Changes in international business since the past few decades have brought greater internationalization and integration. The term globalization captured these changes with considerable impact in increased cross-border movements of goods, services, capital, technology, and people. Based on global integration and local responsiveness dimensions, four forms of organizations are used to manage international business: global, international, multidomestic, and transnational corporations.
This post focuses on Global Corporations (GCs). GCs prefer to market a standardized product worldwide for economical reasons while moving concentration of production, marketing, research and development activities to a few favorable locations. The issues around the expansion of business to a global level relate to the external environment of the organization as well as its internal environment.
The management of external environmental uncertainty is critical for the success of global corporations. The major sources of uncertainty in the external environment are the number of different forces that firms have to manage, the degree to which the external environment is changing, the resources available in the environment, and business continuity management of Global Information Systems (GIS).
GIS drive the information society and enables knowledge workers to connect and communicate in ways that drastically change their work. Four main factors that generally influence decisions each organization make in designing and pursuing its GIS are: (a) interoperability, (b) total cost of ownership, (c) security, and (d) transparency and public right to information.
Recent earthquakes in Haiti and Chile, the violent European windstorm Xynthia, or hurricane Katrina in New Orleans (U.S.) are reminders to business and IT managers that preparedness to protect critical information systems and data against natural and man-made disasters, swift response, and quick recovery are necessary tools to assure business continuity.
Business continuity planning is about having plans and procedures in place to recover key business processes after a disaster. Participants in a recent business continuity management survey perceived failure of computer hardware or software and data loss as the highest risk to business disruption, with 21% of the executives stating that natural disasters such as storms, floods, and earthquakes were of particular concern. Disasters are not just restricted to fire, flood, and other causes of property damage; they can equally result from more mundane problems such as labor strikes, hardware, or software malfunctions.
Virtualization, business impact analysis, redundancy, and offsite data centers are various approaches to ensure business continuity. Virtualization (or virtual machine technology) refers to a framework or methodology of dividing the resources of a computer into multiple execution environments, by applying one or more concepts or technologies such as hardware and software partitioning, time-sharing, partial or complete machine simulation, emulation, quality of service, and many others.
As companies exploit the growing possibilities of international business, technology leaders must build consensus for an organizational structure that enables the expansion of information systems. The purpose of the posts of this thread is to evaluate the expansion from the perspective of a Chief Information Officer and discuss the issues within the expansion scenario as they relate to environmental uncertainty, business continuity, and virtualization considerations.
Global Corporations and Global Information Systems
Information Systems (IS) organization refers to the combination of technologies, processes, people, and promotion mechanisms to improve the performance and effectiveness of the organization. IS affects nearly all aspects of human endeavor and also assists in the management and operations of various types of organizations.
Since the 1960s, managing and operating IS to improve organizational performance and effectiveness has been a field of practice. Firstly known as business data processing and later as management information systems, the field is currently referred to as information technology (IT). Ongoing innovations in IS and the growing worldwide competition add difficulties and uncertainties to corporate environments. Global information systems attract attention from both practitioners and scholars as it is a critical enabler of competitive advantage for international businesses.
Operational priorities of GCs requires innovative capabilities and creates new requirements on the IS function of GCs. Prior research categorized the requirements of GCs into four areas: (a) decreasing the cost structure, (b) increasing innovation, (c) leveraging information assets, and (d) becoming more agile.
Information systems are fundamental to effective global operations because it enables coalitions and provides a coordination mechanism for geographically dispersed activities. Information systems are disruptive phenomena for global corporations because of its capacities of changing the competitive landscape and enabling new organizational structures, products, processes, and ways of communication.
The nature and function of GIS should concur with the operational shifts of GCs which are highlighted above. The strategic use of global information systems (GIS) depends on the ability of corporate managers to appreciate the IT business value and use it as a competitive tool. GIS organizations must provide resources to lead and support IT-enabled business transformation initiatives by simplifying global operations, automating the streamlined processes, and relocating some business processes to lower cost locations. The increased focus on innovation in the business, for example, required GIS organizations to increase productivity, effectiveness of their research and development capabilities. The focus on agility and innovation created new demands on GIS organizations to provide rapid solutions to information management frameworks essentials to ensure intelligent and informed business decision making.
The idea of virtualization is to partition a physical computer into several logical zones. Each of these partitions can run a different operating system and function as if it was a completely separate machine. Virtual machine technology, or virtualization, refers to a framework or methodology of dividing the resources of a computer into multiple execution environments, by applying one or more concepts or technologies such as hardware and software partitioning, time-sharing, partial or complete machine simulation, emulation, quality of service, and many others.
The idea behind virtualization is an extension of what is found in a modern operating system (OS). A program running, for example, on a UNIX machine has its own virtual address space. From the program’s perspective, it has a large chunk (4GB on a 32-bit machine) of RAM to use. The operating system is responsible for multiplexing with other programs. This large and contiguous space does not exist in the real machine. Some of the space will be scattered around real memory while the rest of it might be stored on a hard disk.
Memory is not the only resource virtualized with a modern OS. The CPU is usually allocated to different processes using some form of pre-emption. When a process has used its fair share of the CPU, it is interrupted and another is allowed to take its place. From the process perspective, it has a CPU of its own (or more than one, as in the case with the duo core or quad cores).
Virtualization is not a new technology. In the 1960s, IBM developed a handful of virtual machine systems including the CP-40, CP-67, and VM/370. In all of these instances, a virtual machine monitor (VMM) ran between the application and hardware layers. Through the utilization of this VMM, multiple virtual operating systems could be created, utilized, and shut down without interfering with other virtual machines using the same VMM. This research placed IBM at the forefront of the virtualization race and is acknowledged along with the research assistance from MIT, as the foundation of modern virtualization.
Virtual machines are implemented in various forms: mainframe, open source, paravirtualization, and custom approaches to virtual machines, which were designed over the years. Complexity in chip technology and approaches to solving the x86 limitations of virtualization have led to three different variants of virtual machines: (a) software virtual machines, (b) hardware virtual machines, and (c) virtual OS/containers.
Software virtual machines manage interactions between the host operating system and guest operating system (Microsoft Virtual Server 2005). In the case of hardware virtual machines, virtualization technology sits directly on host hardware (bare metal) using hypervisors, modified code, or APIs to facilitate faster transactions with hardware devices (VMWare ESX). EMC’s VMWare technology is the market leader in x86 virtualization technology. The VMWare solution is more costly, but it provides a robust management console and full-virtualization support for an array of guest operating systems including Solaris, Linux, Windows, and DOS. In this case of virtual OS/containers, the host operating system is partitioned into containers or zones (Solaris Zones, BSD Jail).
There are several vendors in the virtualization technology and each comes with its own features which makes it adaptable for various scenarios. Some virtualization technologies are (a) Microsoft Virtual Server or Hyper V; and (b) EMC’s VMWARE suite (VMWARE workstation, VMWARE server, VMWARE ESX, and Vsphere. Whereas the VMWARE suite is adaptable to most operating systems including Novel and UNIX, Microsoft virtual server is proprietary.
The huge number of centralized services and processing power in data centers in GCs headquarters are the reasons for an adequate virtualization. Virtualization reduces the number of servers, costs in maintenance and server management, costs in power consumption and cooling costs.
Business continuity and disaster recovery planning is the other main reason why GCs are virtualizing their services. Business continuity planning is the elaboration of plans and procedures in place to recover key business processes following a disaster. The plans and procedures for a business continuity planning process encompass (a) business impact analysis, (b) backup and restoration strategy, (c) redundancy, (d) offsite data centers, and (e) virtualization.
Virtualization, GIS, and Management of Environmental Uncertainty
Environmental uncertainty is a central issue for the deployment of global information systems. Uncertainty refers to events the organization cannot forecast. The major sources of uncertainty in the environment are usually the (a) complexity and the number of different forces an organization has to manage, (b) dynamism or the degree to which the environment is changing, and (c) richness or the amount of resources available in the environment. The accurate perception of uncertainty emanating from the environment is critical to organizational performance, organizational structure, firm strategy, and business continuity and disaster recovery planning.
Natural disasters can produce both horrifying and stunning tales of human tragedy and triumph. But after the initial dust has settled, an after shock experience materializes as businesses struggle to resume their operations. The Gartner Group noted that 43% of such companies were immediately put out of business by a major loss of computer records, and another 51% permanently closed their doors within two years leaving a mere 6% survival rate.
Information systems are fundamental to effective global operations because it enables coalitions and provides a coordination mechanism for geographically dispersed activities. From the business continuity and disaster recovery perspectives, the strategic use of GIS depends on a proactive business continuity planning of IT executives. Business Continuity Management (BCM) programs ensure that organizations adopt best practices through industry certification standards such as the British standard BS 25999-2: 2007. This standard specifies requirements for establishing, implementing, operating, monitoring, reviewing, exercising, maintaining, and improving a documented BCM system within the context of managing an organization’s overall business risks.
Virtualization, server consolidation, storage, remote access, security, and green initiatives are among the various challenges companies face with expansion of IS at a global level. Organizations are primarily deploying virtualization to improve server and system utilization rates, increase server reliability and uptime, and enhance business continuity. I believe that successful virtualization of GIS depends on the approaches adopted and the ability of measuring the performance of the virtualized environment.
The purpose of the next post (Part II) will be to explore approaches of virtualization of GIS and identify performance measurement indicators of virtualized global environments.