The significance of global competition in the IT decision in this case was to restore the Kwangju bank health and allow it to compete with well-established bank. The bank could not compete well with other banks since it focused on local competition rather than a global competition and this allowed foreign banks to perform well. The Kwangju bank would not have survived if the Mr. Song did not focus on a global competition. The operations of the bank were hampered by its computer vendors and computer systems.
Global competition in the IT decisions played a greater role in advancing information technology. For instance, Mr. Song decided to downsize the bank’s information system by using middleware, but this technology venture was rarely used even by the well-established bank leave alone Kwangju bank which was collapsing. Mr. Song took this route so that Kwangju bank can venture into the global market and by so doing he led to the advancement of downsizing the online transaction processing (OLTP) system which was not in use by then. Banks which were competing in the global market were aware of this technology but they feared to utilize it due to the problems associated with it. Therefore, Mr. Song made a significant step in the advancement of this innovation when he decided the bank should enter into the global market.
The global competition in IT decisions showed the power of information technology. Before Mr. Song focused on global market, Kwangju bank had many shortcomings with their information systems. For instance, the bank was unable to set its own business strategies since their information systems could not allow it. Additionally, the bank spent more on information systems than their income. Therefore, they needed a lasting solution that could ensure that they were making profit. Using a middleware to downsize the OLTP was initiated by the global competition in IT decisions and this helped the banks to spend less on information systems.
Risks and opportunities of downsizing an OLTP in a bank
There is a major risk associated with downsizing an OLTP in a bank since this system is considered to be the most critical in a bank as it is directly connected to the client’s financial interest. A clear identifiable risk with downsizing an OLTP in a bank is the reputation risk which can result from negative public opinion if the system incurs a minor problem (Kang, n.d). Reputation risk can severely affect the bank’s credibility. Another risk that can be associated with downsizing an OLTP in a bank is strategic risk. Strategic risk refers to the current and prospective impact on capital or earnings that arise from lack of responsiveness to industry changes, improper implementation of decisions, or adverse business decisions.
There are a number of opportunities of downsizing an OLTP in a bank as identified in the Kwangju bank case study. These opportunities are double sided as both the bank and the customers benefit from downsizing the OLTP. Downsizing the OLTP benefits customers by allowing them have an access to quality and timely services. For instance, the transaction speed increases and the bank services will be available all through provided there is an internet connection (Kang, n.d). Customers will also have access to a variety of financial services as downsizing the OLTP shorten new product development cycles. The bank will also have some benefits by downsizing the OLTP such as reducing expenses with an improved performance that will allow it to pursue new business strategies in an efficient manner. Downsizing the OLTP system can also help in reducing the number of staff working at the information center; hence, reducing expenses.
How the new system is supporting the decentralization of operations
The new information system supports decentralization of operations as they are well distributed across the regional centers and branches. The new system has a distributed client/server architecture. It comprises of a regional center server, a branch server, and several clients. The regional center and branch servers are used to serve regional centers and branches respectively. One regional center server is used to serve around 15-20 branches. The regional center handles its customer databases and regional account master files on its regional center server. The server also runs transactions and some online activities carried within its region. Hence, the regional server works as an application server and a database server for the region.
The headquarter server is only used to maintain the common tasks that are employed across all regions. That is, it functions as a server for services such as office automation, information management for senior managers, home banking, commercial banking, and foreign exchange. Each server is remotely monitored, operated unattended, and security checked. To maximize the reliability of regional centers, dual servers having dual databases are used. As a result of the distributed multi-server dual architecture, any malfunction does not affect a large region as it is usually localized to a very small area.
Issues relating to software development and applications
Issues relating to software development and applications include open-source software, open systems, licensing, software evaluation and selection, and software defects (bugs) (Pandey, 2006). In most cases, computer program code is riddled with errors, poorly designed and inefficient. Good software should be reliable, usable, maintainable, cost effective, and defect free (Pandey, 2006). As many business enterprises and individuals become increasingly independent of computer and networks, the risks linked to software bugs are worsening. Another issue is licensing; many individuals copy software without the manufacturer’s explicit permission. This act is illegal and should be abolished. Software vendors should protect their software through copyrighting them. This might reduce the illegal act of copying software without legal means.
The concept of open systems denotes a model of computing products that function together. Open-source source software is whereby a company does not keep the source code. The source code is usually available at no cost to users and developers. Open-source software is copyrighted and distributed with license terms that ensure the source code is always available. However, these types of products have their own advantages and disadvantages. For instance, they are considered to be flexible because the code can be modified to meet the customer needs. Their main disadvantage is that individuals using them will continue to be dependent on goodwill of an army of volunteers for bug fixes, enhancement, etc.
Cultural, economic, or political factors relevant to this case
Economic factors relevant to this case include management, IT costs, interest rates, government policy, taxes among others. Cultural factors relevant to the case include an Information system that was implemented from a bank’s perspective ignoring the customer and staffs not willing to accept change. Political factors relevant to the case include government stability, trade policy, government economic policy, type of the government (whether democratic, monarchy or dictatorship).