Information Systems Go Global

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The rapid globalization of business creates significant challenges for managing information technology. To coordinate their international networks most effectively, multinational companies must establish systems that can efficiently coordinate a wide variety of business requirements and processes.

“Patterns in the Organization of Transnational Information Systems,” a study published in the February 2001 Information & Management, concludes that the most successful companies select the approach that fits most closely with their corporate strategy. “When there is a match between centralization and dispersal of the geographic business and similar arrangements for IT, the organization is doing better in terms of revenues and intangible factors such as customer satisfaction,” says Vikram Sethi, an associate professor of information and management sciences in the University of Texas at Arlington and a co-author of the study. “In the case of mismatches, they are creating dissatisfaction among system customers.”

To determine basic benchmarks for integrating information systems into corporate strategies for the study, Sethi began working with William R. King of the University of Pittsburgh's Joseph M. Katz Graduate School of Business in 1992. Over the next seven years, the two carried out an in-depth survey of the ways in which 150 companies, from 20 countries and 25 industries, organize their worldwide information systems. The CEOs of participating organizations, all of which had at least one international subsidiary, completed two questionnaires. The first, designed to evaluate corporations' multinational reach, focused on value-chain configuration and coordination, strategic alliances, centralization, and market integration. The second covered the companies' management of IT and information systems.

Matching IT to corporate culture may seem obvious, but IT strategists don't necessarily see it that way. “Some of these ideas in multinational management are so fundamental that you would expect them to trickle down, yet they often haven't,” Sethi says. “Coordinating information systems with corporate strategy is well established in theory — but not in practice. Some organizations simply do not have a global IS strategy. Some headquarters are not even aware of what their subsidiaries are doing with their information systems.”

According to the study, there are three main global IT strategies, each related to a specific type of multinational organization:

  1. Low dispersal with high centralization is an approach used mostly by small companies that conduct business in relatively few countries. For them, the enterprise's domestic IS needs control much of the planning for international information systems. Japanese household-products maker Kao Corp.,

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