or pro- ducing iead-country products with common com- ponents and toois. Impiementing any of these strategies will require a major upheaval for existing IT applications and architectures—most of which were initially designed to support singie geographic markets and homogeneous hardware environments. These new business needs wiii require software and documentation that can be quickly enabled for particuiar nationai ianguages so that products available in one part of the world are nearly simultaneously made available throughout the worid. Top management will demand instant access to meaningful data from around the world. Engineers of global products wiii require giobal information on legal re- quirements, professional codes, product per- formance, and customer needs. These new strategies wiii require us to leverage scarce inteiiectual resources on a woridwide basis using knowledge systems, databases, and various communication systems.

In the future, many giobal applications will be inter- organizational. Multinational firms will require immediate access to information systems residing in the computer systems of nationai customs departments, freight forwarders and consoiidators, brokers, carriers, bankers, and insurers as well as their customers, suppliers, and channel partners. Participation in such net- works will require firms to have carefully integrated their own internal processing systems using inter- nationally recognized standards. Firms who fail to build those global and interorganizationai in- formation bridges wiii be increasingiy at a com- petitive disadvantage.

MIS Quarterly/March 1991 47 Global Information Technology Acknowledgements We want to thank Peat Marwick Main Founda- tion for financial assistance on this project. We are aiso gratefui to Siddik Badruddin for his able research assistance and Michael Vitale for com- ments on a previous draft.

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About the Authors Blake Ives is the Constantin Distinguished Professor of Management Information Systems at the Cox Schooi of Business at Southern Methodist University. Professor Ives has been a distinguished feiiow at the Oxford Institute for In- formation Management at Templeton College, Oxford, and a Marvin Bower Faculty Feiiow at the Harvard Business Schooi. He is currently an honorary research associate at Victoria Univer- sity of Weilington, New Zealand, and an associate feiiow at Templeton College. He receiv- ed his Ph.D. in management information systems from the University of Minnesota. He is a frequent contribtor to MIS Quarterly and has pubiished In numerous management and information systems journals; he aiso serves oh several editoriai boards. Professor Ives' recent research focuses on customer service, the competitive use of information technoiogy, globai information systems, and the roie of the senior information systems executive.

Sirkka L. Jarvenpaa is associate professor of information systems at the University of Texas at Austin.

She received her Ph.D. in management information systems from the University of Minnesota in 1986. Dr. Jarvenpaa has pubiished articles in such journals as MIS Quarterly.

Com- munications of the ACM, Management Science, Information Systems Research, International Journal of Man-Machine Studies, and the IEEE Transactions on Systems, Man, and Cybernetics.

Her research interests inciude behaviorai and organizational aspects of information technology.

In her most recent research program, she examines giobai information systems.

MIS Quarterly/March 1991 49