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 productivity 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 Microsoft solutions.
Overcoming these challenges requires systems integration and connectivity on a global basis.
1. 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 and 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, Oracle, 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.
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 United States). Few global corporations trust the security of the public Internet and generally use private networks to communicate sensitive data and Internet virtual private networks (VPNs) for communications that require less security. Not all countries 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 telecommunications service provided. Table 15.5 lists the major challenges posed by international 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 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.
Access to Internet service is limited 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, although inexpensive mobile devices and low-cost data plans are becoming more widely available.
In addition, many countries monitor transmissions. Governments in China, Iran, and Saudi Arabia monitor Internet traffic and block access to websites considered morally or politically offensive. On the other hand, the rate of growth in the Internet population has been faster in Asia, Africa, and the Middle East than in North America and Europe. 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.
3. 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 definitions 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. 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.
Most of the world’s population accesses the Internet using a mobile device, so apps must be built for mobile platforms, tiny screens, and low bandwidth. Since many mobile Internet users cannot read or write, special interfaces using video and audio need to be built to serve this group. The Interactive Session on Technology addresses this issue.
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 resource planning systems to standardize their business processes on a global basis and to create coordinated global supply chains and workforces (see the Interactive Session on Management). However, these cross-functional systems are not always compatible with differences in languages, cultural heritages, and business processes in other countries. 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 and enterprise social networking systems, email, and videoconferencing are especially important worldwide tools for knowledge- and data-based firms, such as advertising firms, research-based firms in medicine and engineering, and graphics and publishing firms.
Source: Laudon Kenneth C., Laudon Jane Price (2020), Management Information Systems: Managing the Digital Firm, Pearson; 16th edition.