Strategies for Global IS Development

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Chapter 16

• Strategies for Global IS Development
• (A critical review of a critical analysis)

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Basic Ideas of This Section

• Developing global systems is risky
• There are solutions, but costly
• Managing global development teams is risky
• Designing and operating global systems are risky
  ventures
• Certain kinds of systems (ERP mostly) are likely
  candidates with their own problems

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Basic Ideas of the Chapter

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

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Basic Ideas of the Chapter -2

• Selection of strategy depends on four sets of
  characteristics
• Organizational
• System
• Core/Periphery match
• IS Department

What else other than the weather could have an
influence anyway?
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Global IS Development Strategies

• Development with a multinational design team
  (MDT)
• Parallel development (PD)
• Central development (CD)
• Core vs. local development (CL)
• Best-in-Firm Software adoption (BIF)
• Outsourced custom development (OD)
• Unmodified package software acquisition (UP)
• Modified package software acquisition (MP)

-- in practice all acquired packages are
modified to some extent
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Why This List?

• These eight strategies actually overlap
  significantly and do not include all possible
  strategies
• Classification scheme is arbitrary, but useful
• Primary tensions affect strategic position of
  organization
• Coherence of team and alignment with co. goals
  are primary quality and cost factors
• In fact, organizations evolve through these
  strategies over time anyway.

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Evolution of Global IT Development
Next, the firm either adopts best-in-firm (BIF)
or puts together a multinational design team
Which is really just another way of exercising
core control
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Evolutionctd

• Central development first countered by
• Peripheral parallel development compromised by
• Core vs. local development then negotiated
  through either
• Best-in-firm or multinational design team
• But solution might best be brokered through an
  outside outsourcer or by buying modifiable
  packages

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Categorizing and Selecting GIS Development
Strategies
Orgl Characteristics Attitudes,
constraints structure
System Characteristics Commonality, size,
technology appln type, criticality

• Domestic vs. International Team
• Package vs. Custom Approach
• Internal customization
• External customization

HQ/Subs. Diffs Technical, requmts, culture
IS Dept. Charstics Maturity, staff skills
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Risk Assessment
Risk S (risk factors) Risk Factor Probability
of harmful event Probability that event will
cause harm Cost of harm.
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Risk Assessment
Risk Factor Probability of harmful event
Probability that event will cause harm Cost
of harm.
Our exposure this year to this particular risk
factor is the product of 0.5, 0.03 and
1,000,000, which is 15,000. Hence we should
spend up to 15,000 to counter or reduce this
risk.
Note These numbers and values are not static
and may change abruptly or over time. All
estimates are controversial and subject to debate.
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McFarlans Risk Analysis

• Risk is due to three factors Size of project,
  technology gap and project definition stability.
• Global projects are all large
• Global projects are all subject to strong
  technology strains thus increasing gap
• Global projects are generally fluid and have
  multiple parties and interests and are subject to
  many stresses
• Thus global project risk is always High.

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So What to Do?
Know what might happen and its causes

• If Risk is High, we need to counter one or all
  of the three risk factors
• P(harmful events) managed via planning
• P(harm from harmful events) managed
  via toughening, skilling, control
• Recovery costs managed by contingency planning,
  redundancy, control
• McFarlan describes these along two dimensions
  integration and formalization

Take action to prevent harm from event or failure
to react appropriately
Have plans in place to repair damage, recover
operations
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Solutions (á la McFarlan)

• Integration (implicit structure)
• Internal team meetings, professional leadership,
  mutual familiarity
• External user leadership, user communication and
  direction
• Formalization (explicit structure)
• Planning Formal planning methods
• Control Status reviews, change management,
  organizational learning