Global Information Systems: Evidence from Australia By: Luis Cielak August 3, 2007 Florida State University College of Business
Cielak 1 Global Information Systems: Evidence from Australia The field of Information Technology has traveled a long road to get where it is today. However, perhaps because of the enormous leaps that technology has made over the last century, it is easy to take the evolution of Information Technology for granted. It is also easy to fail to recognize the sophistication of the systems that allow data to travel and be gathered over many points before we receive it, and then converted into information to help us make the appropriate business decisions. Applying our background knowledge toward a decision is always the last step, and if we have encounter corrupted or unclear information and lack a solid understanding of Information Technology, our efforts may fail. Management Information Systems came about to stabilize these paths of information. There are a tremendous number of entities that have the opportunity to corrupt data at all stages. Therefore, the coordination of these entities is a massively complex yet crucial operation. The fact that some organizations may be basing their business decisions on faulty information, may lead to a financial harm. Throughout this paper I will explain why world-wide organizations such as Multinational Corporations (MNCs) are jumping onto the information bandwagon, how they and their local economies are being affected by this change, how it affects developing nations by comparison, and finally what issues the new information age is bringing. In addition to that I will present examples of the issues that I will be covering with evidence in Australia. To get to our current stage of information technology, we first must understand where it has been over the years, how it has grown, and at what rate
Cielak 2 it has been increasing. According to Peter Drucker we are now living on the Fourth Information Revolution. The First Information Revolution started with the invention of the writing in Mesopotamia. The earliest writings consisted on pictograms, which later on evolved into a script form. The Second Information revolution had its nest in China around 1300 B.C. with the invention of the written book. At this point, data started to get evaluated and organized into subjects and topics, generating a knowledge bank. Eight hundred years later, the ability to manipulate knowledge moved over to Greece, allowing Homer to write down his epics. Gutenberg’s invention of the printing press led to the Third Information Revolution. At this point, information could be duplicated any number of times at a very low cost, making it possible for virtually everybody to have access to information. As information became more widely available, it was put through more rigorous evaluation processes and subjected to more thorough criticism. Consequently, these actions led to new ideas and new ways of processing information that would help us evolve toward faster societal progress. This same effect still holds true in our current Information Revolution. The cost and price of information technologies will keep decreasing and become more widely available as long as they are mass produced in order to drive costs down (Ducker 102). Many people are deeply involved with the current Information Revolution. Technologists, as Drucker puts it, can range from IT and MIS people to the CIO’s. This expanding crew of professionals will no longer be the superstars of the Information Revolution, they will become the supporting cast (106). In the past, those positions used to be more commonly outsourced, but now, this expanding crew of professionals has become so
Cielak 3 indispensable that they have become part of the companies’ regular staffs. Thus the increase of IT related jobs such as computer programmer, computer engineer and systems analyst (Business 2.0). It is clear enough that errors in Information Systems are becoming more costly. Ironically, this might be in part due to the fact that computer manufacturers are cutting prices on core system products due to the increase of competition and alternative technologies (Kanellos). The popularity, due to perhaps the need of automation and strong competition from MNCs, the field of Information Systems has grown and so have the issues that come along with it. Faulty, faster systems just create more issues at a higher speed. Organizations wishing to enter an international market not only face the previously common system issues, but they face cultural and physical distance constraints as well. Once again, the Information Revolution has guided us with answers and new ways of passing information. But at the same time, it has also given us tools that cause cultural rifts. W.R. King argues that “…[it is] desirable to study the linkage between IT capabilities and the MNC strategy from a perspective that is more powerful and enduring than typologies…which give consideration to the organization’s strategy and the IT infrastructure that is developed as a consequence of the strategy” (487). Thus during the planning phase, cultural differences must be considered to be adapted into the proper typologies of a business environment. Oftentimes, executives fail to recognize the real reason why a business strategy fails, finding it easier to blame the system. Cultural differences cannot be resolved with an Information System,
Cielak 4 thus MNCs’ business plans must focus extensively on a way to adapt communication when dealing with different cultures (Steensma 963). Information Systems researchers find that the Information Technology in an organization must interact and fit well into the IT infrastructure as well as the business strategy. Due to the high number of variables and specifications, Information Systems must be tailored to capture business processes that flow under a certain IT infrastructure (King 487). A well-developed IT infrastructure within the organization leads to a competitive advantage that lead MNCs to success in their global market. It is the system’s analysts’ and designers’ role to support reusable and sharable technologies and services. They must find ways to create a technological base that supports and integrated business activities and processes (488). There are many components that must flawlessly work together in order to form a proper Global Telecommunications Network; thus the need for standards in technology and organizations that have been implemented throughout the years. With the help of Management Information Systems professionals the implementation of Global Telecommunications Networks will be strategically planed in order to adapt to the strict rules of particular businesses with the need to communicate globally through technology. The success of a Global Telecommunications Network is strictly ruled by the functionality and integration of its components. The Network Bandwidth brings the limitation of data that can be manipulated within the system’s limits. The more high-volume, large-sized data transferred, the wider the broadband has to be to avoid delays and corruption of information. The availability of
Cielak 5 telecommunications and the quality of network infrastructure will 1) enhance internal and external global business communication, 2) be used as a fundamental architecture for the communication backbone for the flow of data (Kamel 7). The implementation of a Global Telecommunications Network is crucial for the success of MNCs, and as a result of this, developing countries face a wide separation from technology-capable nations and their developing typology. We will come back to developing countries later on. Sherif Kamel presents three different standards that must be followed in order to develop, operate and maintain a successful Global Information System. The first one relates to project level standards. When a system is in the analysis and design stage it is important to consider the application of standard models that can be effectively and easily transferred among business units as well different industries. For example, Unified Modeling Language (UML) has been globally accepted by most developers and users (5). The UML technique can be found on popular application developing software such as Microsoft’s Visual Studio suite. This suite contains applications that aid on the design and building of advanced business applications. Unified Modeling Language is applied by the creation and division of classes within the program itself. Benefits of this standard range from swift coding and developing to even reusing and regenerating code, either within the company itself or in global communities as well. It diminishes code redundancy, which saves a lot of the time invested into projects. Besides technology, different standard organization principles should be followed as well. Organizational Level standardization focuses on creating a
Cielak 6 standard for business units in order to ease the implementation of systems. Nevertheless, the tailoring of Global Information Systems for businesses is required, despite the fact that the more standard the procedures applied to the organization, the fewer the risks and time invested into the system will be. In addition to that, “the organization must make sure each business process has a unique and standard procedure for any required business unit” (Kamel 6). Global Information Systems have led to an increase in the number of MNCs operating globally, thus an increase in globalization. It wouldn’t be too farfetched to imagine Japanese firms headquartered in Hong-Kong, producing with Brazilian raw materials in order to compete in the American market. In order for firms to stay on top on global competition they must strategically find the lowest operational costs while grasping the biggest market possible. The need for a Global Strategic Orientation (GSO) is a high priority when dealing with MNCs. W.R. King defines GSO as “the extent to which the multinational organization chooses to treat the various dispersed national units as a single entity” (487). GIS helps organizations find what business model to use overseas. They must decide if they want to apply a multi-domestic orientation, which is when the products or services formed are highly customized to fit local needs, or they opt to produce worldwide standards and uniform marketing techniques (488). Strategy is not the only instance that organizations must pay attention to. Five categories of issues that facilitate the implementation of a GIS have been identified.
information systems management, people management, end user management, and culture (King 83).
Cielak 7 Information coordination
applications, network infrastructure, security, data resource utilization, and systems integration and recovery. These issues pinpoint network management in a cross-border business environment, providing real-time and accurate data flows and a cross-border understanding of technological issues (84). Executives must address these instances in order to adopt the best possible technology at the time, allowing them to stay on top of the competition without overspending resources on unbeneficial technology. In order to maintain successful business operations, organizations must keep their global information strategy and their new business visions well synthesized.
effectiveness and quality must be well implemented in order to create a globally competitive advantage. During the information system planning stage, changes in the organization structure, the management and the skills required must be addressed. Cross-border business operations, social and technical elements must also be thoroughly accounted for throughout the system’s development stages. This is also the stage when the organization’s strengths and weaknesses are recognized and strategically addressed, and when short and long term goals are defined. In order to develop and maintain efficient Global Information Systems, organization cooperation and effectiveness are strictly required. All business parties, such as suppliers, customers, government agencies, and even competitors must be able to intercommunicate within the organization’s core functions and objectives (Kamel 86). In a survey conducted on MNCs, results
Cielak 8 showed that organizations that examined a globally-oriented strategy ended up actually implementing the strategy in order to create a wide variety of resource flow across units. The role of global integration as a mediator between orientation and global IT capabilities was demonstrated to bring productivity to the organization (King 486). The participation and cooperation of all the people who will be using the system is required throughout the entire development life cycle. In a global organization, information is produced in huge amounts. It is produced by virtually everyone involved in the organization, ranging from suppliers to even competitors. Due to the enormous amount of data generated, it is crucial to keep the information free of errors and the information systems updated with valid information (Kamel 90). When it comes to the work force an organization needs in order to conduct business, Global Information Systems are not left behind. As Kamel argues, “people are major players in designing, implementing and utilizing information systems” (92). Areas such as recruiting, training, organizational learning, and cross-cultural development are the most influenced by the workforce of the organization. Recruiting, for example, is the core of the organization’s human resources department. They are in charge of finding and evaluating the “best-fit” individuals for a specific position or role. When MNCs implement a global human resource system, they are able to manage the workforce globally, disperse employees, and standardize the organization’s employment options (Kamel 92). After the recruitment of employees, the organization will be in charge of training and educating the incoming workforce. The training must reflect the various skills required by employees. Many
Cielak 9 companies are utilizing online training systems due to their advantages. These include the ease of training employees overseas, speed and flexibility, an increase in motivation of stakeholders and the fact that it provides human resources with the capability to generate progress reports on specific employees (Gordon). The knowledge that members of organizations possess altogether acts as a competitive advantage. MNCs have integrated systems such as Office Automation System (OAS), Knowledge Work System (KWS), and Artificial Intelligence (AI) in order to put to use the collaborate knowledge found in the organization (Kamel 93). Barbara Fraumeni argues that e-commerce may open up new opportunities for consumers and business in the domestic and global economy, changing the geographic distribution, reach and distribution channels of business (Fraumeni 320). Multinational corporations have been benefited by the growth of the number of clients with broadband access, which enables them to expand their market share. The Economist Intelligence Unit estimates that there will be 400 million broadband subscriber lines by 2008. According to Ovum, a consulting company, the number of subscribers in India, Brazil, Russia, Indonesia, and China will pass 79 million subscribers this year. Business-to-consumer retail transactions are expected to grow 14 percent in 2010, becoming a $329 billion market (Economist 94). This rapid growth has caused e-commerce activities such as business-to-consumer (B2C) and business-to-business (B2B) trades to increase and revolutionize electronic commerce. According to the United States Department of Commerce, retail sales that take over B2C transactions increased 15.3 percent in one quarter, but
Cielak 10 despite this increase, B2C comprise less than 1 percent of total retail sales (Fraumeni 318). For B2B e-commerce, Global Information Systems focus on the substitution of processing computer data and Internet communication for labor services, with electronic infrastructure that speeds up the process and reduces error. Goldman Sachs in 2000 projected that B2B e-commerce transactions reach the $4.5 trillion mark worldwide (Lucking-Reiley 55). An example of a B2B technology is Electronic Data Interchange (EDI), which relies on customized hardware and software for a particular business. According to Philips and Meeker, EDI technology is being used by more than 250,000 companies in the United States, covering $3 trillion in estimated transactions. B2B technology focuses on areas ranging from automation of transactions, the use of information that leads to economic advantages in
consolidation of demand and supply and vertical integration of information (56). These processes benefits organizations by improving ordering and inventory allocation, which keep operation expenses low (Pollard 1). It automates and controls processes such as ordering, billing, logistics, confirmation of payment, and delivery status in a pure electronic environment aimed to reduce cost procurement prior, during, and after the transaction (Lucking-Reiley 56). Electronic commerce has taken another lead due to the emergence of mobile technology. Technologies such as HSDPA (high-speed downlink packet access) have been key figures in the popular growth of mobile mediums. Juniper Research has predicted that global mobile commerce will be worth $855 billion
Cielak 11 by 2009 (Economist 94). It is also predicted that due to the decrease in price of bandwidth and the presence of free internet services, the dominance of personal computers will shift away towards mobile devices. Personal computer sales have slowed this year to 8 percent, down from 15.6 percent in 2005. At the same time, the sales of semiconductors used in mobile and wireless products is expected to increase 9.8 percent this year (95). Global mobile electronic commerce is affecting Global Information Systems by demanding support for this particular type of devices. According to InfoDev, in the Philippines, over 3.5 million people are using mobile devices to conduct strictly business operations such as transferring money internationally and domestically, leading to mobile-based financial services (InfoDev). This advancement in mobile technology has not only increased the speed of business development world wide, it has also been causing an even greater rift between developed and developing countries, which have limited IT typologies. Many efforts have been efficiently helping to prosper developing nations in an Information Technology perspective. For instance, people like Nicholas Negroponte, the founder of the Massachusetts Institute of Technology Media Laboratory, has developed a laptop prototype that costs only $50US to buy (Markoff). The project, “One Laptop Per Child” (OLPC) has been described by founder Nicholas Negroponte as “an education project, not a laptop project”, which reflects a general high interest in motivating children and generating opportunities for mobile commerce (OLPC). Mr. Negroponte has decided to use free open-source software as an alternative to Windows or OS X, due to the size and involvement of the open-source community. Negroponte stated in an
Cielak 12 interview that he “[had] resolved to use Linux not because it was free, but because of its quality and maintainability…I have 100 million of programmers I can rely on” (Markoff). The hardware will be covered by Quanta Computer of Taiwan, which manufactures one-third of the world’s laptop computers, and Advance Micro Devises (AMD) of Sunnyvale, California. Negroponte also mentions in the interview that he has a final commitment from Thailand, Egypt, Nigeria, India, China, Brazil and Argentina to purchase seven million of the laptops (Markoff). At the same time, these developing nations have seen a drastic increase in their number of mobile-phone subscribers. For instance, in Asia & Australasia (excluding Japan), 25.9 per 100 people have a mobile phone, in Latin America 59.4, while in the Middle East & Africa, 41.5 (Economist 96). For this reason, hubs for online access have been drifting from land lines into mobile devices because they are simpler to implement. Not only current Global Information Systems are drifting to a mobile perspective; new business opportunities are also emerging due to this trend. Companies like Skype and Vonage are revolutionizing the telecom industry by providing Voice Over IP (VoIP) services. The launching of Wi-Fi mobile handsets by Nokia, Motorola, LG and Samsung that rely on VoIP technologies to provide low-cost or free call services are helping to advance developing countries into global mobile commerce faster than it would been with personal computers and land lines for communication (Economist 96). For example, computers have failed to penetrate beyond the urban middle class in east Africa due to thieves targeting laptops, common power cuts on desktop computers, and lack of broadband access. Breakdesign, a South African software
Cielak 13 development company for mobile devices, predicts that mobiles will become east Africa’s primary portal to the Internet. More innovative applications to old technologies such as SMS have also contributed to the advancement of developing nations. For instance, innovative SMS technology will allow people to move money, receive information on, say, crops and planting tips, or medical advice that will benefit those with tuberculosis or AIDS (Ledgard 57). These mobile-enabled financial services have led to new mobile financial solutions such as m-banking, which includes companies like Fundamo in South Africa, Safaricom in Kenya and MTN Banking and Celpay in South Africa (InfoDev). This drift to mobile networks not only integrates more communication channels worldwide, but it also allows more developing countries to join an on-going process in Global Information Systems. As I mentioned before, many organization are taking advantages of EDI systems in order to optimize order processing and minimize errors during business operations. Governments around the globe are also taking this perspective in order to sustain better communication channels between suppliers. In isolated locations such as Western Australia, the government has implemented EDI in order to exercise a central influence on agencies in their selection of suppliers. The government of Australia has established their own emarketplace in order to form and control an oligopsonistic market that caters to the Australian Government (Kamel 14). Nancy Odendaal introduces the term of smart city in order to express the impact Information Technology has in on-going developed and developing nations. This concept leads to the idea of the use and research of technology in
Cielak 14 order to explore new frontiers ranging from sciences, industries, and commerce. It is understood that emphasis will be placed on developing geographic coincidence in the area with the attempt of distributing and producing a more advanced and balanced Information Communication Technology (ICT) under the general term of digital divine. An evidence of this transition has been presented by some of the moves perform by the Australian government. Tasks such as managing the business environment to achieve ongoing growth, effective delivery, and administration of affairs must be emphasized in the government’s goals. This must all be incorporated into an Information System to achieve what The World Bank defines as e-governance: “The [Information Technology] use by government agencies… [to] have the ability to transform relationships with citizens, businesses, and other arms of governments” (586). E-governance is about the relationship between the state and the civil society covering all the guises, not only the rules and regulations forming the government itself (587). For instance, the Australian government has turned to more up-to-date ICT in order to support military activity such as the mapping out of Australia’s Collins submarines’ maintenance and upgrade procedures throughout their service life. At the same time, Defense planners will be able to perform system updates that will keep flying the same aircrafts in 2030. An emphasis in part of the Australian government on open systems and COTS (commercial, of the-shelf hardware) allows Admirals and military body to replace old systems and install new ones without “tearing the insides out of boats” (Newsbyte).
Cielak 15 A successful e-governance may be accomplished through two main government goals. The first one involves incorporating seamless governance between the three different tiers of the government (federal, state and local) through an online environment. The latter contributes to the ability to perform up to 80 percent of Council interactions on-line (Odendaal 592). Through technology, efficiency in the government’s response to the needs of its citizens is possible. As Odendaal says, “Good local governance requires the capacity to respond to local challenges, to act and move beyond traditional bureaucratic procedures” (588). Technology provides the key to transition. In the city of Brisbane, for instance, $505,000 Australian dollars have been allocated to the assistance of small businesses to acquire web presences. This Council involvement
acknowledgment for the small businesses on the city’s site (ourbrisbane.com) and facilitates training for upcoming government contracts and services (591). The business model in which the city of Brisbane is taking a lead brings the city to the Internet, increasing the popularity and recognition of the Australian metropolis from an ICT perspective. It also introduces many local small businesses to a world-wide online market, which has led to ourbrisbane.com becoming the destination of choice for many communities and businesses in the city (593). In the state of Victoria the government put in a place a set of policies and procedures in order to promote the use of Internet, while in the state of Queensland, “the Information Industries Board implemented the Strategic Plan to promote public and private sector strategic use of Information Technology through export, development, investment attraction, [and] infrastructure
Cielak 16 support” (Middleton 10). The relationship between ICT and local governance is not solely ruled by technology and capacity. Information Technology as a field has produced great results in the economy by generating jobs and access to different markets. As stated by Nancy Odendaal, “It is [also] impacted upon by the less predictable elements such as social pressure, community activism and capacity within local government’s areas of jurisdiction” (587). It is estimated that 680,000 of Australians are employed in the industry, generating an income of $100 billion Australian dollars, while 2.7 percent of the nation’s total employment, that is, about 236,000 Australians, are employed in the core ICT production industries (Washington Post). According to the government’s national
Telecommunications (IT&T) industry ranked as a $59 billion Australian dollar industry (Gale Group). The Australian Bureau of Statistics classified Australian exporters as being very wired with more than two-thirds of them having access to Internet and having their own websites. At the same time, the Australian Government’s Office of Government Online requires an online plan for all government services to be properly functioning through the web (Selby). The government of Australia has also put in place a framework called GOSIP (Australian Government Guide to Open Systems), which is aimed to provide information on open systems applied to the Federal Government computing. It gives guidance to different departments and agencies on how to formulate a strategy to move their computing platforms into a more open environment (Middleton 12).
Cielak 17 Australia’s labor force has been found to be the world’s second most competitive location for information and communication technology, ranking behind Singapore, but ahead of Ireland, the United Kingdom, China, India, Japan, and the United States (Starner 452). Moreover, the EIU reported that higher quality labor and greater access to skilled labor can be found in Australia over Singapore. In addition to that, KPMG ranked Australia as having one of the lowest cost of doing business for industrialized nations (454). This has led the IT&T industry in Australia to a very proactive state, in which cities aim to ensure broadband capacity as well as technological resources (Odendaal 592). Projects such as Green PCs, which emerged as a social enterprise out of the Infoexchange Australian initiative, intended to bridge the Digital Divine by selling recycled and refurbished PCs to provide Internet access to low income communities (593). Prime Minister Kim Beazley started a 10 year plan in 2001 that aims to lead Australia’s investments into R&D with a particular focus on information and communication technology, environment management, biotechnology and health services (Cory 2169). As a result, the Australian government has been working on implementing new technologies that will drive Australia to a better lead in Information and Communication Technology. The Australian Government Information Management Office has been encouraging individual government agencies to move to a more advanced technology under the IPv6 (Internet Protocol Version 6) protocol. IPv6, the next generation of internet protocol, represents a great opportunity for Australia to develop preeminence in a technology that it is expected to increase innovation globally (Argy). The next-generation protocol is expected to replace our current
Cielak 18 technology, IPv4, which is nearly twenty years old and is becoming obsolete due to the growing shortage of IPv4 addresses, which are needed by all the machines added to the Internet (IPv6). One of the benefits of IPv6 is that it creates a network vastly larger than what the Internet is now, increasing the current number of four billion possible addresses, to tens of billions of addresses (Argy). Austrade’s (The Australian Trade Commission) mission is to support Australian companies to reduce time, cost, and risk to businesses competing in international markets
(Austrade). As a result, Austrade is setting up joint
ventures to commercialize IPv6 products, ensuring that government purchases encourage IPv6 development (Argy). Another example where Australia has also been taking a lead in innovating telecommunications with a 40Gb/s optical transmission technology. These electro-absorbent modulators are fabricated in 10Gb/s and 40Gb/s versions. The new 40Gb/s version provides lower insertion costs, a 32GHz error-free transmission bandwidth, and a low voltage of 2.9V (III-Vs). The devices are part of a transmission technology called DWDM (Dense Wave Division Multiplexing), which is used to carry voice, data, and video. Telstra, an Australian operator, conducted the world’s first trial with Swedish telecoms solutions provider Ericsson in order to evaluate and upgrade Telstra’s existing 10Gb/s structure. The trial that took place on Telstra’s optical coastal and inland routes from Sydney to Melbourne demonstrated that the DWDM can be increased to 40Gb/s without major changes to the network (Nordic Business Report). This benefit places Australian businesses in a position where they will
Cielak 19 be able to grasp a competitive advantage over other organizations and nations world-wide. The increase in popularity of Global Information Systems has granted many opportunities for businesses of all sizes to compete with better advantages on world-wide markets, this has lead small businesses to finally be able to compete against other businesses in these same markets. Another result of Global Information Systems is the new opportunities available to governments, allowing them to govern more effectively and raise their nations’ standards. These two previously unrelated areas have in common the intervention of technology, processes, and people working together to build a system to efficiently automate daily tasks while minimizing error, and eventually lowering production costs. It is not enough to stress out the importance of system planning and development is needed in order to come to a successful system. Australia has shown incredible adaptation to the fast-paced information revolution in a business environment, as well as governmental. It has succeeded in impacting the global market while not only using the latest technology, but also by pioneering in the field. Nevertheless technology keeps evolving, and new trends progress; for this reason, it is crucial for Australia and the rest of the world to keep close pace with new technology trends, given that it might be the difference between success or failure.
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