Transcript Chapter 5

IT Infrastructure and Platforms
Chapter Six (9th ed)
Chapter 6 and Our Questions
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4. Why are technology infrastructures so
important to modern organizations?
 Explain the nature of, and organizational
dependence on, technology and business
platforms
 Compare open versus proprietary architectures
 Recognize total cost of ownership for
technology investments, (e.g., desk top
computing)
 Understand the problems in justifying
investments in infrastructure
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Chapter Six Outline
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Significance of IT Infrastructure
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IT infrastructure (ITI) is the foundation for
 Serving customers
 Working with suppliers and
 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
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The Connection between the Firm, IT
Infrastructure, and Business
Capabilities
Figure 6-1
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Definitions of ITI
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(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
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Listing of the Services from the Second
Definition of ITI
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Computing platforms
that provide
computing services
Telecommunication
services provide data,
voice, and video
connectivity
Application software
services provide
access to ERP, SCM,
CRM, and KM
Physical facilities
management services
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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
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Levels Of Infrastructure
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Public infrastructure
 The Internet
 Public telephone system
 Industry networks
Enterprise wide infrastructure
 E-mail
 Corporate Web site
 Intranets
 Enterprise applications like SCM, ERP, CRM, and KM
Functional business units
 Productions systems
 Customer systems
 Order entry systems
Questions
 Centralization versus decentralization
 Cross functional applications
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Evolution of IT Infrastructure
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Electronic accounting machine era: (1930–1950)
General-purpose mainframe and minicomputer
era: (1959 to present)
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Personal computer era: (1981 to present)
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Client/server era: (1983 to present)
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Enterprise internet computing era: (1992 to
present)
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Technology Drivers of Infrastructure
Evolution
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Moore’s law and microprocessing power
 Microprocessor power (MIPS) doubles every 18 months
 Number of transistors on a chip doubles every 18 months
 Cost of computing falls by ½ every 18 months
 Near future will continue, but heat issues and consumer
needs may slow this process
The law of mass digital storage
 The number of kilobytes stored for $1 has doubled every 15
months since 1950
Metcalfe’s law and network economics
 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
 ASCII, COBOL, UNIX
 TCP/IP, Ethernet, and WWW
 IBM/Microsoft/Intel
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Moore’s Law
Figure 6-5
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Moore’s Law: Falling Cost of Chips
Figure 6-6
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The Growth of Mass Digital Storage
Figure 6-8
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Cost of Mass Digital Storage
Figure 6-9
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Exponential Declines in Internet
Communications Costs
Figure 6-10
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Seven Key Infrastructure Components
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Computer Hardware Platforms
Operating System Platforms
Enterprise Software Applications
Data Management and Storage
Networking/Telecommunications Platforms
Internet Platforms
Consulting and System Integration Services
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The IT Infrastructure Ecosystem
Figure 6-11
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Computer Hardware Platforms
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$110 billion annually spent in the United States
Dominance of Intel, AMD, and IBM 32-bit
processor chips at both the client and server level
Hardware market is dominated by IBM, HP, Dell,
and Sun
Strong server market growth for 64 bit generic
processors from AMD, Intel and IBM
Blade servers replace box servers
Mainframes continue as a presence working as
very large servers
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Operating System Platforms
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100 billion annually spent in the United States
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Continued dominance of Microsoft OS in the client
(95%) and handheld market (45%)
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Growing dominance of Linux (UNIX) in the
corporate server market (85%)
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Windows 2002 and 2003 Server remains strong in
smaller enterprises and workgroup networks
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Enterprise Software Applications
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$165 billion annually spent in the United States
for basic enterprise software infrastructure
SAP, Oracle, PeopleSoft (now Oracle), and Siebel
(now Oracle) dominate this market.
Middleware firms like BEA and JD Edwards serve
smaller firms, and work also in the Web services
space.
The enterprise market is consolidating around a
few huge firms that have gained significant
market share such as SAP and Oracle.
Microsoft is expanding into smaller firm
enterprise systems where it can build on its
Windows server-installed base.
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Data Management and Storage
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Data management software
 $70 billion annually spent in the United States.
 Oracle and IBM dominate the market.
 Microsoft (SQL Server) and Sybase tend to serve
smaller firms.
 Open source Linux MySQL now supported by HP
and most consulting firms as an inexpensive,
powerful database used mostly in small to mid-size
firms.
Data storage hardware
 $35 billion annually spent in the United States for
physical hard disk storage
 The hard disk market is consolidating around a few
huge firms like EMC and smaller PC hard disk firms
like Seagate, Maxtor, and Western Digital
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Networking/Telecommunications
Platforms
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150 billion annually spent on networking and
telecommunications hardware
$700 billion annually spent on telecommunications
services, e.g. phone and Internet connectivity
Local area networking still dominated by Microsoft
Server (about 75%) but strong growth of Linux
challenges this dominance
Enterprise networking almost entirely Linux or UNIX
Cisco, Lucent, Nortel, and Juniper Networks continue to
dominate networking hardware.
The telecommunications services market is highly
dynamic with MCI, AT&T, and Sprint providing most
trunk line services for both phone and Internet.
Growth of non-telephone Wi-Fi and Wi-Max services,
and Internet telephony
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Internet Platforms
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$32 billion annually spent on Internet
infrastructure in the United States
Internet hardware server market concentrated in
Dell, HP, and IBM
Prices falling rapidly by up to 50% in a single
year for low-power servers
Open-source Apache remains the dominant Web
server software, followed by Microsoft’s IIS
server.
Sun’s Java grows as the most widely used tool for
interactive Web applications.
Microsoft and Sun settle a long-standing law suit
and agree to support a common Java.
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Consulting and System Integration
Services
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Most firms today, even large firms, cannot
develop their systems without significant outside
help.
$130 billion annually spent on computer system
design, and related business services like
business process redesign in the United States
About 85% of business consulting in the United
States involves IT business consulting.
Integration services involves integrating data,
and applications in a firm.
Connecting new applications and systems to
legacy systems
IBM has transformed itself into a systems
integration firm with IBM Global Services, the
largest system integration firm.
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Contemporary Hardware Platform
Trends: Overview
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Integration of Computing and
Telecommunications Platforms
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Grid Computing
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On-Demand (utility) Computing
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Autonomic Computing
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Integration of Computing and
Telecommunications Platforms
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Increasingly computing takes place over the
network.
Client level: integration of cell phones and PDAs
(Example: Palm Treo)
Television, video, and radio move toward digital
production.
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.
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Grid Computing
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Rather than purchase huge mainframes or super
computers, firms can chain together thousands of
smaller desktop clients into a single computing
grid; computers may be geographically remote
It is estimated that from 25% - 50% of the
computing power in the United States is unused.
Grid computing saves infrastructure spending,
increases speed of computing, and increases the
agility of firms.
Examples: Royal Dutch/Shell Group and the
National Digital Mammography Archive
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On-Demand (Utility) Computing
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Firms off-loading peak demand for computing
power to remote, large-scale data processing
centers
Developed by IBM, SUN, and HP
Firms pay only for the computing power they use,
as with an electrical utility.
Excellent for firms with spiked demand curves
caused by seasonal variations in consumer
demand, e.g. holiday shopping
Saves firms from purchasing excessive levels of
infrastructure
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Autonomic Computing
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Autonomic computing is an industry-wide effort
to develop systems that can:
 Configure, optimize, and tune themselves
 Heal themselves when broken
 Protect themselves from outside intruders and
self-destruction
Why is there a need for this?
 Computer systems (both hardware and
software) have become so complex that the
cost of managing them has risen.
 Thirty to fifty percent of a company’s IT budget
is spent preventing or recovering from system
crashes.
 Operator error is the most common cause of
crashes.
Example: Windows XP and Max X OS
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automatically download patches and updates.
Software Platform Trends: Overview
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The open-source software movement
Java and Linux
Software for enterprise integration
 Enterprise wide systems
 Linkage to older systems and applications
 Enterprise application integration
 Middleware
Web services and service-oriented architecture
Software outsourcing
 Software packages
 Application service providers
 Custom software development or maintenance
of existing systems to outside firms
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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.
 The movement has evolved over 30 years and has
demonstrated it can provide high quality software.
 Major examples include 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. Linux is an operating system derived from
Unix.
 IBM, HP, Intel, Dell, and Sun have adopted and support
Linux. Linux is a major alternative to Windows server
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and even client operating systems
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Java
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A programming language that is independent of
the operating system and hardware processor.
Applications written in Java can run on any
hardware for which a Java virtual machine has
been defined.
Java is embedded in PDAs, cell phones, music
players, automobiles, set-top cable TV systems,
and browsers.
Java is a leading interactive programming
environment for the Web.
Applet concept
Dispute with Microsoft
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Software For Enterprise Integration
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An important software trend of the last decade is the
usage of enterprise-wide software systems by firms
(SCM, ERP, CRM, and KM).
Rather than build their own software, large firms
increasingly purchase enterprise applications
prewritten by specialized software firms like SAP or
Oracle.
The goal is to achieve an integrated firm-wide
information environment, reduce cost, increase
reliability, and to adopt business best practices which
are captured by the software.
Enterprise software firms achieve economies of scale by
selling the same software to hundreds of firms.
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Software For Enterprise Integration
(continued)
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How do you link new enterprise software with
older legacy applications?
Middleware approach
 Special software that creates an interface
between two different systems
Enterprise application integration approach
 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
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Enterprise Application Integration
(EAI) Software Versus Traditional
Integration
Figure 6-13
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Web Services And Service-Oriented
Architecture
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An alternative to middleware and EAI is to use
new Web-based standards to create a
communication platform allowing older
applications to communicate with newer
applications.
Web services refers to a set of loosely coupled
software components that exchange information
with each other using Web communication
standards and languages
Web services permit computer programs to
communicate with one another and share
information without rewriting applications, or
disturbing older legacy systems.
Web services are based on XML, and standards
like SOAP, WSDL, and UDDI to create this
communication environment.
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Web Services And Service-Oriented
Architecture (continued)
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XML stands for extensible markup language and is a
more powerful version of HTML that enables one to tag
items that provide meaning to data.
Web Services Description Language (WSDL) describes
the tasks performed by the Web service and the
commands and data it will accept so that it can be used
by other applications.
Universal description discovery and integration (UDDI)
enables a Web service to be listed in a directory of Web
services for easy location.
The collection of Web services used to build a firm’s
software constitute what is know as a service-oriented
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architecture (SOA)
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
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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. Software is not
installed on the firm’s systems.
 Rather than purchase hardware and software,
firms can go onto the Internet and find providers
who offer the same functionality over the
Internet, and charge on a per-user or license
basis.
 Example: Salesforce.com provides customer
relationship management and sales force
management services to firms
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Software Outsourcing: Custom
Software
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A firm contracts custom software development or
maintenance of existing legacy programs to
outside firms, often in low-wage countries.
Example: Dow Chemical hired IBM for $1.1 billion
to create an integrated communication system for
50,000 Dow employees in 63 countries.
Why would Dow not build this system itself?
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Changing Sources of Firm Software
Figure 6-15
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Management Challenges
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ITI management must be guided by the firm’s
need to provide computer-based services to
customers, employees, and suppliers. To this
wisely the firm must deal with:
 How do we make wise infrastructure
investments?
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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)
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Management Solutions
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Consider your strategic situation: six questions to
ask (see next slide)
Start out small, with respect to large scale
infrastructure changes (develop one module at a
time)
Consider the total cost of ownership
 Develop benchmarks for the total cost of
ownership
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Six Questions to Ask
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1. What is the market demand for computer-based
services from customers, employees, and suppliers?
2. What is your firm’s business strategy or what new
services are needed to achieve goals?
3. What is the firm’s IT strategy with respect to ITI and
costs?
4. What is the position of your firm with respect to IT
compared to your competition (ahead or behind)?
5. What is the position of your firm with respect to
computer-based services to customers, employees, and
suppliers compared to your competition?
6. How do your expenditures for ITI compare with your
competition?
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Total Cost of Ownership
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When calculating the costs of systems, be sure to
include all the costs:
Hardware acquisition
 Software acquisition
 Installation
 Training
 Support
 Maintenance
 Infrastructure requirements
 Downtime
 Space and energy
The desktop management concept for distributed computer
assets (http://cais.isworld.org/articles/86/default.asp?View=Journal&x=50&y=7 )
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