564 Part Four Building and Managing Systems
globally shared media such as movies now permits different cultures and
peoples to develop common expectations about right and wrong, desirable and
undesirable, heroic and cowardly. The collapse of the Eastern bloc has speeded
the growth of a world culture enormously, increased support for capitalism and
business, and reduced the level of cultural conflict considerably.
A last factor to consider is the growth of a global knowledge base. At the end
of World War II, knowledge, education, science, and industrial skills were
highly concentrated in North America, western Europe, and Japan, with the
rest of the world euphemistically called the Third World. This is no longer true.
Latin America, China, India, southern Asia, and eastern Europe have devel-
oped powerful educational, industrial, and scientific centers, resulting in a
much more democratically and widely dispersed knowledge base.
These general cultural factors leading toward internationalization result in
specific business globalization factors that affect most industries. The growth of
powerful communications technologies and the emergence of world cultures
lay the groundwork for global markets—global consumers interested in
consuming similar products that are culturally approved. Coca-Cola, American
sneakers (made in Korea but designed in Los Angeles), and Cable News
Network (CNN) programming can now be sold in Latin America, Africa, and
Asia.
Responding to this demand, global production and operations have
emerged with precise online coordination between far-flung production
facilities and central headquarters thousands of miles away. At Sealand
Transportation, a major global shipping company based in Newark, New
Jersey, shipping managers in Newark can watch the loading of ships in
Rotterdam online, check trim and ballast, and trace packages to specific ship
locations as the activity proceeds. This is all possible through an international
satellite link.
The new global markets and pressure toward global production and opera-
tion have called forth whole new capabilities for global coordination.
Production, accounting, marketing and sales, human resources, and systems
development (all the major business functions) can be coordinated on a global
scale.
Frito Lay, for instance, can develop a marketing sales force automation
system in the United States and, once provided, may try the same techniques
and technologies in Spain. Micromarketing—marketing to very small geo-
graphic and social units—no longer means marketing to neighborhoods in
the United States, but to neighborhoods throughout the world! These new
levels of global coordination permit for the first time in history the location
of business activity according to comparative advantage. Design should be
located where it is best accomplished, as should marketing, production, and
finance.
Finally, global markets, production, and administration create the conditions
for powerful, sustained global economies of scale. Production driven by world-
wide global demand can be concentrated where it can best be accomplished,
fixed resources can be allocated over larger production runs, and production
runs in larger plants can be scheduled more efficiently and precisely estimated.
Lower cost factors of production can be exploited wherever they emerge. The
result is a powerful strategic advantage to firms that can organize globally.
These general and specific business drivers have greatly enlarged world trade
and commerce.
Not all industries are similarly affected by these trends. Clearly, manufactur-
ing has been much more affected than services that still tend to be domestic
Chapter 15 Managing Global Systems 565
and highly inefficient. However, the localism of services is breaking down in
telecommunications, entertainment, transportation, finance, law, and general
business. Clearly, those firms within an industry that can understand the inter-
nationalization of the industry and respond appropriately will reap enormous
gains in productivity and stability.
Business Challenges
Although the possibilities of globalization for business success are significant,
fundamental forces are operating to inhibit a global economy and to disrupt
international business. Table 15-2 lists the most common and powerful
challenges to the development of global systems.
At a cultural level, particularism, making judgments and taking action on
the basis of narrow or personal characteristics, in all its forms (religious, nation-
alistic, ethnic, regionalism, geopolitical position) rejects the very concept of a
shared global culture and rejects the penetration of domestic markets by
foreign goods and services. Differences among cultures produce differences in
social expectations, politics, and ultimately legal rules. In certain countries,
such as the United States, consumers expect domestic name-brand products to
be built domestically and are disappointed to learn that much of what they
thought of as domestically produced is in fact foreign made.
Different cultures produce different political regimes. Among the many
different countries of the world are different laws governing the movement of
information, information privacy of their citizens, origins of software and
hardware in systems, and radio and satellite telecommunications. Even the
hours of business and the terms of business trade vary greatly across political
cultures. These different legal regimes complicate global business and must be
considered when building global systems.
For instance, European countries have very strict laws concerning transbor-
der data flow and privacy. Transborder data flow is defined as the movement
of information across international boundaries in any form. Some European
countries prohibit the processing of financial information outside their
boundaries or the movement of personal information to foreign countries. The
European Union Data Protection Directive, which went into effect in October
1998, restricts the flow of any information to countries (such as the United
States) that do not meet strict European information laws on personal informa-
tion. Financial services, travel, and health care companies are often directly
affected. In response, most multinational firms develop information systems
within each European country to avoid the cost and uncertainty of moving
information across national boundaries.
TABLE 15-2 CHALLENGES AND OBSTACLES TO GLOBAL BUSINESS
SYSTEMS
GLOBAL SPECIFIC
Standards: Different Electronic Data Interchange (EDI),
Cultural particularism: Regionalism, e-mail, telecommunications standards
nationalism, language differences Reliability: Phone networks not uniformly reliable
Social expectations: Brand-name Speed: Different data transfer speeds, many slower than
expectations, work hours United States
Personnel: Shortages of skilled consultants
Political laws: Transborder data and
privacy laws, commercial regulations
566 Part Four Building and Managing Systems
Cultural and political differences profoundly affect organizations’ business
processes and applications of information technology. A host of specific
barriers arise from the general cultural differences, everything from different
reliability of phone networks to the shortage of skilled consultants.
National laws and traditions have created disparate accounting practices in
various countries, which impact the ways profits and losses are analyzed.
German companies generally do not recognize the profit from a venture until
the project is completely finished and they have been paid. Conversely, British
firms begin posting profits before a project is completed, when they are reason-
ably certain they will get the money.
These accounting practices are tightly intertwined with each country’s legal
system, business philosophy, and tax code. British, U.S., and Dutch firms share
a predominantly Anglo-Saxon outlook that separates tax calculations from
reports to shareholders to focus on showing shareholders how fast profits are
growing. Continental European accounting practices are less oriented toward
impressing investors, focusing rather on demonstrating compliance with strict
rules and minimizing tax liabilities. These diverging accounting practices make
it difficult for large international companies with units in different countries to
evaluate their performance.
Language remains a significant barrier. Although English has become a kind
of standard business language, this is truer at higher levels of companies and
not throughout the middle and lower ranks. Software may have to be built with
local language interfaces before a new information system can be successfully
implemented.
Currency fluctuations can play havoc with planning models and projections.
A product that appears profitable in Mexico or Japan may actually produce a
loss because of changes in foreign exchange rates.
These inhibiting factors must be taken into account when you are designing
and building international systems for your business. For example, companies
trying to implement “lean production” systems spanning national boundaries
typically underestimate the time, expense, and logistical difficulties of making
goods and information flow freely across different countries.
STATE OF THE ART
One might think, given the opportunities for achieving competitive advantages
as outlined previously and the interest in future applications, that most inter-
national companies have rationally developed marvelous international systems
architectures. Nothing could be further from the truth. Most companies have
inherited patchwork international systems from the distant past, often based on
concepts of information processing developed in the 1960s—batch-oriented
reporting from independent foreign divisions to corporate headquarters,
manual entry of data from one legacy system to another, with little online
control and communication. Corporations in this situation increasingly face
powerful competitive challenges in the marketplace from firms that have ratio-
nally designed truly international systems. Still other companies have recently
built technology platforms for international systems but have nowhere to go
because they lack global strategy.
As it turns out, there are significant difficulties in building appropriate
international architectures. The difficulties involve planning a system appro-
priate to the firm’s global strategy, structuring the organization of systems and
business units, solving implementation issues, and choosing the right technical
platform. Let’s examine these problems in greater detail.
Chapter 15 Managing Global Systems 567
15.2 ORGANIZING INTERNATIONAL INFORMATION
SYSTEMS
Three organizational issues face corporations seeking a global position: choos-
ing a strategy, organizing the business, and organizing the systems manage-
ment area. The first two are closely connected, so we discuss them together.
GLOBAL STRATEGIES AND BUSINESS ORGANIZATION
Four main global strategies form the basis for global firms’ organizational
structure. These are domestic exporter, multinational, franchiser, and transna-
tional. Each of these strategies is pursued with a specific business organizational
structure (see Table 15-3). For simplicity’s sake, we describe three kinds of
organizational structure or governance: centralized (in the home country),
decentralized (to local foreign units), and coordinated (all units participate as
equals). Other types of governance patterns can be observed in specific
companies (e.g., authoritarian dominance by one unit, a confederacy of equals,
a federal structure balancing power among strategic units, and so forth).
The domestic exporter strategy is characterized by heavy centralization of
corporate activities in the home country of origin. Nearly all international
companies begin this way, and some move on to other forms. Production,
finance/accounting, sales/marketing, human resources, and strategic manage-
ment are set up to optimize resources in the home country. International sales
are sometimes dispersed using agency agreements or subsidiaries, but even
here, foreign marketing relies on the domestic home base for marketing themes
and strategies. Caterpillar Corporation and other heavy capital-equipment man-
ufacturers fall into this category of firm.
The multinational strategy concentrates financial management and con-
trol out of a central home base while decentralizing production, sales, and
marketing operations to units in other countries. The products and services
on sale in different countries are adapted to suit local market conditions. The
organization becomes a far-flung confederation of production and marketing
facilities in different countries. Many financial service firms, along with a
host of manufacturers, such as General Motors, Chrysler, and Intel, fit this
pattern.
Franchisers are an interesting mix of old and new. On the one hand, the
product is created, designed, financed, and initially produced in the home
country, but for product-specific reasons must rely heavily on foreign personnel
for further production, marketing, and human resources. Food franchisers such
TABLE 15-3 GLOBAL BUSINESS STRATEGY AND STRUCTURE
BUSINESS FUNCTION DOMESTIC EXPORTER MULTINATIONAL FRANCHISER TRANSNATIONAL
Production Centralized Dispersed Coordinated Coordinated
Finance/Accounting Centralized Centralized Centralized Coordinated
Sales/Marketing Mixed Dispersed Coordinated Coordinated
Human Resources Centralized Centralized Coordinated Coordinated
Strategic Management Centralized Centralized Centralized Coordinated
568 Part Four Building and Managing Systems
as McDonald’s, Mrs. Fields Cookies, and KFC fit this pattern. McDonald’s created
a new form of fast-food chain in the United States and continues to rely largely
on the United States for inspiration of new products, strategic management, and
financing. Nevertheless, because the product must be produced locally—it is
perishable—extensive coordination and dispersal of production, local marketing,
and local recruitment of personnel are required.
Generally, foreign franchisees are clones of the mother country units, but
fully coordinated worldwide production that could optimize factors of produc-
tion is not possible. For instance, potatoes and beef can generally not be bought
where they are cheapest on world markets but must be produced reasonably
close to the area of consumption.
Transnational firms are the stateless, truly globally managed firms that may
represent a larger part of international business in the future. Transnational
firms have no single national headquarters but instead have many regional
headquarters and perhaps a world headquarters. In a transnational strategy,
nearly all the value-adding activities are managed from a global perspective
without reference to national borders, optimizing sources of supply and demand
wherever they appear, and taking advantage of any local competitive advan-
tages. Transnational firms take the globe, not the home country, as their
management frame of reference. The governance of these firms has been
likened to a federal structure in which there is a strong central management
core of decision making, but considerable dispersal of power and financial
muscle throughout the global divisions. Few companies have actually attained
transnational status, but Citicorp, Sony, Ford, and others are attempting this
transition.
Information technology and improvements in global telecommunications are
giving international firms more flexibility to shape their global strategies.
Protectionism and a need to serve local markets better encourage companies to
disperse production facilities and at least become multinational. At the same
time, the drive to achieve economies of scale and take advantage of short-term
local advantage moves transnationals toward a global management perspective
and a concentration of power and authority. Hence, there are forces of
decentralization and dispersal, as well as forces of centralization and global
coordination.
GLOBAL SYSTEMS TO FIT THE STRATEGY
Information technology and improvements in global telecommunications are
giving international firms more flexibility to shape their global strategies. The
configuration, management, and development of systems tend to follow the
global strategy chosen. Figure 15-3 depicts the typical arrangements. By systems
we mean the full range of activities involved in building and operating informa-
tion systems: conception and alignment with the strategic business plan,
systems development, and ongoing operation and maintenance. For the sake of
simplicity, we consider four types of systems configuration. Centralized systems
are those in which systems development and operation occur totally at the
domestic home base. Duplicated systems are those in which development occurs
at the home base but operations are handed over to autonomous units in foreign
locations. Decentralized systems are those in which each foreign unit designs its
own unique solutions and systems. Networked systems are those in which
systems development and operations occur in an integrated and coordinated
fashion across all units.
Chapter 15 Managing Global Systems 569
FIGURE 15-3 GLOBAL STRATEGY AND SYSTEMS CONFIGURATIONS
The large Xs show the dominant patterns, and the small Xs show the emerging patterns. For instance,
domestic exporters rely predominantly on centralized systems, but there is continual pressure and
some development of decentralized systems in local marketing regions.
As can be seen in Figure 15-3, domestic exporters tend to have highly
centralized systems in which a single domestic systems development staff
develops worldwide applications. Multinationals offer a direct and striking
contrast: Here, foreign units devise their own systems solutions based on local
needs with few if any applications in common with headquarters (the excep-
tions being financial reporting and some telecommunications applications).
Franchisers have the simplest systems structure: Like the products they sell,
franchisers develop a single system usually at the home base and then replicate
it around the world. Each unit, no matter where it is located, has identical
applications. Last, the most ambitious form of systems development is found in
transnational firms: Networked systems are those in which there is a solid,
singular global environment for developing and operating systems. This
usually presupposes a powerful telecommunications backbone, a culture of
shared applications development, and a shared management culture that
crosses cultural barriers. The networked systems structure is the most visible in
financial services where the homogeneity of the product—money and money
instruments—seems to overcome cultural barriers.
REORGANIZING THE BUSINESS
How should a firm organize itself for doing business on an international scale?
To develop a global company and information systems support structure, a firm
needs to follow these principles:
1. Organize value-adding activities along lines of comparative advantage.
For instance, marketing/sales functions should be located where they can best
be performed, for least cost and maximum impact; likewise with production,
finance, human resources, and information systems.
2. Develop and operate systems units at each level of corporate activity—
regional, national, and international. To serve local needs, there should be
host country systems units of some magnitude. Regional systems units should
handle telecommunications and systems development across national bound-
aries that take place within major geographic regions (European, Asian,
American). Transnational systems units should be established to create the
linkages across major regional areas and coordinate the development and
operation of international telecommunications and systems development
(Roche, 1992).
570 Part Four Building and Managing Systems
3. Establish at world headquarters a single office responsible for development of
international systems—a global chief information officer (CIO) position.
Many successful companies have devised organizational systems structures
along these principles. The success of these companies relies not only on the
proper organization of activities, but also on a key ingredient—a management
team that can understand the risks and benefits of international systems and
that can devise strategies for overcoming the risks. We turn to these manage-
ment topics next.
15.3 MANAGING GLOBAL SYSTEMS
Table 15-4 lists the principal management problems posed by developing
international systems. It is interesting to note that these problems are the
chief difficulties managers experience in developing ordinary domestic
systems as well. But these are enormously complicated in the international
environment.
A TYPICAL SCENARIO: DISORGANIZATION ON A
GLOBAL SCALE
Let’s look at a common scenario. A traditional multinational consumer-goods
company based in the United States and operating in Europe would like to
expand into Asian markets and knows that it must develop a transnational
strategy and a supportive information systems structure. Like most multination-
als, it has dispersed production and marketing to regional and national centers
while maintaining a world headquarters and strategic management in the
United States. Historically, it has allowed each of the subsidiary foreign divisions
to develop its own systems. The only centrally coordinated system is financial
controls and reporting. The central systems group in the United States focuses
only on domestic functions and production.
The result is a hodgepodge of hardware, software, and telecommunications.
The e-mail systems between Europe and the United States are incompatible.
Each production facility uses a different manufacturing resources planning
system (or a different version of the same ERP system), and different market-
ing, sales, and human resource systems. Hardware and database platforms are
wildly different. Communications between different sites are poor, given the
high cost of European intercountry communications. The central systems
group at headquarters in the United States recently was decimated and dis-
TABLE 15-4 MANAGEMENT CHALLENGES IN DEVELOPING GLOBAL
SYSTEMS
Agreeing on common user requirements
Introducing changes in business processes
Coordinating applications development
Coordinating software releases
Encouraging local users to support global systems.
Chapter 15 Managing Global Systems 571
persed to the U.S. local sites in the hope of serving local needs better and
reducing costs.
What do you recommend to the senior management leaders of this
company, who now want to pursue a transnational strategy and develop an
information systems architecture to support a highly coordinated global
systems environment? Consider the problems you face by reexamining
Table 15-4. The foreign divisions will resist efforts to agree on common user
requirements; they have never thought about much other than their own
units’ needs. The systems groups in American local sites, which have been
enlarged recently and told to focus on local needs, will not easily accept
guidance from anyone recommending a transnational strategy. It will be
difficult to convince local managers anywhere in the world that they should
change their business procedures to align with other units in the world,
especially if this might interfere with their local performance. After all, local
managers are rewarded in this company for meeting local objectives of their
division or plant. Finally, it will be difficult to coordinate development of
projects around the world in the absence of a powerful telecommunications
network and, therefore, difficult to encourage local users to take on owner-
ship in the systems developed.
GLOBAL SYSTEMS STRATEGY
Figure 15-4 lays out the main dimensions of a solution. First, consider that not
all systems should be coordinated on a transnational basis; only some core
FIGURE 15-4 LOCAL, REGIONAL, AND GLOBAL SYSTEMS
Agency and other coordination costs increase as the firm moves from local option systems toward
regional and global systems. However, transaction costs of participating in global markets probably
decrease as firms develop global systems. A sensible strategy is to reduce agency costs by developing
only a few core global systems that are vital for global operations, leaving other systems in the hands
of regional and local units.
Source: From Managing Information Technology in Multinational Corporations by Edward M. Roche, © 1993. Adapted by
permission of Prentice Hall, Inc., Upper Saddle River, N.J.
572 Part Four Building and Managing Systems
systems are truly worth sharing from a cost and feasibility point of view. Core
systems support functions that are absolutely critical to the organization. Other
systems should be partially coordinated because they share key elements, but
they do not have to be totally common across national boundaries. For such sys-
tems, a good deal of local variation is possible and desirable.
A final group of systems is peripheral, truly provincial, and needed to suit local
requirements only.
Define the Core Business Processes
How do you identify core systems? The first step is to define a short list of
critical core business processes. Business processes are defined and described in
Chapter 2, which you should review. Briefly, business processes are sets of
logically related tasks to produce specific business results, such as shipping out
correct orders to customers or delivering innovative products to the market.
Each business process typically involves many functional areas, communicating
and coordinating work, information, and knowledge.
The way to identify these core business processes is to conduct a business
process analysis. How are customer orders taken, what happens to them once
they are taken, who fills the orders, how are they shipped to the customers?
What about suppliers? Do they have access to manufacturing resource planning
systems so that supply is automatic? You should be able to identify and set
priorities in a short list of 10 business processes that are absolutely critical for
the firm.
Next, can you identify centers of excellence for these processes? Is the
customer order fulfillment superior in the United States, manufacturing process
control superior in Germany, and human resources superior in Asia? You should
be able to identify some areas of the company, for some lines of business, where
a division or unit stands out in the performance of one or several business
functions.
When you understand the business processes of a firm, you can rank-order
them. You then can decide which processes should be core applications,
centrally coordinated, designed, and implemented around the globe,
and which should be regional and local. At the same time, by identifying
the critical business processes, the really important ones, you have gone a
long way to defining a vision of the future that you should be working
toward.
Identify the Core Systems to Coordinate Centrally
By identifying the critical core business processes, you begin to see opportuni-
ties for transnational systems. The second strategic step is to conquer the core
systems and define these systems as truly transnational. The financial and
political costs of defining and implementing transnational systems are
extremely high. Therefore, keep the list to an absolute minimum, letting experi-
ence be the guide and erring on the side of minimalism. By dividing off a small
group of systems as absolutely critical, you divide opposition to a transnational
strategy. At the same time, you can appease those who oppose the central
worldwide coordination implied by transnational systems by permitting periph-
eral systems development to progress unabated, with the exception of some
technical platform requirements.
Choose an Approach: Incremental, Grand Design, Evolutionary
A third step is to choose an approach. Avoid piecemeal approaches. These
surely will fail for lack of visibility, opposition from all who stand to lose from
Chapter 15 Managing Global Systems 573
transnational development, and lack of power to convince senior manage-
ment that the transnational systems are worth it. Likewise, avoid grand
design approaches that try to do everything at once. These also tend to fail,
because of an inability to focus resources. Nothing gets done properly, and
opposition to organizational change is needlessly strengthened because the
effort requires huge resources. An alternative approach is to evolve transna-
tional applications incrementally from existing applications with a precise
and clear vision of the transnational capabilities the organization should have
in five years. This is sometimes referred to as the “salami strategy,” or one
slice at a time.
Make the Benefits Clear
What is in it for the company? One of the worst situations to avoid is to build
global systems for the sake of building global systems. From the beginning, it is
crucial that senior management at headquarters and foreign division managers
clearly understand the benefits that will come to the company as well as to
individual units. Although each system offers unique benefits to a particular
budget, the overall contribution of global systems lies in four areas.
Global systems—truly integrated, distributed, and transnational systems—
contribute to superior management and coordination. A simple price tag cannot
be put on the value of this contribution, and the benefit will not show up in any
capital budgeting model. It is the ability to switch suppliers on a moment’s
notice from one region to another in a crisis, the ability to move production in
response to natural disasters, and the ability to use excess capacity in one region
to meet raging demand in another.
A second major contribution is vast improvement in production, operation,
and supply and distribution. Imagine a global value chain, with global suppli-
ers and a global distribution network. For the first time, senior managers can
locate value-adding activities in regions where they are most economically
performed.
Third, global systems mean global customers and global marketing. Fixed
costs around the world can be amortized over a much larger customer base. This
will unleash new economies of scale at production facilities.
Last, global systems mean the ability to optimize the use of corporate funds
over a much larger capital base. This means, for instance, that capital in a
surplus region can be moved efficiently to expand production of capital-starved
regions; that cash can be managed more effectively within the company and put
to use more effectively.
These strategies will not by themselves create global systems. You will have to
implement what you strategize.
THE MANAGEMENT SOLUTION: IMPLEMENTATION
We now can reconsider how to handle the most vexing problems facing
managers developing the global information systems architectures that were
described in Table 15-4.
Agreeing on Common User Requirements
Establishing a short list of the core business processes and core support systems
will begin a process of rational comparison across the many divisions of the
company, develop a common language for discussing the business, and
naturally lead to an understanding of common elements (as well as the unique
qualities that must remain local).
574 Part Four Building and Managing Systems
Introducing Changes in Business Processes
Your success as a change agent will depend on your legitimacy, your authority,
and your ability to involve users in the change design process. Legitimacy is
defined as the extent to which your authority is accepted on grounds of compe-
tence, vision, or other qualities. The selection of a viable change strategy, which
we have defined as evolutionary but with a vision, should assist you in convinc-
ing others that change is feasible and desirable. Involving people in change,
assuring them that change is in the best interests of the company and their local
units, is a key tactic.
Coordinating Applications Development
Choice of change strategy is critical for this problem. At the global level there is
far too much complexity to attempt a grand design strategy of change. It is far
easier to coordinate change by making small incremental steps toward a larger
vision. Imagine a five-year plan of action rather than a two-year plan of action,
and reduce the set of transnational systems to a bare minimum to reduce
coordination costs.
Coordinating Software Releases
Firms can institute procedures to ensure that all operating units convert to new
software updates at the same time so that everyone’s software is compatible.
Encouraging Local Users to Support Global Systems
The key to this problem is to involve users in the creation of the design without
giving up control over the development of the project to parochial interests.
The overall tactic for dealing with resistant local units in a transnational
company is cooptation. Cooptation is defined as bringing the opposition into
the process of designing and implementing the solution without giving up
control over the direction and nature of the change. As much as possible, raw
power should be avoided. Minimally, however, local units must agree on a short
list of transnational systems, and raw power may be required to solidify the
idea that transnational systems of some sort are truly required.
How should cooptation proceed? Several alternatives are possible. One alter-
native is to permit each country unit the opportunity to develop one transna-
tional application first in its home territory, and then throughout the world. In
this manner, each major country systems group is given a piece of the action in
developing a transnational system, and local units feel a sense of ownership in
the transnational effort. On the downside, this assumes the ability to develop
high-quality systems is widely distributed, and that, a German team, for exam-
ple, can successfully implement systems in France and Italy. This will not
always be the case.
A second tactic is to develop new transnational centers of excellence, or a
single center of excellence. There may be several centers around the globe that
focus on specific business processes. These centers draw heavily from local
national units, are based on multinational teams, and must report to worldwide
management. Centers of excellence perform the initial identification and
specification of business processes, define the information requirements,
perform the business and systems analysis, and accomplish all design and
testing. Implementation, however, and pilot testing are rolled out to other parts
of the globe. Recruiting a wide range of local groups to transnational centers of
excellence helps send the message that all significant groups are involved in the
design and will have an influence.
Chapter 15 Managing Global Systems 575
INTERACTIVE SESSION: MANAGEMENT
FONTERRA: MANAGING THE WORLD’S MILK TRADE
While global trade has expanded at over 9 percent a (actually a cooperative) that is implementing an
year in the last 20 years, many international compa- import/export process control system.
nies still rely on outdated manual processes and
paperwork for conducting their international trade Fonterra is the world’s leading exporter of dairy
business. In 2010, global trade of goods and services products. Owned by 11,000 New Zealand dairy
will amount to a staggering $15 trillion. That’s a lit- farmers, Fonterra is a cooperative that exports 95
tle bigger than the entire United States economy percent of its products to 140 countries—of all the
($14 trillion). There are many complex challenges dairy goods it manufactures, only 5 percent are
that managers face when conducting business on an consumed within its domestic market. Fonterra is
international scale. Chief among these challenges is primarily an exporting firm. Fonterra has $10 billion
managing the import and export business process. in assets, annual revenues of $12.1 billion, and
Managing an import/export business involves man- produces 3.6 billion gallons of milk each year. If you
aging three processes: compliance with foreign and wonder how that’s possible, the answer is Fonterra
domestic laws, customs clearance procedures, and relies on the contributions of 4.3 million New
risk management. Each country you export to has Zealand cows, and over 15,000 employees. Fonterra
different laws governing imported products and dif- accounts for over 25 percent of New Zealand’s export
ferent customs procedures. Trading across bound- trade, and about 30 percent of all global trade in milk
aries raises financial and contractual risks. What if and milk products.
you export to a foreign company and it doesn’t pay
you? What kinds of credit assessments can you Fonterra’s operations generate a substantial
perform in various countries? What if your goods amount of transactional data. “The volume going
are stalled at a foreign port for lack of proper through this platform is quite significant in both
documents? What are the proper documents? The dollar and transactional terms,” says Clyde Fletcher,
potential pitfalls are numerous. Documentation Center Manager at Fonterra. “But we
don’t just rely on New Zealand. We procure our
In the past, time-consuming and error-prone man- products from multiple countries to try to spread the
ual methods were incapable of handling the complex risk. We also export out of Australia, the United
challenges of global trade. To conduct business in States, Latin America, Europe, and Asia.” This data
other countries, your company must comply with needs to be captured in an enterprise database, then
local laws, satisfy trade security measures, meet doc- moved into a data warehouse so management can
umentation requirements, understand complicated monitor the firms operations. To handle more
tariffs and duties, and coordinate the involvement of complex import/export processes, Fonterra turned to
all parties. Handling these responsibilities manually the SAP BusinessObjects Global Trade Services
increases the risk of errors. According to a United solution.
Nations study, the inefficient administration of cus-
toms regulations and documents accounts for 7 per- SAP Global Trade Services (SAP GTS) automates
cent of the cost of international trade. That’s $1 tril- import/export processes, while ensuring that
lion lost annually on a global basis to inefficient transactions comply with all customs and security
handling of customs documents. Poor management regulations. SAP GTS helps companies standardize
of compliance and risk accounts for even more and streamline trade processes across their entire
losses. enterprise and business units. And it fosters use of
shared data and shared collaboration knowledge,
Increasingly, international firms are turning to replacing high-maintenance manual processes.
enterprise software and business intelligence
applications to manage their import/export business With SAP GTS, Fonterra has been able to lower the
processes on a global scale. One world, one business, cost, and reduce the risk, of doing business interna-
one set of software tools with pre-defined business tionally. To date, SAP GTS has helped Fonterra stan-
processes that are the same the world over. That’s dardize and streamline trade processes across its
the dream. Fonterra provides an example of a firm entire enterprise and business units. And it has fos-
tered the sharing of data, greater collaboration, and
sharing of knowledge throughout the firm. SAP GTS
manages the complexities of global trade and ensures
576 Part Four Building and Managing Systems and errors that can result in expensive penalties—
and even revoked import/export privileges.
full regulatory compliance. The solution helps
reduce buffer stock by improving transparency Sources: David Barboza, “Supply Chain for iPhone Highlights Costs
throughout the supply chain—sharing cross-border in China,” New York Times, July 5, 2010; Lauren Bonneau,
trade information will all partners, including freight “Mastering Global Trade at Fonterra,” CustomProfiles, SAP.com, July
forwarders, insurance agencies, banks, and regula- 1, 2010; Kevin Keller, “iPhone Carries Bill of Materials of $187.51,”
tory entities. SAP GTS has helped Fonterra avoid sup- iSuppli.com/Teardowns, June 28, 2010.
ply chain bottlenecks, costly production downtime,
CASE STUDY QUESTIONS MIS IN ACTION
1. Describe the various capabilities of SAP GTS. How Explore Fonterra’s Web site (Fonterra.com) and then
does using this software help Fonterra manage its answer the following questions:
export trade? What quantifiable benefits does this
system provide? 1. Go the Web site SAP.com and search on “GTS.”
Click on the article entitled “SAP GRC Global Trade
2. How would you characterize Fonterra’s global Services: Streamline and Secure Your Global Supply
business strategy and structure (review Table 15-3). Chain.” What benefits does SAP promise to deliver
What kind of a global business is it? Has Fonterra’s for global trading companies? Create a summary
structure and strategy shaped its uses of SAP GTS? table for your class.
Would a transnational company choose a different
solution? 2. Visit SAP’s largest competitor, Oracle.com, and
identify similar applications provided by Oracle.
3. What influence does the global business environ- What do you think are the most important
ment have on firms like Fonterra, and how does management and business considerations in
that influence their choice of systems? deciding between Oracle and SAP solutions for
global projects? Discover one global firm that uses
Oracle’s global trade offerings, and compare that
firm to Fonterra.
Even with the proper organizational structure and appropriate management
choices, it is still possible to stumble over technology issues. Choices of tech-
nology platforms, networks, hardware, and software are the final element in
building transnational information systems architectures.
15.4 TECHNOLOGY ISSUES AND OPPORTUNITIES FOR
GLOBAL VALUE CHAINS
Once firms have defined a global business model and systems strategy, they
must select hardware, software, and networking standards along with key
system applications to support global business processes. Hardware, software,
and networking pose special technical challenges in an international setting.
One major challenge is finding some way to standardize a global computing
platform when there is so much variation from operating unit to operating unit
and from country to country. Another major challenge is finding specific
software applications that are user friendly and that truly enhance the produc-
Chapter 15 Managing Global Systems 577
tivity of international work teams. The universal acceptance of the Internet
around the globe has greatly reduced networking problems. But the mere
presence of the Internet does not guarantee that information will flow
seamlessly throughout the global organization because not all business units
use the same applications, and the quality of Internet service can be highly
variable (just as with the telephone service). For instance, German business
units may use an open source collaboration tool to share documents and
communicate, which is incompatible with American headquarters teams,
which use Lotus Notes. Overcoming these challenges requires systems integra-
tion and connectivity on a global basis.
COMPUTING PLATFORMS AND SYSTEMS INTEGRATION
The development of a transnational information systems architecture based on
the concept of core systems raises questions about how the new core systems
will fit in with the existing suite of applications developed around the globe by
different divisions, different people, and for different kinds of computing
hardware. The goal is to develop global, distributed, and integrated systems to
support digital business processes spanning national boundaries. Briefly, these
are the same problems faced by any large domestic systems development
effort. However, the problems are magnified in an international environment.
Just imagine the challenge of integrating systems based on the Windows,
Linux, Unix, or proprietary operating systems running on IBM, Sun, HP, and
other hardware in many different operating units in many different countries!
Moreover, having all sites use the same hardware and operating system does
not guarantee integration. Some central authority in the firm must establish data
standards, as well as other technical standards with which sites are to comply. For
instance, technical accounting terms such as the beginning and end of the fiscal
year must be standardized (review the earlier discussion of the cultural
challenges to building global businesses), as well as the acceptable interfaces
between systems, communication speeds and architectures, and network
software.
CONNECTIVITY
Truly integrated global systems must have connectivity—the ability to link
together the systems and people of a global firm into a single integrated network
just like the phone system but capable of voice, data, and image transmissions.
The Internet has provided an enormously powerful foundation for providing
connectivity among the dispersed units of global firms. However, many issues
remain. The public Internet does not guarantee any level of service (even in the
U.S.). Few global corporations trust the security of the Internet and generally
use private networks to communicate sensitive data, and Internet virtual private
networks (VPNs) for communications that require less security. Not all coun-
tries support even basic Internet service that requires obtaining reliable circuits,
coordinating among different carriers and the regional telecommunications
authority, and obtaining standard agreements for the level of telecommunica-
tions service provided. Table 15-5 lists the major challenges posed by interna-
tional networks.
While private networks have guaranteed service levels and better security
than the Internet, the Internet is the primary foundation for global corporate
networks when lower security and service levels are acceptable. Companies
can create global intranets for internal communication or extranets to exchange
578 Part Four Building and Managing Systems
TABLE 15-5 PROBLEMS OF INTERNATIONAL NETWORKS
Quality of service
Security
Costs and tariffs
Network management
Installation delays
Poor quality of international service
Regulatory constraints
Network capacity
information more rapidly with business partners in their supply chains. They
can use the public Internet to create global networks using VPNs from Internet
service providers, which provide many features of a private network using the
public Internet (see Chapter 7). However, VPNs may not provide the same level
of quick and predictable response as private networks, especially during times
of the day when Internet traffic is very congested, and they may not be able to
support large numbers of remote users.
The high cost of PCs, and low incomes, limit access to Internet service in
many developing countries (see Figure 15-5). Where an Internet infrastructure
exists in less-developed countries, it often lacks bandwidth capacity, and is
unreliable in part due to power grid issues. The purchasing power of most
people in developing countries makes access to Internet services very
expensive in local currencies. In addition, many countries monitor transmis-
FIGURE 15-5 INTERNET PENETRATION BY REGION
The percentage of the total population using the Internet in developing countries is much smaller than
in the United States and Europe, but the fastest growth is in Asia.
Source: Internetworldstats.com, 2010.
Chapter 15 Managing Global Systems 579
sions. Governments in China, Singapore, Iran, and Saudi Arabia monitor
Internet traffic and block access to Web sites considered morally or politically
offensive. On the other hand, the rate of growth in the Internet population is far
faster in Asia, Africa, and the Middle East than in North America and Europe,
where the Internet population is growing slowly if at all. In 2010, China, for
instance, has more than 420 million Internet users compared to the United
States with about 221 million. Therefore, in the future, Internet connectivity
will be much more widely available and reliable in less-developed regions of
the world, and it will play a significant role in integrating these economies with
the world economy.
The Interactive Session on Organizations describes how cell phones
provide a partial solution to this problem. Their use is mushrooming in
developing countries, and they are starting to become engines for economic
development.
SOFTWARE LOCALIZATION
The development of core systems poses unique challenges for application
software: How will the old systems interface with the new? Entirely new
interfaces must be built and tested if old systems are kept in local areas (which
is common). These interfaces can be costly and messy to build. If new
software must be created, another challenge is to build software that can be
realistically used by multiple business units from different countries given
that business units are accustomed to their unique business processes and def-
initions of data.
Aside from integrating the new with the old systems, there are problems of
human interface design and functionality of systems. For instance, to be truly
useful for enhancing productivity of a global workforce, software interfaces
must be easily understood and mastered quickly. Graphical user interfaces are
This page from the Pearson
Prentice Hall Web site was
translated into Japanese.
Web sites and software
interfaces for global systems
may have to be translated
into multiple languages to
accommodate users in other
parts of the world.
580 Part Four Building and Managing Systems
INTERACTIVE SESSION: ORGANIZATIONS
HOW CELL PHONES SUPPORT ECONOMIC DEVELOPMENT
As cell phones, the Internet, high-speed Internet Cellular phone companies such as Nokia are
connections, and other information and communica- sending what they call “human-behavior
tion technologies become increasingly widespread, researchers” or “user anthropologists” to gather as
more and more people are experiencing the benefits much useful information as they can about con-
each technology has to offer. Many of these tech- sumer habits and the lives of potential cell phone
nologies have not yet closed the “digital divide” buyers. They pass on that information to cell phone
separating the world’s well-developed and underde- designers and technology architects. This process
veloped nations. Some countries, like the United represents a new approach to designing phones
States, have access to most new technologies, but known as “human-centered design”. Human-cen-
most residents of poorer countries still struggle with tered design is important to high-tech companies
challenges like obtaining reliable electricity and trying to build products that people find appealing
abject poverty. Recent trends in cell phone design and easy to use, and are thus more likely to be
and consumer research indicate that cellular phones bought.
are crossing the digital divide and are becoming a
truly ubiquitous technology (far more so than Nokia and other companies face significant
personal computers), enhancing the quality of life challenges in marketing their phones to the poorest
for millions of people while also increasing the segment of Africa and Asia’s populations. Barriers
strength of the global economy. As in the United include lack of electricity in many areas, incomes
States, by 2015, cell phones will be the primary too low to afford a cell phone, and potential lack of
means of access to the Internet in the developing service in non-urban areas. India currently leads the
world. way in cell phone subscriptions, with an astounding
756 million (63 percent of its total population), but
For instance, mobile phone use in Africa is many other countries lag far behind both in cell
booming. Despite their high costs (the price of a phone usage and rates of Internet access. For
phone in Niger is equal to five days of income), example, Morocco, one of Africa’s leaders in cell
mobile phone subscriptions in Africa have risen phone and Internet usage, boasts 20 million Internet
from 16 million in 2000, to 376 million in 2008. users, or 58 percent of its total population. By
Sixty-eight percent of the world’s mobile phone comparison, the United States. has over 221 million
subscriptions are in developing countries, compared Internet users of all ages, or 79 percent of its total
with 20 percent of the world’s Internet users. population.
Because cell phones combine features of watches,
alarm clocks, cameras and video cameras, stereos, The World Resources Institute published a report
televisions, and perhaps even wallets soon due to detailing how the poor in developing countries
the growing popularity of mobile banking, they are allocate their money. Even the poorest families dedi-
growing in usefulness even as they decrease in cated significant portions of their small budgets to
price. Most importantly, cell phones are increasingly communication technologies such as cell phones.
becoming the most convenient and affordable way Having a cell phone is a tremendous advantage for
to connect to the Internet and perform other tasks members of populations that are constantly on the
traditionally associated with computers. And cell move due to war, drought, natural disasters, or
phones are much less costly than personal comput- extreme poverty, primarily because it allows people
ers. to remain reachable under practically any circum-
stances. Cell phones also have implications for medi-
The possession of a cell phone greatly increases cine in these countries: patients can more easily
efficiency and quality of life, so the global economy reach doctors, and doctors can more easily acquire
would stand to benefit on a proportionally large information pertaining to diseases and ailments they
scale. Many economists believe that widespread cell may need to treat.
phone usage in developing countries is having a
profound and revolutionary effect on their economic In addition to the benefit of being able to stay in
well-being in a way that traditional methods of touch with others, cell phones are also useful as a
foreign aid have failed to achieve. business tool. Evidence suggests that possession of a
cell phone increases profits on an individual level,
allowing people to more easily identify and take Chapter 15 Managing Global Systems 581
advantage of business opportunities. A recent study
by the Centre for Economic Policy Research also fishermen to call around to different markets while at
showed that for every additional 10 cellular phones sea, choose the market with the best price, and sell
per 100 people a country acquires, that country’s accordingly. Mobile phones resulted in financial
gross domestic product (GDP) rises 0.5 percent. improvements for both fishermen and consumers:
fishermen’s profits increased by 8 percent, and con-
In Niger, millet is a household staple sold in sumer prices declined by 4 percent.
traditional village markets across thousands of
square miles. According to economists, the growth of Economists and others who believe that poor
mobile phone coverage reduced grain price countries need to radically change their economic
differences across markets by 15 percent between structure in order to develop, and who also discour-
2001 and 2007, with a greater impact on markets age reliance on international aid given to failing
isolated by distance and poor-quality roads. Traders economies, are enthusiastic about the positive
could respond to surpluses and shortages in the mar- impact that cell phones and other information tech-
ket, making better decisions about price and deliv- nologies can have on underdeveloped countries.
ery. As a result, trader profits rose and prices fell. Access to the Internet via cell phones also promises
to bring about societal and political change in devel-
Harvard economist Robert Jensen discovered that oping countries in which repressive governments
the introduction of mobile phones in the Indian exert control over all forms of media.
coastal state of Kerala reduced price differences across
fish markets by almost 60 percent between 1997 and Sources: Worldwide Worx, “Businesses Across Africa Are Expecting
2001, providing an almost-perfect example of the “Law a Revolution in Internet Access, Technology and Costs as a Result
of One Price”: when markets work efficiently, identi- of the Rush of New Undersea Cables Connecting the Continent,”
cal goods have the same price. In addition, mobile Telecom Trends in Africa Report 2010, September 16, 2010;
phones almost completely eliminated waste—the Jenny C. Aker and Isaac M. Mbiti, “Mobile Phones and Economic
catch left unsold at the end of the day—by allowing Development in Africa,” Center for Global Development, June 1,
2010; Jenny Aker and Isaac Mbiti, “Africa Calling: Can Mobile
Phones Make a Miracle,” Boston Review, March/April 2010; “Top 20
Countries—Internet Usage,” Internetworldstats.com, November
2010.
CASE STUDY QUESTIONS MIS IN ACTION
1. What strategies are cell phone companies using to Explore the Web site for One Laptop Per Child
‘close the digital divide’ and market phones to the (www.laptop.org) and then answer the following
poorest segment of the world’s population? questions:
2. Why do economists predict that widespread cell 1. What are the capabilities of the XO laptop
phone usage in developing countries would have (especially the latest version, XO-3) ? How well-
an unprecedented effect on the growth of those suited is this machine for developing countries?
countries?
2. How would use of the XO laptop narrow the
3. What are some examples of how cell phones global digital divide? Compare the potential
might increase quality of life for residents of impact of this machine to that of cell phones in
developing countries? developing nations.
4. Do you believe that cell phones will proliferate
widely through Africa and Asia? Why or why not?
ideal for this but presuppose a common language—often English. When
international systems involve knowledge workers only, English may be the
assumed international standard. But as international systems penetrate deeper
into management and clerical groups, a common language may not be assumed
and human interfaces must be built to accommodate different languages and
even conventions. The entire process of converting software to operate in a
second language is called software localization.
582 Part Four Building and Managing Systems
What are the most important software applications? Many international
systems focus on basic transaction and management reporting systems.
Increasingly, firms are turning to supply chain management and enterprise
systems to standardize their business processes on a global basis and to create
coordinated global supply chains. However, these cross-functional systems are not
always compatible with differences in languages, cultural heritages, and business
processes in other countries (Martinons, 2004; Liang et al., 2004; Davison, 2002).
Company units in countries that are not technically sophisticated may also
encounter problems trying to manage the technical complexities of enterprise
applications.
Electronic Data Interchange (EDI) systems and supply chain management
systems are widely used by manufacturing and distribution firms to connect to
suppliers on a global basis. Collaboration systems, e-mail, and videoconferenc-
ing are especially important worldwide collaboration tools for knowledge- and
data-based firms, such as advertising firms, research-based firms in medicine
and engineering, and graphics and publishing firms. Internet-based tools will
be increasingly employed for such purposes.
15.5 HANDS-ON MIS PROJECTS
The projects in this section give you hands-on experience analyzing interna-
tional systems issues for an expanding business, conducting international mar-
ket research, and building a job posting database and Web page for an interna-
tional company.
Management Decision Problems
1. United Parcel Service (UPS) has been expanding its package delivery and
logistics services in China, serving both multinational companies and local
businesses. UPS drivers in China need to use UPS systems and tools such as its
handheld Driver Information Acquisition Device for capturing package delivery
data. UPS wants to make its WorldShip, CampusShip, and other shipping
management services accessible to Chinese and multinational customers via
the Web. What are some of the international systems issues UPS must consider
in order to operate successfully in China?
2. Your company manufactures and sells tennis rackets and would like to start
selling outside the United States. You are in charge of developing a global Web
strategy, and the first countries you are thinking of targeting are Brazil, China,
Germany, Italy, and Japan. Using the statistics in the CIA World Factbook,
which of these countries would you target first? What criteria would you use?
What other considerations should you address in your Web strategy? What
features would you put on your Web site to attract buyers from the countries
you target?
Chapter 15 Managing Global Systems 583
Achieving Operational Excellence: Building a Job
Database and Web Page for an International
Consulting Firm
Software skills: Database and Web page design
Business skills: Human resources internal job postings
Companies with many overseas locations need a way to inform employees
about available job openings in these locations. In this project, you’ll use
database software to design a database for posting internal job openings and a
Web page for displaying this information.
KTP Consulting operates in various locations around the world. KTP special-
izes in designing, developing, and implementing enterprise systems for
medium- to large-size companies. KTP offers its employees opportunities to
travel, live, and work in various locations throughout the United States, Europe,
and Asia. The firm’s human resources department has a simple database that
enables its staff to track job vacancies. When an employee is interested in
relocating, he or she contacts the human resources department for a list of KTP
job vacancies. KTP also posts its employment opportunities on the company
Web site.
What type of data should be included in the KTP job vacancies database?
What information should not be included in this database? Based on your
answers to these questions, build a job vacancies database for KTP. Populate the
database with at least 20 records. You should also build a simple Web page that
incorporates job vacancy data from your newly created database. Send a copy of
the KTP database and Web page to your professor.
Improving Decision Making: Conducting International
Marketing and Pricing Research
Software skills: Internet-based software
Business skills: International pricing and marketing
When companies sell overseas, it’s important to determine whether their
products are priced properly for non-domestic markets. In this project, you’ll
use the Web to research overseas distributors and customs regulations and use
Internet-based software to calculate prices in foreign currencies.
You are in charge of marketing for a U.S. manufacturer of office furniture
that has decided to enter the international market. You have been given the
name of Sorin SRL, a major Italian office furniture retailer, but your source
had no other information. You want to test the market by contacting this firm
to offer it a specific desk chair that you have to sell at about $125. Using the
Web, locate the information needed to contact this firm and to find out how
many European euros you would need to get for the chair in the current
market. One source for locating European companies is the Europages
Business Directory (www.europages.com). In addition, consider using the
Universal Currency Converter Web site (www.xe.net/ucc/), which deter-
mines the value of one currency expressed in other currencies. Obtain both
the information needed to contact the firm and the price of your chair in
their local currency. Then locate and obtain customs and legal restrictions
on the products you will export from the United States and import into Italy.
Finally, locate a company that will represent you as a customs agent and
gather information on shipping costs.
584 Part Four Building and Managing Systems
Review Summary
1. What major factors are driving the internationalization of business?
The growth of inexpensive international communication and transportation has created a world
culture with stable expectations or norms. Political stability and a growing global knowledge base that
is widely shared also contribute to the world culture. These general factors create the conditions for
global markets, global production, coordination, distribution, and global economies of scale.
2. What are the alternative strategies for developing global businesses?
There are four basic international strategies: domestic exporter, multinational, franchiser, and
transnational. In a transnational strategy, all factors of production are coordinated on a global scale.
However, the choice of strategy is a function of the type of business and product.
3. How can information systems support different global business strategies?
There is a connection between firm strategy and information systems design. Transnational firms
must develop networked system configurations and permit considerable decentralization of develop-
ment and operations. Franchisers almost always duplicate systems across many countries and use
centralized financial controls. Multinationals typically rely on decentralized independence among
foreign units with some movement toward development of networks. Domestic exporters typically
are centralized in domestic headquarters with some decentralized operations permitted.
4. What are the challenges posed by global information systems and management solutions for
these challenges?
Global information systems pose challenges because cultural, political, and language diversity
magnifies differences in organizational culture and business processes and encourages proliferation of
disparate local information systems that are difficult to integrate. Typically, international systems have
evolved without a conscious plan. The remedy is to define a small subset of core business processes
and focus on building systems to support these processes. Tactically, managers will have to coopt
widely dispersed foreign units to participate in the development and operation of these systems, being
careful to maintain overall control.
5. What are the issues and technical alternatives to be considered when developing international
information systems?
Implementing a global system requires an implementation strategy that considers both business
design and technology platforms. The main hardware and telecommunications issues are systems
integration and connectivity. The choices for integration are to go either with a proprietary architec-
ture or with open systems technology. Global networks are extremely difficult to build and operate.
Firms can build their own global networks or they can create global networks based on the Internet
(intranets or virtual private networks). The main software issues concern building interfaces to
existing systems and selecting applications that can work with multiple cultural, language, and
organizational frameworks.
Key Terms Legitimacy, 574
Multinational, 567
Business driver, 562 Particularism, 565
Cooptation, 574 Software localization, 581
Core systems, 572 Transborder data flow, 565
Domestic exporter, 567 Transnational, 568
Franchisers, 567
Global culture, 563
International information systems architecture, 562
Review Questions Chapter 15 Managing Global Systems 585
1. What major factors are driving the international- 4. What are the challenges posed by global informa-
ization of business? tion systems and management solutions for these
challenges?
• List and describe the five major dimensions
for developing an international information • List and describe the major management
systems architecture. issues in developing international systems.
• Describe the five general cultural factors • Identify and describe three principles to
leading toward growth in global business and follow when organizing the firm for global
the four specific business factors. Describe business.
the interconnection among these factors.
• Identify and describe three steps of a
• List and describe the major challenges to the management strategy for developing and
development of global systems. implementing global systems.
• Explain why some firms have not planned for • Define cooptation and explain how can it be
the development of international systems. used in building global systems.
2. What are the alternative strategies for developing 5. What are the issues and technical alternatives to
global businesses? be considered when developing international
• Describe the four main strategies for global information systems?
business and organizational structure.
• Describe the main technical issues facing
3. How can information systems support different global systems.
global business strategies?
• Identify some technologies that will help
• Describe the four different system configura- firms develop global systems.
tions that can be used to support different
global strategies.
Discussion Questions Video Cases
1. If you were a manager in a company that oper- You will find Video Cases illustrating some of the
ates in many countries, what criteria would you concepts in this chapter on the Laudon Web site along
use to determine whether an application should with questions to help you analyze the cases.
be developed as a global application or as a local
application?
2. Describe ways the Internet can be used in
international information systems.
Collaboration and Teamwork: Identifying Technologies for Global Business
Strategies
With a group of students, identify an area of clothing franchise, such as Express, as example
information technology and explore how this businesses. Which applications would you make
technology might be useful for supporting global global, which core business processes would you
business strategies. For instance, you might choose choose, and how would the technology be helpful?
an area such as digital telecommunications (e.g., If possible, use Google Sites to post links to Web
e-mail, wireless communications, virtual private pages, team communication announcements, and
networks), enterprise systems, collaboration soft- work assignments; to brainstorm; and to work col-
ware, or the Web. It will be necessary to choose a laboratively on project documents. Try to use
business scenario to discuss the technology. You Google Docs to develop a presentation of your find-
might choose an automobile parts franchise or a ings for the class.
586 Part Four Building and Managing Systems
WR Grace Consolidates its General Ledger System
CASE STUDY
W R Grace is a chemical manufacturer ity, and all three of the ledgers were driven by
headquartered in Columbia, Maryland. separate data sources.
Founded in 1854, the company develops
and sells specialty chemicals and con- The “classic” general ledger is used for reporting
struction products and has been a worldwide leader revenues and expenditures for all subsidiaries,
in those fields. Grace has over 6,300 employees and accounts, and business areas. The Grace Davison
earned $2.8 billion in revenues in 2009. The com- ledger stored information on company codes
pany has two operating segments: Grace Davison, (subsidiary ID numbers), accounts, profit centers,
which focuses on specialty chemicals and formula- plants, and trading partners. The Grace Construction
tion technologies, and Grace Construction Products, Products management ledger stored information on
which focuses on specialty construction materials, company codes, accounts, business areas, profit
systems, and services. Between these two divisions, centers, trading partners, and destination countries.
there are over 200 separate subsidiaries and several Grace Davison used profit-center accounting for its
different legal entities that comprise the full com- management reporting, and Grace Construction
pany. Grace has operations in 45 countries around Products used special-purpose ledgers to gather the
the world. same financial information. If this sounds like a
confusing arrangement, that’s because it was.
Though Grace is a strong and successful company,
global companies with separate divisions often strug- Consolidating this data across the two divisions
gle to unify their information systems. Grace is not a and across its many subdivisions proved difficult,
single, cohesive business unit—it’s an amalgam of and compiling company financial reports was a
many operating divisions, subsidiaries, and business painstaking and time-consuming task. Reconciling
units, all of which use different financial data, the financial data from each of the three reporting
reports, and reconciliation methods. Though this sources resulted in lengthy financial close cycles and
“fractured” structure is common to most global com- consumed excessive amounts of employee time and
panies, it created problems for the company’s general resources. Michael Brown, director of finance
ledger. The general ledger of a business is its main productivity at Grace, said that “from a financials
accounting record. General ledgers use double-entry point of view, we were basically three different
bookkeeping, which means that all of the transactions companies.” Grace management decided that the
made by a company are entered into two different company needed to eliminate the financial reporting
accounts, debits and credits. General ledgers include ‘silos’ and create a system that served all parts of
accounts for current assets, fixed assets, liabilities, Grace’s business.
revenues and expense items, gains, and losses.
WR Grace hoped to create a global financial
It’s no surprise that a global company that earns standard for its financial reporting system, using the
several billion dollars in revenues would have a slogan “one Grace” to rally the company to work
complicated ledger system, but Grace’s general towards that standard. SAP General Ledger was the
ledger setup was more than just complicated. It was most important factor in Grace’s ability to accomplish
a disorganized tangle of multiple ledgers, redundant its goal. SAP General Ledger was attractive to Grace
data, and inefficiency processes. The company had because of its many unique and useful features. It has
three separate ledger systems from SAP: one for its the ability to automatically and simultaneously post
legal reporting requirements team, and two more for all sub-ledger items in the appropriate general
each of its two major operating segments, Grace accounts, simultaneously update general ledger and
Davison and Grace Construction Products. But each cost accounting areas, and evaluate and report on
of the three implementations for these systems current accounting data in real time. Grace also liked
occurred several years apart, so the differences SAP’s centralized approach to general ledger, up-to-
between the ledgers were substantial. All three date references for the rendering of accounts across
ledgers had different configurations and different all of its divisions.
levels of granularity within the reporting functional-
Consolidating multiple ledgers is a difficult task.
SAP General Ledger helped Grace to simplify the
process. SAP Consulting and an SAP General Ledger Chapter 15 Managing Global Systems 587
migration team assisted the company along the way.
SAP implementations feature an SAP team leader special document types used by those interfaces. SAP
and project manager as well as a migration cockpit. and Grace both knew that a significant effort would
The migration cockpit is a feature of SAP implemen- be required to properly test the general ledger, and
tations that offers a graphical representation and SAP’s experience with similar upgrades in the past
overview of the general ledger migration process. was helpful in ensuring that SAP performed the
The cockpit displays steps of the migration in proper amount of tests.
sequence and manages logs, attachments, and other
materials important to the general ledger. The migra- After the data migration was completed, Grace
tion cockpit helps to ensure that sufficient planning still had to decommission its old ledgers, which were
goes into the general ledger consolidation process, still pivotal sources for many of the custom reports
and that the necessary business process changes that the company was generating on a regular basis.
accompany the technical changes of implementing a For example, reports are automatically generated
unified general ledger. from the special-purpose ledger, or reports that group
all the transactions that took place within a particu-
SAP and Grace split the project into two main com- lar country in the past year, and so on. To decommis-
ponents: General Ledger Data Migration, and sion its old ledgers, Grace had to eliminate as many
Business Process Testing. General Ledger Data of those custom reports as it could, and move the
Migration involved acquiring all of the relevant data essential ones over to the new general ledger. Grace
from Grace’s three separate ledgers, combining it and recruited employees from all areas of their financial
eliminating redundancies, and supplying it to the SAP division to identify the most critical reports.
General Ledger. A small team executed this half of
the project. Grace decided to standardize its reporting With the general ledger migration completed, all of
processes around profit-center accounting and built WR Grace shares a common accounting infrastructure,
its general ledger design with that standard in mind. management can quickly develop an overall picture of
Business Process Testing was completed by a global the company’s financial status, and most of the ledger
SAP team performing multiple full-cycle tests. In can be accessed or updated in real time. The financial
other words, SAP testers accessed the system reconciliation processes at the end of each reporting
remotely and tested all of the functions of SAP period were totally eliminated, allowing Grace to
General Ledger to ensure that the system would work devote less energy on managing its ledgers and more
as planned. The SAP General Ledger project manager on actually running its business. The eventual savings
oversaw both components of the project. in all areas of the business figure to pay for the installa-
tion in short order. Grace’s accountants and financial
During the testing process, SAP testers used a planners will be much more efficient. Managers will
technique called “unit testing,” common to many spend less time getting the information they need. IT
system upgrades of this type. The testers set up a costs for maintaining a single ledger will total far less
“dummy” system with a prototype version of the than the costs for maintaining three, and fewer errors
general ledger and used it to test different types of will make their way into the general ledger system.
accounting documents. Grace wanted to modify the Best of all for Grace, the implementation was com-
configuration of the general ledger to conform to the pleted on time and under budget.
company’s unique needs and circumstances, and
made sure that the people who knew what was Grace hopes to use the General Ledger platform to
needed were building the system and designing its continue making other improvements with SAP.
specifications. Because of these adjustments, unit Grace plans to upgrade its consolidation systems,
testing was critical to ensure that configuration financial planning, and analytics functions to SAP
changes had not affected the overall integrity of the systems. Grace already had a strong relationship with
system. SAP. In 1997, Grace installed SAP software for the
first time, and prior to the general ledger migration,
SAP testers also performed basic scenario tests, Grace was already using SAP Business Information
complex scenario tests, and tests on special account- Warehouse and NetWeaver Portal globally. This
ing document types in an effort to ensure that the pre-existing relationship made the process of imple-
general ledger was equipped to handle all of the menting SAP General Ledger much easier. It’s also
tasks Grace expected it to perform. They also tested the reason why Grace is so optimistic that it will
inbound finance interfaces, such as the HR interface, achieve similar gains in other areas of its business by
bank statements, and upload programs, as well as switching to SAP solutions.
588 Part Four Building and Managing Systems 2. What made SAP a logical partner for Grace’s
upgrade?
Sources: Christ Maxcer, “Global Enterprise Unites as One: W.R.
Grace Migrates to SAP General Ledger,” insiderPROFILES 5, no. 1, 3. What obstacles did SAP and Grace face in their
January 2, 2009; SAP AG, “One Grace Project Builds Single Source attempts to consolidate Grace’s ledgers?
of Truth Using SAP General Ledger,” 2008; and Ed Taylor, “The
Business Benefits of a General Ledger Migration at W.R. Grace & 4. How successful was the general ledger migration?
Co.” May 6, 2008. What are some of the risks of adopting a single
general ledger system from a single vendor to run
CASE STUDY QUESTIONS a global business?
1. Why did WR Grace’s general ledger system need
an overhaul?
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Glossary
3G networks Cellular networks based on packet-switched technology apps Small pieces of software that run on the Internet, on your
with speeds ranging from 144 Kbps for mobile users to over 2 Mbps computer, or on your cell phone and are generally delivered
for stationary users, enabling users to transmit video, graphics, and over the Internet.
other rich media, in addition to voice.
artificial intelligence (AI) The effort to develop computer-based
4G networks The next evolution in wireless communication is systems that can behave like humans, with the ability to learn
entirely packet switched and capable of providing between 1 languages, accomplish physical tasks, use a perceptual apparatus,
Mbps and 1 Gbps speeds; up to ten times faster than 3G and emulate human expertise and decision making.
networks. Not widely deployed in 2010.
attribute A piece of information describing a particular entity.
acceptable use policy (AUP) Defines acceptable uses of the firm’s augmented reality A technology for enhancing visualization.
information resources and computing equipment, including
desktop and laptop computers, wireless devices, telephones, and Provides a live direct or indirect view of a physical real-world
the Internet, and specifies consequences for noncompliance. environment whose elements are augmented by virtual computer-
generated imagery.
acceptance testing Provides the final certification that the system is authentication The ability of each party in a transaction to ascertain
ready to be used in a production setting. the identity of the other party.
authorization management systems Systems for allowing each user
accountability The mechanisms for assessing responsibility for access only to those portions of a system or the Web that person
decisions made and actions taken. is permitted to enter, based on information established by a set of
access rules.
accumulated balance digital payment systems Systems enabling authorization policies Determine differing levels of access to
users to make micropayments and purchases on the Web, information assets for different levels of users in an organization.
accumulating a debit balance on their credit card or telephone automation Using the computer to speed up the performance of
bills. existing tasks.
autonomic computing Effort to develop systems that can manage
affiliate revenue model an e-commerce revenue model in which themselves without user intervention.
Web sites are paid as "affiliates" for sending their visitors to other
sites in return for a referral fee. backward chaining A strategy for searching the rule base in an
agent-based modeling Modeling complex phenomena as systems of expert system that acts like a problem solver by beginning with a
autonomous agents that follow relatively simple rules for
interaction. hypothesis and seeking out more information until the
agency theory Economic theory that views the firm as a nexus of hypothesis is either proved or disproved.
contracts among self-interested individuals who must be
supervised and managed. balanced scorecard method Framework for operationalizing a firms
agile development Rapid delivery of working software by breaking a strategic plan by focusing on measurable financial, business
large project into a series of small sub-projects that are completed
in short periods of time using iteration and continuous feedback. process, customer, and learning and growth outcomes of firm
Ajax Development technique for creating interactive Web performance.
applications capable of updating the user interface without
reloading the entire browser page. bandwidth The capacity of a communications channel as measured
analog signal A continuous waveform that passes through a by the difference between the highest and lowest frequencies
communications medium; used for voice communications.
that can be transmitted by that channel.
analytical CRM Customer relationship management applications
dealing with the analysis of customer data to provide information banner ad A graphic display on a Web page used for advertising. The
for improving business performance.
banner is linked to the advertiser’s Web site so that a person
Android A mobile operating system developed by Android, Inc.
(purchased by Google) and later the Open Handset Alliance as a clicking on it will be transported to the advertiser’s Web site.
flexible, upgradeable mobile device platform.
batch processing A method of collecting and processing data in
antivirus software Software designed to detect, and often eliminate,
computer viruses from an information system. which transactions are accumulated and stored until a specified
application controls: Specific controls unique to each computerized time when it is convenient or necessary to process them as a
application that ensure that only authorized data are completely
and accurately processed by that application. group.
application server Software that handles all application operations baud A change in signal from positive to negative or vice versa that is
between browser-based computers and a company’s back-end
business applications or databases. used as a measure of transmission speed.
application software package A set of prewritten, precoded behavioral models Descriptions of management based on behavioral
application software programs that are commercially available for
sale or lease. scientists’ observations of what managers actually do in their
application software Programs written for a specific application to jobs.
perform functions specified by end users.
behavioral targeting Tracking the click-streams (history of clicking
behavior) of individuals across multiple Web sites for the purpose
of understanding their interests and intentions, and exposing
them to advertisements which are uniquely suited to their
interests.
benchmarking Setting strict standards for products, services, or
activities and measuring organizational performance against
those standards.
best practices The most successful solutions or problem-solving
methods that have been developed by a specific organization or
industry.
G1
G 2 Glossary capacity planning The process of predicting when a computer
hardware system becomes saturated to ensure that adequate
biometric authentication Technology for authenticating system computing resources are available for work of different priorities
users that compares a person’s unique characteristics such as and that the firm has enough computing power for its current
fingerprints, face, or retinal image, against a stored set profile of and future needs.
these characteristics.
capital budgeting The process of analyzing and selecting various
bit A binary digit representing the smallest unit of data in a computer proposals for capital expenditures.
system. It can only have one of two states, representing 0 or 1.
carpal tunnel syndrome (CTS) Type of RSI in which pressure on
blade server Entire computer that fits on a single, thin card (or blade) the median nerve through the wrist’s bony carpal tunnel
and that is plugged into a single chassis to save space, power and structure produces pain.
complexity.
case-based reasoning (CBR) Artificial intelligence technology that
blog Popular term for Weblog, designating an informal yet structured represents knowledge as a database of cases and solutions.
Web site where individuals can publish stories, opinions, and
links to other Web sites of interest. cell phone A device that transmits voice or data, using radio waves to
communicate with radio antennas placed within adjacent
blogosphere Totality of blog-related Web sites. geographic areas called cells.
Bluetooth Standard for wireless personal area networks that can
centralized processing Processing that is accomplished by one large
transmit up to 722 Kbps within a 10-meter area. central computer.
botnet A group of computers that have been infected with bot
change agent In the context of implementation, the individual acting
malware without users’ knowledge, enabling a hacker to use the as the catalyst during the change process to ensure successful
amassed resources of the computers to launch distributed denial- organizational adaptation to a new system or innovation.
of-service attacks, phishing campaigns or spam.
broadband High-speed transmission technology. Also designates a change management Managing the impact of organizational change
single communications medium that can transmit multiple associated with an innovation, such as a new information system.
channels of data simultaneously.
bugs Software program code defects. channel conflict Competition between two or more different
bullwhip effect Distortion of information about the demand for a distribution chains used to sell the products or services of the
product as it passes from one entity to the next across the supply same company.
chain.
bus topology Network topology linking a number of computers by a channel The link by which data or voice are transmitted between
single circuit with all messages broadcast to the entire network. sending and receiving devices in a network.
business continuity planning Planning that focuses on how the
company can restore business operations after a disaster strikes. chat Live, interactive conversations over a public network.
business driver A force in the environment to which businesses chief information officer (CIO) Senior manager in charge of the
must respond and that influences the direction of business.
business ecosystem Loosely coupled but interdependent networks of information systems function in the firm.
suppliers, distributors, outsourcing firms, transportation service chief knowledge officer (CKO) Senior executive in charge of the
firms, and technology manufacturers
business functions Specialized tasks performed in a business organization’s knowledge management program.
organization, including manufacturing and production, sales and chief privacy officer (CPO) Responsible for ensuring the company
marketing, finance and accounting, and human resources.
business intelligence Applications and technologies to help users complies with existing data privacy laws.
make better business decisions. chief security officer (CSO) Heads a formal security function for
business model An abstraction of what an enterprise is and how the
enterprise delivers a product or service, showing how the the organization and is responsible for enforcing the firm’s
enterprise creates wealth. security policy.
business performance management Attempts to systematically choice Simon’s third stage of decision making, when the individual
translate a firm’s strategies (e.g., differentiation, low-cost producer, selects among the various solution alternatives.
market share growth, and scope of operation) into operational Chrome OS Google's lightweight computer operating system for users
targets. who do most of their computing on the Internet; runs on
business process management Business process management (BPM) computers ranging from netbooks to desktop computers.
is an approach to business which aims to continuously improve churn rate Measurement of the number of customers who stop using
and manage business processes. or purchasing products or services from a company. Used as an
business process redesign Type of organizational change in which indicator of the growth or decline of a firm’s customer base.
business processes are analyzed, simplified, and redesigned. classical model of management Traditional description of
business processes The unique ways in which organizations management that focused on its formal functions of planning,
coordinate and organize work activities, information, and organizing, coordinating, deciding, and controlling.
knowledge to produce a product or service. click fraud Fraudulently clicking on an online ad in pay
business-to-business (B2B) electronic commerce Electronic sales per click advertising to generate an improper charge per click.
of goods and services among businesses. clicks-and-mortar Business model where the Web site is an
business-to-consumer (B2C) electronic commerce Electronic extension of a traditional bricks-and-mortar business.
retailing of products and services directly to individual clickstream tracking Tracking data about customer activities at Web
consumers. sites and storing them in a log.
byte A string of bits, usually eight, used to store one number or client The user point-of-entry for the required function in
character in a computer system. client/server computing. Normally a desktop computer,
workstation, or laptop computer.
cable Internet connections Internet connections that use digital client/server computing A model for computing that splits processing
cable lines to deliver high-speed Internet access to homes and between clients and servers on a network, assigning functions to
businesses. the machine most able to perform the function.
cloud computing Web-based applications that are stored on remote
call center An organizational department responsible for handling servers and accessed via the "cloud" of the Internet using a
customer service issues by telephone and other channels. standard Web browser.
coaxial cable A transmission medium consisting of thickly insulated
copper wire; can transmit large volumes of data quickly.
Code Division Multiple Access (CDMA) Major cellular
transmission standard in the United States that transmits over
several frequencies, occupies the entire spectrum, and randomly Glossary G 3
assigns users to a range of frequencies over time.
collaboration Working with others to achieve shared and explicit consumer-to-consumer (C2C) electronic commerce Consumers
goals. selling goods and services electronically to other consumers.
collaborative commerce The use of digital technologies to enable
multiple organizations to collaboratively design, develop, build controls All of the methods, policies, and procedures that ensure
and manage products through their life cycles. protection of the organization’s assets, accuracy and reliability of
collaborative filtering Tracking users’ movements on a Web site, its records, and operational adherence to management standards.
comparing the information gleaned about a user’s behavior
against data about other customers with similar interests to conversion The process of changing from the old system to the new
predict what the user would like to see next. system.
collaborative planning, forecasting, and replenishment (CPFR)
Firms collaborating with their suppliers and buyers to formulate cookies Tiny file deposited on a computer hard drive when an
demand forecasts, develop production plans, and coordinate individual visits certain Web sites. Used to identify the visitor and
shipping, warehousing, and stocking activities. track visits to the Web site.
co-location a kind of Web site hosting in which firm purchase or rent
a physical server computer at a hosting company's location in cooptation Bringing the opposition into the process of designing and
order to operate a Web site. implementing a solution without giving up control of the
community provider a Web site business model that creates a digital direction and nature of the change.
online environment where people with similar interests can
transact (buy and sell goods); share interests, photos, videos; copyright A statutory grant that protects creators of intellectual
communicate with like-minded people; receive interest-related property against copying by others for any purpose for a
information; and even play out fantasies by adopting online minimum of 70 years.
personalities called avatars.
competitive forces model Model used to describe the interaction of core competency Activity at which a firm excels as a world-class
external influences, specifically threats and opportunities, that leader.
affect an organization’s strategy and ability to compete.
complementary assets Additional assets required to derive value core systems Systems that support functions that are absolutely
from a primary investment. critical to the organization.
component-based development Building large software systems by
combining pre-existing software components. cost transparency the ability of consumers to discover the actual
computer Physical device that takes data as an input, transforms the costs merchants pay for products.
data by executing stored instructions, and outputs information to
a number of devices. counterimplementation A deliberate strategy to thwart the
computer abuse The commission of acts involving a computer that implementation of an information system or an innovation in an
may not be illegal but are considered unethical. organization.
computer crime The commission of illegal acts through the use of a
computer or against a computer system. critical success factors (CSFs) A small number of easily identifiable
computer forensics The scientific collection, examination, operational goals shaped by the industry, the firm, the manager,
authentication, preservation, and analysis of data held on or and the broader environment that are believed to assure the
retrieved from computer storage media in such a way that the success of an organization. Used to determine the information
information can be used as evidence in a court of law. requirements of an organization.
computer hardware Physical equipment used for input, processing,
and output activities in an information system. cross-selling Marketing complementary products to customers.
computer literacy Knowledge about information technology, crowdsourcing Using large Internet audiences for advice, market
focusing on understanding of how computer-based technologies
work. feedback, new ideas and solutions to business problems. Related
computer software Detailed, preprogrammed instructions that to the 'wisdom of crowds' theory.
control and coordinate the work of computer hardware culture The set of fundamental assumptions about what products the
components in an information system. organization should produce, how and where it should produce
computer virus Rogue software program that attaches itself to other them, and for whom they should be produced.
software programs or data files in order to be executed, often customer lifetime value (CLTV) Difference between revenues
causing hardware and software malfunctions. produced by a specific customer and the expenses for acquiring
computer vision syndrome (CVS) Eyestrain condition related to and servicing that customer minus the cost of promotional
computer display screen use; symptoms include headaches, marketing over the lifetime of the customer relationship,
blurred vision, and dry and irritated eyes. expressed in today’s dollars.
computer-aided design (CAD) Information system that automates customer relationship management (CRM) Business and
the creation and revision of designs using sophisticated graphics technology discipline that uses information systems to coordinate
software. all of the business processes surrounding the firm’s interactions
computer-aided software engineering (CASE) Automation of step- with its customers in sales, marketing, and service.
by-step methodologies for software and systems development to customer relationship management systems Information systems
reduce the amounts of repetitive work the developer needs to do. that track all the ways in which a company interacts with its
computer-based information systems (CBIS) Information systems customers and analyze these interactions to optimize revenue,
that rely on computer hardware and software for processing and profitability, customer satisfaction, and customer retention.
disseminating information. customization The modification of a software package to meet an
connectivity The ability of computers and computer-based devices to organization’s unique requirements without destroying the
communicate with each other and share information in a package software’s integrity.
meaningful way without human intervention.. cybervandalism Intentional disruption, defacement, or destruction
of a Web site or corporate information system.
data Streams of raw facts representing events occurring in
organizations or the physical environment before they have been
organized and arranged into a form that people can understand
and use.
data administration A special organizational function for managing
the organization’s data resources, concerned with information
policy, data planning, maintenance of data dictionaries, and data
quality standards.
data cleansing Activities for detecting and correcting data in a
database or file that are incorrect, incomplete, improperly
formatted, or redundant. Also known as data scrubbing.
G 4 Glossary from higher priority business-critical data, and sending packets in
order of priority.
data definition DBMS capability that specifies the structure and demand planning Determining how much product a business needs
content of the database. to make to satisfy all its customers’ demands.
denial of service (DoS) attack Flooding a network server or Web
data dictionary An automated or manual tool for storing and server with false communications or requests for services in
organizing information about the data maintained in a database. order to crash the network.
Descartes’ rule of change A principle that states that if an action
data-driven DSS A system that supports decision making by allowing cannot be taken repeatedly, then it is not right to be taken at any
users to extract and analyze useful information that was time.
previously buried in large databases. design Simon’s second stage of decision making, when the individual
conceives of possible alternative solutions to a problem.
data element A field. digital asset management systems Classify, store, and distribute
data flow diagram (DFD) Primary tool for structured analysis that digital objects such as photographs, graphic images, video, and
audio content.
graphically illustrates a system’s component process and the flow digital certificate An attachment to an electronic message to verify
of data between them. the identity of the sender and to provide the receiver with the
data governance Policies and processes for managing the availability, means to encode a reply.
usability, integrity, and security of the firm’s data. digital checking Systems that extend the functionality of existing
data inconsistency The presence of different values for same checking accounts so they can be used for online shopping
attribute when the same data are stored in multiple locations. payments.
data management software Software used for creating and digital credit card payment system Secure services for credit card
manipulating lists, creating files and databases to store data, and payments on the Internet that protect information transmitted
combining information for reports. among users, merchant sites, and processing banks.
data manipulation language A language associated with a database digital dashboard Displays all of a firm’s key performance indicators
management system that end users and programmers use to as graphs and charts on a single screen to provide one-page
manipulate data in the database. overview of all the critical measurements necessary to make key
data mart A small data warehouse containing only a portion of the executive decisions.
organization’s data for a specified function or population of users. digital divide Large disparities in access to computers and the
data mining Analysis of large pools of data to find patterns and rules Internet among different social groups and different locations.
that can be used to guide decision making and predict future digital firm Organization where nearly all significant business
behavior. processes and relationships with customers, suppliers, and
data quality audit A survey and/or sample of files to determine employees are digitally enabled, and key corporate assets are
accuracy and completeness of data in an information system. managed through digital means.
data redundancy The presence of duplicate data in multiple data digital goods Goods that can be delivered over a digital network.
files. digital market A marketplace that is created by computer and
data visualization Technology for helping users see patterns and communication technologies that link many buyers and sellers.
relationships in large amounts of data by presenting the data in Digital Millennium Copyright Act (DMCA) Adjusts copyright laws
graphical form. to the Internet Age by making it illegal to make, distribute, or use
data warehouse A database, with reporting and query tools, that devices that circumvent technology-based protections of copy-
stores current and historical data extracted from various righted materials.
operational systems and consolidated for management reporting digital signal A discrete waveform that transmits data coded into
and analysis. two discrete states as 1-bits and 0-bits, which are represented as
data workers People such as secretaries or bookkeepers who process on-off electrical pulses; used for data communications.
the organization’s paperwork. digital subscriber line (DSL) A group of technologies providing
database A group of related files. high-capacity transmission over existing copper telephone lines.
database (rigorous definition) A collection of data organized to digital wallet Software that stores credit card, electronic cash, owner
service many applications at the same time by storing and identification, and address information and provides this data
managing data so that they appear to be in one location. automatically during electronic commerce purchase transactions.
database administration Refers to the more technical and direct cutover A risky conversion approach where the new system
operational aspects of managing data, including physical database completely replaces the old one on an appointed day.
design and maintenance. disaster recovery planning Planning for the restoration of
database management system (DBMS) Special software to create computing and communications services after they have been
and maintain a database and enable individual business disrupted.
applications to extract the data they need without having to disintermediation The removal of organizations or business process
create separate files or data definitions in their computer layers responsible for certain intermediary steps in a value chain.
programs. disruptive technologies Technologies with disruptive impact on
database server A computer in a client/server environment that is industries and businesses, rendering existing products, services
responsible for running a DBMS to process SQL statements and and business models obsolete.
perform database management tasks. distance learning Education or training delivered over a distance to
dataconferencing Teleconferencing in which two or more users are individuals in one or more locations.
able to edit and modify data files simultaneously. distributed database A database that is stored in more than one
decisional roles Mintzberg’s classification for managerial roles where physical location. Parts or copies of the database are physically
managers initiate activities, handle disturbances, allocate stored in one location, and other parts or copies are stored and
resources, and negotiate conflicts. maintained in other locations.
decision-support systems (DSS) Information systems at the distributed denial-of-service (DDoS) attack Numerous computers
organization’s management level that combine data and inundating and overwhelming a network from numerous launch
sophisticated analytical models or data analysis tools to support points.
semistructured and unstructured decision making.
dedicated lines Telephone lines that are continuously available for
transmission by a lessee. Typically conditioned to transmit data
at high speeds for high-volume applications.
deep packet inspection (DPI) Technology for managing network
traffic by examining data packets, sorting out low-priority data
distributed processing The distribution of computer processing Glossary G 5
work among multiple computers linked by a communications
network. end users Representatives of departments outside the information
systems group for whom applications are developed.
documentation Descriptions of how an information system works
from either a technical or end-user standpoint. enterprise applications Systems that can coordinate activities,
decisions, and knowledge across many different functions, levels,
domain name English-like name that corresponds to the unique 32- and business units in a firm. Include enterprise systems, supply
bit numeric Internet Protocol (IP) address for each computer chain management systems, and knowledge management
connected to the Internet systems.
Domain Name System (DNS) A hierarchical system of servers enterprise content management systems Help organizations
maintaining a database enabling the conversion of domain names manage structured and semistructured knowledge, providing
to their numeric IP addresses. corporate repositories of documents, reports, presentations, and
best practices and capabilities for collecting and organizing e-mail
domestic exporter Form of business organization characterized by and graphic objects.
heavy centralization of corporate activities in the home county of
origin. enterprise portal Web interface providing a single entry point for
accessing organizational information and services, including
downsizing The process of transferring applications from large information from various enterprise applications and in-house
computers to smaller ones. legacy systems so that information appears to be coming from a
single source.
downtime Period of time in which an information system is not
operational. enterprise software Set of integrated modules for applications such
as sales and distribution, financial accounting, investment
drill down The ability to move from summary data to lower and management, materials management, production planning, plant
lower levels of detail. maintenance, and human resources that allow data to be used by
multiple functions and business processes.
due process A process in which laws are well-known and understood
and there is an ability to appeal to higher authorities to ensure enterprise systems Integrated enterprise-wide information systems
that laws are applied correctly. that coordinate key internal processes of the firm.
dynamic pricing Pricing of items based on real-time interactions enterprise-wide knowledge management systems General-
between buyers and sellers that determine what a item is worth purpose, firmwide systems that collect, store, distribute, and
at any particular moment. apply digital content and knowledge.
e-government Use of the Internet and related technologies to entity A person, place, thing, or event about which information must
digitally enable government and public sector agencies’ be kept.
relationships with citizens, businesses, and other arms of
government. entity-relationship diagram A methodology for documenting
databases illustrating the relationship between various entities in
e-learning Instruction delivered through purely digital technology, the database.
such as CD-ROMs, the Internet, or private networks.
ergonomics The interaction of people and machines in the work
efficient customer response system System that directly links environment, including the design of jobs, health issues, and the
consumer behavior back to distribution, production, and supply end-user interface of information systems.
chains.
e-tailer Online retail stores from the giant Amazon to tiny local stores
electronic billing and payment presentation system Systems that have Web sites where retail goods are sold.
used for paying routine monthly bills that allow users to view
their bills electronically and pay them through electronic funds ethical “no free lunch” rule Assumption that all tangible and
transfers from banks or credit card accounts. intangible objects are owned by someone else, unless there is a
specific declaration otherwise, and that the creator wants
electronic business (e-business) The use of the Internet and digital compensation for this work.
technology to execute all the business processes in the enterprise.
Includes e-commerce as well as processes for the internal ethics Principles of right and wrong that can be used by individuals
management of the firm and for coordination with suppliers and acting as free moral agents to make choices to guide their
other business partners. behavior.
electronic commerce The process of buying and selling goods and evil twins Wireless networks that pretend to be legitimate to entice
services electronically involving transactions using the Internet, participants to log on and reveal passwords or credit card
networks, and other digital technologies. numbers.
electronic data interchange (EDI) The direct computer-to- exchange Third-party Net marketplace that is primarily transaction
computer exchange between two organizations of standard oriented and that connects many buyers and suppliers for spot
business transactions, such as orders, shipment instructions, or purchasing.
payments.
executive support systems (ESS) Information systems at the
electronic payment system The use of digital technologies, such as organization’s strategic level designed to address unstructured
credit cards, smart cards and Internet-based payment systems, to decision making through advanced graphics and
pay for products and services electronically. communications.
e-mail The computer-to-computer exchange of messages. expert system Knowledge-intensive computer program that captures
employee relationship management (ERM) Software dealing with the expertise of a human in limited domains of knowledge.
employee issues that are closely related to CRM, such as setting explicit knowledge Knowledge that has been documented.
objectives, employee performance management, performance- external integration tools Project management technique that links
based compensation, and employee training.
encryption The coding and scrambling of messages to prevent their the work of the implementation team to that of users at all
being read or accessed without authorization. organizational levels.
end-user development The development of information systems by extranet Private intranet that is accessible to authorized outsiders.
end users with little or no formal assistance from technical
specialists. Fair Information Practices (FIP) A set of principles originally set
end-user interface The part of an information system through which forth in 1973 that governs the collection and use of information
the end user interacts with the system, such as on-line screens about individuals and forms the basis of most U.S. and European
and commands. privacy laws.
G 6 Glossary global positioning system (GPS) Worldwide satellite navigational
system.
fault-tolerant computer systems Systems that contain extra
hardware, software, and power supply components that can back graphical user interface (GUI) The part of an operating system
a system up and keep it running to prevent system failure. users interact with that uses graphic icons and the computer
mouse to issue commands and make selections.
feasibility study As part of the systems analysis process, the way to
determine whether the solution is achievable, given the Gramm-Leach-Bliley Act Requires financial institutions to ensure
organization’s resources and constraints. the security and confidentiality of customer data.
feedback Output that is returned to the appropriate members of the green computing Refers to practices and technologies for designing,
organization to help them evaluate or correct input. manufacturing, using, and disposing of computers, servers, and
associated devices such as monitors, printers, storage devices,
fiber-optic cable A fast, light, and durable transmission medium and networking and communications systems to minimize
consisting of thin strands of clear glass fiber bound into cables. impact on the environment.
Data are transmitted as light pulses.
grid computing Applying the resources of many computers in a
field A grouping of characters into a word, a group of words, or a network to a single problem.
complete number, such as a person’s name or age.
group decision-support system (GDSS) An interactive computer-
file transfer protocol (FTP) Tool for retrieving and transferring files based system to facilitate the solution to unstructured problems
from a remote computer. by a set of decision makers working together as a group.
file A group of records of the same type. hacker A person who gains unauthorized access to a computer
firewall Hardware and software placed between an organization’s network for profit, criminal mischief, or personal pleasure.
internal network and an external network to prevent outsiders hertz Measure of frequency of electrical impulses per second, with 1
from invading private networks. Hertz equivalent to 1 cycle per second.
focused differentiation Competitive strategy for developing new
market niches for specialized products or services where a high-availability computing Tools and technologies ,including
business can compete in the target area better than its backup hardware resources, to enable a system to recover quickly
competitors. from a crash.
folksonomies User-created taxonomies for classifying and sharing
information. HIPAA Law outlining rules for medical security, privacy, and the
foreign key Field in a database table that enables users find related management of health care records.
information in another database table.
formal control tools Project management technique that helps hotspot A specific geographic location in which an access point
monitor the progress toward completion of a task and fulfillment provides public Wi-Fi network service.
of goals.
formal planning tools Project management technique that hubs Very simple devices that connect network components, sending
structures and sequences tasks, budgeting time, money, and a packet of data to all other connected devices.
technical resources required to complete the tasks.
forward chaining A strategy for searching the rule base in an expert hybrid AI systems Integration of multiple AI technologies into a
system that begins with the information entered by the user and single application to take advantage of the best features of these
searches the rule base to arrive at a conclusion. technologies.
fourth-generation language A programming language that can be
employed directly by end users or less-skilled programmers to hypertext markup language (HTML) Page description language for
develop computer applications more rapidly than conventional creating Web pages and other hypermedia documents.
programming languages.
franchiser Form of business organization in which a product is hypertext transfer protocol (HTTP) The communications standard
created, designed, financed, and initially produced in the home used to transfer pages on the Web. Defines how messages are
country, but for product-specific reasons relies heavily on foreign formatted and transmitted.
personnel for further production, marketing, and human
resources. identity management Business processes and software tools for
free/fremium revenue model an e-commerce revenue model in identifying the valid users of a system and controlling their
which a firm offers basic services or content for free, while access to system resources.
charging a premium for advanced or high value features.
fuzzy logic Rule-based AI that tolerates imprecision by using identity theft Theft of key pieces of personal information, such as
nonspecific terms called membership functions to solve credit card or Social Security numbers, in order to obtain
problems. merchandise and services in the name of the victim or to obtain
false credentials.
Gantt chart Visually representats the timing, duration, and resource
requirements of project tasks. Immanuel Kant’s Categorical Imperative A principle that states
that if an action is not right for everyone to take it is not right for
general controls Overall control environment governing the design, anyone.
security, and use of computer programs and the security of data
files in general throughout the organization's information implementation Simon’s final stage of decision-making, when the
technology infrastructure. individual puts the decision into effect and reports on the
progress of the solution.
genetic algorithms Problem-solving methods that promote the
evolution of solutions to specified problems using the model of industry structure The nature of participants in an industry and
living organisms adapting to their environment. their relative bargaining power. Derives from the competitive
forces and establishes the general business environment in an
geographic information system (GIS) System with software that industry and the overall profitability of doing business in that
can analyze and display data using digitized maps to enhance environment.
planning and decision-making.
inference engine The strategy used to search through the rule base
global culture The development of common expectations, shared in an expert system; can be forward or backward chaining.
artifacts, and social norms among different cultures and peoples
information Data that have been shaped into a form that is
meaningful and useful to human beings.
information asymmetry Situation where the relative bargaining
power of two parties in a transaction is determined by one party
in the transaction possessing more information essential to the
transaction than the other party.
information density The total amount and quality of information Glossary G 7
available to all market participants, consumers, and merchants.
Internet Service Provider (ISP) A commercial organization with a
information policy Formal rules governing the maintenance, permanent connection to the Internet that sells temporary
distribution, and use of information in an organization. connections to subscribers.
information requirements A detailed statement of the information Internet telephony Technologies that use the Internet Protocol’s
needs that a new system must satisfy; identifies who needs what packet-switched connections for voice service.
information, and when, where, and how the information is
needed. Internet2 Research network with new protocols and transmission
speeds that provides an infrastructure for supporting high-
information rights The rights that individuals and organizations bandwidth Internet applications.
have with respect to information that pertains to themselves.
interorganizational systems Information systems that automate the
information system Interrelated components working together to flow of information across organizational boundaries and link a
collect, process, store, and disseminate information to support company to its customers, distributors, or suppliers.
decision making, coordination, control, analysis, and visualization
in an organization. interpersonal roles Mintzberg’s classification for managerial roles
where managers act as figureheads and leaders for the
information systems department The formal organizational unit organization.
that is responsible for the information systems function in the
organization. intranet An internal network based on Internet and World Wide Web
technology and standards.
information systems literacy Broad-based understanding of
information systems that includes behavioral knowledge about intrusion detection system Tools to monitor the most vulnerable
organizations and individuals using information systems as well points in a network to detect and deter unauthorized intruders.
as technical knowledge about computers.
investment workstation Powerful desktop computer for financial
information systems managers Leaders of the various specialists in specialists, which is optimized to access and manipulate massive
the information systems department. amounts of financial data.
information systems plan A road map indicating the direction of IT governance Strategy and policies for using information
systems development: the rationale, the current situation, the technology within an organization, specifying the decision rights
management strategy, the implementation plan, and the budget. and accountabilities to ensure that information technology
supports the organization's strategies and objectives.
information technology (IT) All the hardware and software
technologies a firm needs to achieve its business objectives. iterative A process of repeating over and over again the steps to build
a system.
information technology (IT) infrastructure Computer hardware,
software, data, storage technology, and networks providing a Java Programming language that can deliver only the software
portfolio of shared IT resources for the organization. functionality needed for a particular task, such as a small applet
downloaded from a network; can run on any computer and
informational roles Mintzberg’s classification for managerial roles operating system.
where managers act as the nerve centers of their organizations,
receiving and disseminating critical information. Joint Application Design (JAD) Process to accelerate the
generation of information requirements by having end users and
informed consent Consent given with knowledge of all the facts information systems specialists work together in intensive
needed to make a rational decision. interactive design sessions.
input The capture or collection of raw data from within the just-in-time Scheduling system for minimizing inventory by having
organization or from its external environment for processing in components arrive exactly at the moment they are needed and
an information system. finished goods shipped as soon as they leave the assembly line.
instant messaging Chat service that allows participants to create key field A field in a record that uniquely identifies instances of that
their own private chat channels so that a person can be alerted record so that it can be retrieved, updated, or sorted.
whenever someone on his or her private list is on-line to initiate
a chat session with that particular individual. key performance indicators Measures proposed by senior
management for understanding how well the firm is performing
intangible benefits Benefits that are not easily quantified; they along specified dimensions.
include more efficient customer service or enhanced decision
making. keylogger Spyware that records every keystroke made on a computer
to steal personal information or passwords or to launch Internet
intellectual property Intangible property created by individuals or attacks.
corporations that is subject to protections under trade secret,
copyright, and patent law. knowledge Concepts, experience, and insight that provide a
framework for creating, evaluating, and using information.
intelligence The first of Simon’s four stages of decision making,
when the individual collects information to identify problems knowledge—and information-intense products Products that
occurring in the organization. require a great deal of learning and knowledge to produce.
intelligent agent Software program that uses a built-in or learned knowledge base Model of human knowledge that is used by expert
knowledge base to carry out specific, repetitive, and predictable systems.
tasks for an individual user, business process, or software
application. knowledge discovery Identification of novel and valuable patterns in
large databases.
internal integration tools Project management technique that
ensures that the implementation team operates as a cohesive knowledge management The set of processes developed in an
unit. organization to create, gather, store, maintain, and disseminate
the firm’s knowledge.
international information systems architecture The basic
information systems required by organizations to coordinate knowledge management systems Systems that support the creation,
worldwide trade and other activities. capture, storage, and dissemination of firm expertise and
knowledge.
Internet Global network of networks using universal standards to
connect millions of different networks. knowledge network system Online directory for locating corporate
experts in well-defined knowledge domains.
Internet Protocol (IP) address Four-part numeric address
indicating a unique computer location on the Internet. knowledge workers People such as engineers or architects who
design products or services and create knowledge for the
organization.
G 8 Glossary microprocessor Very large scale integrated circuit technology that
integrates the computer’s memory, logic, and control on a single
learning management system (LMS) Tools for the management, chip.
delivery, tracking, and assessment of various types of employee
learning. microwave A high-volume, long-distance, point-to-point transmission
in which high-frequency radio signals are transmitted through
legacy system A system that has been in existence for a long time the atmosphere from one terrestrial transmission station to
and that continues to be used to avoid the high cost of replacing another.
or redesigning it.
middle management People in the middle of the organizational
legitimacy The extent to which one’s authority is accepted on hierarchy who are responsible for carrying out the plans and
grounds of competence, vision, or other qualities. Making goals of senior management.
judgments and taking actions on the basis of narrow or personal
characteristics. midrange computer Middle-size computer that is capable of
supporting the computing needs of smaller organizations or of
liability The existence of laws that permit individuals to recover the managing networks of other computers.
damages done to them by other actors, systems, or organizations.
minicomputer Middle-range computer used in systems for
Linux Reliable and compactly designed operating system that is an universities, factories, or research laboratories.
offshoot of UNIX and that can run on many different hardware
platforms and is available free or at very low cost. Used as MIS audit Identifies all the controls that govern individual
alternative to UNIX and Windows NT. information systems and assesses their effectiveness.
local area network (LAN) A telecommunications network that mobile commerce (m-commerce) The use of wireless devices,
requires its own dedicated channels and that encompasses a such as cell phones or handheld digital information appliances, to
limited distance, usually one building or several buildings in conduct both business-to-consumer and business-to-business e-
close proximity. commerce transactions over the Internet.
long tail marketing Refers to the ability of firms to profitably market mobile wallets (m-wallets) Store m-commerce shoppers’ personal
goods to very small online audiences, largely because of the information and credit card numbers to expedite the purchase
lower costs of reaching very small market segements (people process.
who fall into the long tail ends of a Bell curve).
moblog Specialized blog featuring photos with captions posted from
mainframe Largest category of computer, used for major business mobile phones.
processing.
model An abstract representation that illustrates the components or
maintenance Changes in hardware, software, documentation, or relationships of a phenomenon.
procedures to a production system to correct errors, meet new
requirements, or improve processing efficiency. model-driven DSS Primarily stand-alone system that uses some type
of model to perform “what-if” and other kinds of analyses.
malware Malicious software programs such as computer viruses,
worms, and Trojan horses. modem A device for translating a computer’s digital signals into
analog form for transmission over ordinary telephone lines, or for
managed security service provider (MSSP) Company that provides translating analog signals back into digital form for reception by a
security management services for subscribing clients. computer.
management information systems (MIS) The study of information module A logical unit of a program that performs one or several
systems focusing on their use in business and management.. functions.
management-level systems Information systems that support the Moore’s Law Assertion that the number of components on a chip
monitoring, controlling, decision-making, and administrative doubles each year
activities of middle managers.
MP3 (MPEG3) Compression standard that can compress audio files
managerial roles Expectations of the activities that managers should for transfer over the Internet with virtually no loss in quality.
perform in an organization.
multicore processor Integrated circuit to which two or more
man-month The traditional unit of measurement used by systems processors have been attached for enhanced performance,
designers to estimate the length of time to complete a project. reduced power consumption and more efficient simultaneous
Refers to the amount of work a person can be expected to processing of multiple tasks.
complete in a month.
multimedia The integration of two or more types of media such as
market creator An e-commerce business model in which firms text, graphics, sound, voice, full-motion video, or animation into a
provide a digital online environment where buyers and sellers computer-based application.
can meet, search for products, and engage in transactions.
multinational Form of business organization that concentrates
marketspace A marketplace extended beyond traditional boundaries financial management and control out of a central home base
and removed from a temporal and geographic location. while decentralizing
mashups Composite software applications that depend on multiplexing Ability of a single communications channel to carry
high-speed networks, universal communication standards, and data transmissions from multiple sources simultaneously.
open-source code.
multitiered (N-tier) client/server architecture Client/server
mass customization The capacity to offer individually tailored network which the work of the entire network is balanced over
products or services using mass production resources.. several different levels of servers.
megahertz A measure of cycle speed, or the pacing of events in a nanotechnology Technology that builds structures and processes
computer; one megahertz equals one million cycles per second. based on the manipulation of individual atoms and molecules.
menu costs Merchants’ costs of changing prices. natural language Nonprocedural language that enables users to
metric A standard measurement of performance. communicate with the computer using conversational commands
metropolitan area network (MAN) Network that spans a resembling human speech.
metropolitan area, usually a city and its major suburbs. Its net marketplace A single digital marketplace based on Internet
geographic scope falls between a WAN and a LAN. technology linking many buyers to many sellers.
microbrowser Web browser software with a small file size that can
work with low-memory constraints, tiny screens of handheld netbook Small low-cost, lightweight subnotebook optimized for
wireless devices, and low bandwidth of wireless networks. wireless communication and Internet access.
micropayment Payment for a very small sum of money, often less
than $10. network The linking of two or more computers to share data or
resources, such as a printer.
network economics Model of strategic systems at the industry level Glossary G 9
based on the concept of a network where adding another
participant entails zero marginal costs but can create much larger operational-level systems Information systems that monitor the
marginal gains. elementary activities and transactions of the organization.
network interface card (NIC) Expansion card inserted into a opt-in Model of informed consent permitting prohibiting an
computer to enable it to connect to a network. organization from collecting any personal information unless the
individual specifically takes action to approve information
network operating system (NOS) Special software that routes and collection and use.
manages communications on the network and coordinates
network resources. opt-out Model of informed consent permitting the collection of
personal information until the consumer specifically requests
networking and telecommunications technology Physical devices that the data not be collected.
and software that link various computer hardware components
and transfer data from one physical location to another. organization (behavioral definition) A collection of rights,
privileges, obligations, and responsibilities that are delicately
neural network Hardware or software that attempts to emulate the balanced over a period of time through conflict and conflict
processing patterns of the biological brain. resolution.
nonobvious relationship awareness (NORA) Technology that can organization (technical definition) A stable, formal, social
find obscure hidden connections between people or other entities structure that takes resources from the environment and
by analyzing information from many different sources to processes them to produce outputs.
correlate relationships.
organizational and management capital Investments in
normalization The process of creating small stable data structures organization and management such as new business processes,
from complex groups of data when designing a relational management behavior, organizational culture, or training.
database.
organizational impact analysis Study of the way a proposed system
object Software building block that combines data and the procedures will affect organizational structure, attitudes, decision making,
acting on the data. and operations.
object-oriented DBMS An approach to data management that stores organizational learning Creation of new standard operating
both data and the procedures acting on the data as objects that procedures and business processes that reflect organizations’
can be automatically retrieved and shared; the objects can experience.
contain multimedia.
output The distribution of processed information to the people who
object-oriented development Approach to systems development will use it or to the activities for which it will be used.
that uses the object as the basic unit of systems analysis and
design. The system is modeled as a collection o objects and the outsourcing The practice of contracting computer center operations,
relationship between them. telecommunications networks, or applications development to
external vendors.
object-oriented programming An approach to software
development that combines data and procedures into a single P3P Industry standard designed to give users more control over
object. personal information gathered on Web sites they visit. Stands for
Platform for Privacy Preferences Project.
object-relational DBMS A database management system that
combines the capabilities of a relational DBMS for storing packet switching Technology that breaks messages into small, fixed
traditional information and the capabilities of an bundles of data and routes them in the most economical way
object-oriented DBMS for storing graphics and multimedia. through any available communications channel..
Office 2010 The latest version of Microsoft desktop software suite paradigm shift Radical reconceptualization of the nature of the
with capabilities for supporting collaborative work on the Web or business and the nature of the organization.
incorporating information from the Web into documents.
parallel strategy A safe and conservative conversion approach where
offshore outsourcing Outsourcing systems development work or both the old system and its potential replacement are run
maintenance of existing systems to external vendors in another together for a time until everyone is assured that the new one
country. functions correctly.
on-demand computing Firms off-loading peak demand for particularism Making judgments and taking action on the basis of
computing power to remote, large-scale data processing centers, narrow or personal characteristics, in all its forms (religious,
investing just enough to handle average processing loads and nationalistic, ethnic, regionalism, geopolitical position).
paying for only as much additional computing power as the
market demands. Also called utility computing. partner relationship management (PRM) Automation of the firm’s
relationships with its selling partners using customer data and
on-line analytical processing (OLAP) Capability for manipulating analytical tools to improve coordination and customer sales.
and analyzing large volumes of data from multiple perspectives.
patch Small pieces of software to repair the software flaws without
online processing A method of collecting and processing data in disturbing the proper operation of the software.
which transactions are entered directly into the computer system
and processed immediately. patent A legal document that grants the owner an exclusive
monopoly on the ideas behind an invention for 17 years;
online transaction processing Transaction processing mode in designed to ensure that inventors of new machines or methods
which transactions entered on-line are immediately processed by are rewarded for their labor while making widespread use of their
the computer. inventions.
open-source software Software that provides free access to its peer-to-peer Network architecture that gives equal power to all
program code, allowing users to modify the program code to computers on the network; used primarily in small networks.
make improvements or fix errors.
personal area network (PAN) Computer network used for
operating system Software that manages the resources and activities communication among digital devices (including telephones and
of the computer. PDAs) that are close to one person.
operational CRM Customer-facing applications, such as sales force personal digital assistant (PDA) Small, pen-based, handheld
automation, call center and customer service support, and computer with built-in wireless telecommunications capable of
marketing automation. entirely digital communications transmission.
operational management People who monitor the day-to-day personalization Ability of merchants to target marketing messages to
activities of the organization. specific individuals by adjusting the message for a person’s name,
interests, and past purchases.
PERT chart Network diagram depicting project tasks and their
interrelationships.
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