reliability of PCs had increased to the point where they began to replace computer
terminals in business applications.
Local area networks (LANs) were developed to interconnectpersonal computers
and to sharedata files, programs, printers, and other resources. Workers on a LAN
could exchange e-mail and send each other copies of documents and spreadsheets
that they may have developed on their computers. The success of departmental LANs
encouraged firms to tie their LANs together, as long as they were close enough, for
example, in one building, using communications devices called bridges. These LANs
could be further interconnected using communications services provided by the tele-
coms, called wide area network (WAN) services.
(ii) Private versus Public Networks. It used to be that the only way to obtain reliable
data communications was for a firm to construct its own private data network. A firm
would lease a line from a private telephone company or from a PTT in a foreign
country in order to connect two locations, for example, a subsidiary and headquar-
ters. The firm had to then provide the equipment on both ends of the line. This made
sense when a firm could use most of the data capacity between two locations, but it
was expensive when less information needed to be exchanged. Now, with the ac-
ceptance of the Internet, firms can connect foreign (and domestic) locations together
using off-the-shelf communications equipment (routers, switches, hubs, etc.) and
open Internet protocols. Thsy still need to subscribe to a service to gain entry, but
many companies will already have this gateway in place. The incremental cost to
route data to a home office or other remote location over the Internet may be mini-
mal. Care needs to be taken with the security of the data and the internal network.
(iii) Network Management. While distributed networks have many advantages in
terms of reliability and responsiveness, they require active management. It is not un-
usual for an international firm to establish its own network management center, where
network performance is monitored on a 24-hour basis. In addition, because distributed
applications lack the unified controls of applications that run on a single processor,
they have to be specially tuned and monitored in order to insure their performance.
(iv) Security. Security is a problem in distributed networks. One approach is to in-
sure that unauthorized external access to the network is prevented by the use of a fire-
wall. Another is to see that passwords are changed frequently and that equipment
manufacturers’ default passwords are never used. A third is to give the responsibility
for monitoring the status of network security to someone other than the head of
telecommunications. Users should own their own data and take an active interest in
security.
(d) Applications. As firms move toward global and transnational strategies, there is
pressure for commonalty among applications software. It is unlikely that an applica-
tion system developed at one subsidiary (or headquarters) will meet the needs of
other subsidiaries without significant participationfrom the other units—both IT
staff and functional area representation—in its development, and extensive local
modification. It takes considerably longerfor an information technology project to be
completed when the team developing it is from different countries, and the resulting
software is more complex. Consequently, firms are often reluctant to allocate the
extra resources needed to build integrated application systems.
28.6 ISSUES IN THE GLOBAL MANAGEMENT OF IT 28 • 23