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SIGNIFICANCE OF IT INFRASTRUCTURE
IT infrastructure (ITI) is the foundation for y Serving customers y Working with suppliers and y Managing internal business processes An example: If you are a bank and you want to sell banking services (savings, checking, car loans, home loans, brokerage accounts, etc) to all of your customers on a global level, your choices of ITI will make or break you. ITI is critical component of any business strategy 2
DEFINITIONS OF ITI
(1) ITI is the shared technology resources that provide the platform for the firm·s specific information system applications. These technology resources include hardware, software, and services (consulting, education, and training) (2) ITI is a set of firm wide services budgeted by management and comprising both human and technical capabilities that provide services to employees, customers, and suppliers. The latter definition puts more emphasis on the business value provided by investments in ITI
and video connectivity Application software services provide access to ERP. voice. CRM. SCM. and KM Physical facilities management services IT management services for planning and managing ITI IT standards services for developing policies IT education services that provide training IT research and development services for developing future projects 4 .LISTING OF THE SERVICES FROM THE SECOND DEFINITION OF ITI Computing platforms that provide computing services Telecommunication services provide data.
and KM Functional business units y Productions systems y Customer systems y Order entry systems 5 . CRM. ERP.LEVELS OF INFRASTRUCTURE Public infrastructure y The Internet y Public telephone system Enterprise wide infrastructure y Corporate Web site y Intranets y Enterprise applications like SCM.
EVOLUTION OF IT INFRASTRUCTURE Electronic accounting machine era: (1930²1950) General-purpose mainframe and minicomputer era: (1959 to present) Personal computer era: (1981 to present) Client/server era: (1983 to present) Enterprise internet computing era: (1992 to present) 6 .
UNIX y TCP/IP. and WWW y IBM/Microsoft/Intel 7 . Ethernet.TECHNOLOGY DRIVERS OF INFRASTRUCTURE EVOLUTION Moore·s law and microprocessing power y Microprocessor power (MIPS) doubles every 18 months y Number of transistors on a chip doubles every 18 months y Cost of computing falls by ½ every 18 months The law of mass digital storage y The number of kilobytes stored for $1 has doubled every 15 months since 1950 Metcalfe·s law and network economics y Power of a network grows exponentially as a function of the number of network members (network economics) Declining communications costs and the Internet Standards and network effects y ASCII. COBOL.
MOORE·S LAW 8 .
MOORE·S LAW: FALLING COST OF CHIPS 9 .
THE GROWTH OF MASS DIGITAL STORAGE 10 .
EXPONENTIAL DECLINES IN INTERNET COMMUNICATIONS COSTS 11 .
CONTEMPORARY HARDWARE PLATFORM TRENDS: OVERVIEW Integration of Computing and Telecommunications Platforms Grid Computing On-Demand (utility) Computing Autonomic Computing 12 .
and radio move toward digital production. 13 . Client level: integration of cell phones and PDAs (Example: Palm Treo) Television. video.INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS Increasingly computing takes place over the network. Server level: The integration of voice telephone and the Internet bring together two historically separate and distinct global networks. The network in many respects is the source of computing power.
50% of the computing power in the United States is unused. computers may be geographically remote It is estimated that from 25% . 14 . and increases the agility of firms.GRID COMPUTING Rather than purchase huge mainframes or super computers. increases speed of computing. Grid computing saves infrastructure spending. firms can chain together thousands of smaller desktop clients into a single computing grid.
ON-DEMAND (UTILITY) COMPUTING Firms off-loading peak demand for computing power to remote. large-scale data processing centers Developed by IBM. holiday shopping Saves firms from purchasing excessive levels of infrastructure 15 . SUN. e. and HP Firms pay only for the computing power they use. Excellent for firms with spiked demand curves caused by seasonal variations in consumer demand.g. as with an electrical utility.
y Operator error is the most common cause of crashes.AUTONOMIC COMPUTING Autonomic computing is an industry-wide effort to develop systems that can: y Configure. and tune themselves y Heal themselves when broken y Protect themselves from outside intruders and self-destruction Why is there a need for this? y Computer systems (both hardware and software) have become so complex that the cost of managing them has risen. Example: Windows XP and Max X OS automatically download patches and updates. 16 . y Thirty to fifty percent of a company·s IT budget is spent preventing or recovering from system crashes. optimize.
SOFTWARE PLATFORM TRENDS: OVERVIEW The open-source software movement Java and Linux Software for enterprise integration y Enterprise wide systems y Linkage to older systems and applications Enterprise application integration Middleware Software outsourcing y Software packages y Application service providers y Custom software development or maintenance of existing systems to outside firms 17 .
Dell. The movement has evolved over 30 years and has demonstrated it can provide high quality software. Major examples include Linux. Intel. Linux is a major alternative to Windows server and even client operating systems 18 . Linux is an operating system derived from Unix. HP.THE OPEN-SOURCE SOFTWARE MOVEMENT Open-source software is free and can be modified by users. Developed and maintained by a worldwide network of programmers and designers under the management of user communities. IBM. and Sun have adopted and support Linux. Firefox (browser). and Apache (Web server software that resides on the server and delivers Web content to your browser) Linux is the most widely used open-source software program.
and browsers. cell phones. Java is a leading interactive programming environment for the Web. 19 . Applications written in Java can run on any hardware for which a Java virtual machine has been defined. Java is embedded in PDAs.JAVA A programming language that is independent of the operating system and hardware processor. set-top cable TV systems. music players. automobiles.
and to adopt business best practices which are captured by the software. and KM). ERP. Rather than build their own software. increase reliability. Enterprise software firms achieve economies of scale by selling the same software to hundreds of firms. CRM. 20 . reduce cost.SOFTWARE FOR ENTERPRISE INTEGRATION An important software trend of the last decade is the usage of enterprise-wide software systems by firms (SCM. The goal is to achieve an integrated firm-wide information environment. large firms increasingly purchase enterprise applications prewritten by specialized software firms like SAP or Oracle.
SOFTWARE FOR ENTERPRISE INTEGRATION (CONTINUED) How do you link new enterprise software with older legacy applications? Middleware approach y Special software that creates an interface between two different systems Enterprise application integration approach y Enterprise application integration software creates a single software hub where multiple systems can exchange data through a single hub rather than building countless interfaces for each system 21 .
ENTERPRISE APPLICATION INTEGRATION (EAI) SOFTWARE VERSUS TRADITIONAL INTEGRATION 22 .
SOFTWARE OUTSOURCING: PACKAGES Prewritten off-the-shelf software built by a software company Eliminates the need for the company to write their own Available for all standard business applications within and across industries Includes all the transaction processing systems mentioned in earlier chapters Also includes the large enterprise applications 23 .
firms can go onto the Internet and find providers who offer the same functionality over the Internet. Example: Salesforce. Software is not installed on the firm·s systems.SOFTWARE OUTSOURCING: APPLICATION SERVICE PROVIDERS A business that delivers and manages applications and computer services from remote computer centers to multiple users using the Internet or a private network.com provides customer relationship management and sales force management services to firms 24 . Rather than purchase hardware and software. and charge on a per-user or license basis.
SOFTWARE OUTSOURCING: CUSTOM SOFTWARE A firm contracts custom software development or maintenance of existing legacy programs to outside firms.1 billion to create an integrated communication system for 50. often in low-wage countries. Why would Dow not build this system itself? 25 .000 Dow employees in 63 countries. Example: Dow Chemical hired IBM for $1.
CHANGING SOURCES SOFTWARE OF FIRM 26 .
MANAGEMENT CHALLENGES ITI management must be guided by the firm·s need to provide computer-based services to customers. and suppliers. To this wisely the firm must deal with: y How do we make wise infrastructure investments? y How do we choose and coordinate infrastructure components? How do we prepare for infrastructure change (scalability)? How should we control and manage ITI? (decentralization versus centralization) 27 y y . employees.
with respect to large scale infrastructure changes (develop one module at a time) Consider the total cost of ownership y Develop benchmarks for the total cost of ownership 28 .MANAGEMENT SOLUTIONS Consider your strategic situation: six questions to ask Start out small.
and suppliers? 2. What is the firm·s IT strategy with respect to ITI and costs? 4. How do your expenditures for ITI compare with your competitor? 29 . What is the market demand for computer-based services from customers. What is your firm·s business strategy or what new services are needed to achieve goals? 3.SIX QUESTIONS TO ASK 1. and suppliers compared to your competitor? 6. What is the position of your firm with respect to IT compared to your competition (ahead or behind)? 5. employees. What is the position of your firm with respect to computer-based services to customers. employees.
TOTAL COST OF OWNERSHIP When calculating the costs of systems. be sure to include all the costs: y y y y y y y y y Hardware acquisition Software acquisition Installation Training Support Maintenance Infrastructure requirements Downtime Space and energy 30 Reference book: MIS by Laudon .
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