Transcript Organizations, Management and the Networked Enterprise

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EMERGING TECHNOLOGIES
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Chapter 5
Doç.Dr. Aykut Hamit TURAN
Management Information Systems Laudon&Laudon (2010)
IT INFRASTRUCTURE AND
DREAMWORKS PICTURES
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Dreamworks uses world class creative talent and advanced
computer technology to produce successful computer
generated animated films
Dreamworks has plenty of competition from Pixar. To gain
edge in this fiercely competitive market, Dreamworks
Animation has made enterteinment films to all audiences,
while leveraging latest technology and finest talent
available
Dreamworks has set an ambitious plan to work two
animated films at one time in a year. To do that
Dreamworks used the latest technology, powerful and fast
computers, high speed network links to link powerful
computers
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DREAMWORKS PICTURES
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Dreamworks management believes that its exclusive
software and other technology infrastructure investments
will not only pay off, but also provide a strategic advantage
To render animation films, Dreamworks uses a network of
2700 HP processors running Linux Operating System,
which are organized to act a single computer system that is
distributed among the company’s studios and HP research
facility in Palo Alto, California
Hardware and software investments can play in improving
business performance and achieving strategic advantage by
using information technology to create differentiated
products more rapidly than competitors
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IT INFRASTRUCTURE
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IT infrasturcture is the shared technology resources that
provide the platform for the firm’s specific information
technology applications
IT infrustrucutre includes investments in hardware,
software and services such as consulting, education and
training that are shared accross the entire firm
A firm’s IT infrastructure provides the foundation for
serving customers, working with vendors and managing
internal firm business processes
US IT infrastructure business is a 1.8 trillion dollar
industry when telecommunications, networking equipment
and telecommunications services are included
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DEFINING IT INFRASTRUCTURE
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IT infrastrucutre consists of a set of physical devices and
software applications that are required to operate the
entire enterprise
But IT infrastucture is also set of firmwide services
budgeted by management and comprising both human and
technical capabilities. These services include
Computing platforms used to provide computing services
that connect employees, customers and suppliers into a
coherent digital environment including large mainframes,
desktop and laptop computers as well as handheld devices
Telecommunications services that provide data, voice and
video connectivity to employees, customers and suppliers
Data management services that store and manage
corporate data and provide capabilities for analyzing the
data
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DEFINING IT INFRASTRUCTURE
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Application software services that provide enterprise wide
capabilities such as enterprise resource planning, customer
relationship management, supply chain management and
knowledge management systems that are shared by all
business units
Physical facilities management services that develop and
manage the physical installations required for computing,
telecommunications and data management services
IT management services that plan and develop the
infrastructure, coordinate with the business units for IT
services
IT standards services that provide the firm and its business
units with policies that determine which information
technology will be used, when and how
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DEFINING IT INFRASTRUCTURE
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It education services that provide training in system use to
employees and offer managers training in how to plan for
and management IT investments
IT research and development services that provide the firm
with research on potential future IT projects and
investments that could help the firm differentiate itself in
the market
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EVOLUTION OF IT INFRASTRUCTURE 1950
- 2007
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Today’s IT infrasturcture is an outgrowth of over 50 years of
evolution in computing platforms
Five different stages have been identified in this evolution, each
represeting different confuguration of computing power and
infrastructure elements
These eras do not necessarily end for all organizations at the
same time and technologies that chracterize one era may also be
used in other time period for other purposes. Some companies still
run mainframe or minicomputers
Electronic Accounting Machine era: 1930 – 1950: The first era of
business computing used specialized machines that could sort
computer cards into bins, accumulate totals and print reports.
Although the electronic accounting machine was efficient
processor of accounting tasks, the machines were large and
cumbersome. Computer programs were hardwired into circuit
boards and they could be changed by altering the wired
connections
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EVOLUTION OF IT INFRASTRUCTURE 1950
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IBM dominated mainframe computing ans still dominate 27
billion dollar market. Mainframe era was a period of higly
centralized computing under the control of professional
programmers and system operators with most elements of
infrasture provided by single vendor, the manufacturer of
hardware and software. This started to change with the
introduction of minicomputers produced by Digital Equipment
Corporation (DEC). This mahines enabled decentralized
computing, customized to the specific needs of individual
departments or business units
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General purpose mainframe and minicomputer era: 1959 to
present: The first commercial all electronic vacuum tube
computers appeared in the early 1950s with the intrduction of
UNIVAC computers and IBM 700 series. Introduction of IBM
1401 ve 7090 transistorized machines started widespread use of
mainframe computers. In 1956, the general purpose commercial
mainframe computer truly came into its own with the
introduction of IBM 360 series
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EVOLUTION OF IT INFRASTRUCTURE 1950
- 2007
Client/Serve Era: 1983 to present: In client/server computing,
desktop computers called clients are networked to powerful server
computers that provide clients with a variety of services and
capabilities
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Personal Computer Era: 1981 to present: The appreance of IBM
PC in 1981 considered the beginning of PC era. These machines
are largely adopted by Amrican business afterwords. First PCs
have DOS text based operating systems and later PCs adopted
Wintel standard (windows operating systems with Intel
processors) and this has bcome standard in the industry. Today
95 percent of 1 billion PCs use this standard. Proliferation of PCs
in the early 1980s and 1990s launced wide variety of desktop
productivity tools, word processors, spreadsheets, electronic
presentation softwares and small data management programs.
After 1990s PC operating systems enabled PCs to connect
networks
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EVOLUTION OF IT INFRASTRUCTURE 1950
- 2007
Enterprise computing era: 1992 to present: The success of the
client/server model posed a new set of problems. Many large firms
found it difficult to integrate all of their local area networks
(LANs) into a signle, coherent corproate computing environment
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Computing processing work is split between these two types of
machines. The client is the user point of entery, whereas the
server typically processes and stores shared data, serves up web
pages or manages network activities. Client/server computing
enables businesses to distribute computing work across a series of
smaller, inexpensive machines that cost much less than
minicomputers or centralized mainframes. The result is an
explosion in computing power and applications throughout the
firm. Today Microsoft is the market leader with its Windows
operating system by dominating 78 percent of local area network
market. Linux is the fastest growing network operating system
yet
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EVOLUTION OF IT INFRASTRUCTURE 1950
- 2007
Management Information Systems Laudon&Laudon (2010)
Applications developed by local departments and divsions in a
firm or in different georgraphic areas could not communicate
easily with one another and share data. In the arly 1990s, firms
turned to networking standards and software tools that could
integrate disparate networks and applications throughout the
firm into a enterprise wide infrastructure. İrms began using
TCP/Ip standars as Internet develop to tie their disparate
networks together. The resulting IT infrasturcure links different
pieces of computer hardware and smaller networks into an
enterprise wide network so that information can now freely flow
across the organization and between the firm and other
organizations.
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TECHNOLOGY DRIVERS OF
INFRASTRUCTURE EVOLUTION
The law of mass Digital Storage: A second technology driver of IT
infrastucture change is the law of mass digital storage. The world
produces as much as 5 exabytes of unique information every year
(an exabyte is a billion gigabytes). The amount of digital
information is roughly doubling every year. Fortunately the cost
of storing digital information is falling at an exponential rate. The
number of kilobytes storedon magnetic disks for one dollar 1950
to 2005 doubled roughly every 15 months
Management Information Systems Laudon&Laudon (2010)
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There is a reason to believe computing power increase and prices
falling down will continue in the future. Chip manufacturers
continue to miniaturize components By using nanotechnology,
Intel believes it can shrink the size of transistors down the width
of several atoms
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TECHNOLOGY DRIVERS OF
INFRASTRUCTURE EVOLUTION
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TECHNOLOGY DRIVERS OF
INFRASTRUCTURE EVOLUTION
Moore’s law and microporcessing power: In 9165 Gordon Moore,
the director of Fairchild Semiconductor’s research and
Development Laboratories wrote since first microchips introduced
1959, the number of components on chips had doubled each year.
The interpretation of Moore’s law: the power of microporessors
doubles every 18 months, computing power doubles every 18
months and price of computing falls by half every 18 months
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The changes in IT infrasturcture have resulted from dvelopments
in computer processing, memory chips, storage devices,
telecommunication and networking hardware and software design
that have exponentially increased computing power while
exponentially reducing costs
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TECHNOLOGY DRIVERS OF
INFRASTRUCTURE EVOLUTION
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TECHNOLOGY DRIVERS OF
INFRASTRUCTURE EVOLUTION
Declining communication costs and the Internet: A fourth
technology driver transforming IT infrasturcture is the rapid
decline in the costs of communication and the exponential growth
in the size of the ınternet. More than 1 billion people has Internet
access. Internet made telecommunication costs to drop
drastically. To take advantage of business value assocaited with
Internet, firms must greatly expand their Internet connections,
including wireless connectivity and mobile computing services
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Metcalfe’s law and Network economies: Moore’s law and law of
Mass Storage help us understand why computing resources are
now so readily available. But why people want more computing
and storage power? Robert Metcalfe, inventor of ethernet LAN
technology, claimed in 1970 that the value or power of a networks
grows exponentailly as a function of the number of network
members. Metcalfe and other point to the increasing returns to
scale that network members receive as more and more poeple join
the network
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TECHNOLOGY DRIVERS OF
INFRASTRUCTURE EVOLUTION
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Technology standards are specifications that establish the
compatibility of products and the ability to communicate in a
network
Technology standards enleash powerful economies of scale and
result in price decline as manufacturers focus on the products
built to a single standard. Without these economies of scale,
computing of any sort would be far more expensive that its
current case
Begining 1990s, corporations started moving toward tandard
computing and communication platforms. The Wintel PC and the
Windows operating system and Microsoft office productivity tools
became the standard destop and mobile client computing
platform.
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Standards and network effects: Today’s enterprise infrastructure
and Internet computing would be impossible without agreements
among manufacturers and widespread consumer acceptance of
technology standards
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INFRASTURCTURE COMPONENTS
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IT infrasturcture today is composed of seven
major components.
 Investment in each component must be
coordinated with one another to provide the firm
with a coherent infrastructure
 In the past, technology vedors supplying these
components were often in competition with one
another, offering purchasing firms a mixture of
incompatible, proprietary, partial solutions. But
increasingly, the vendor firms have been forced
by large customers to cooperate with strategic
partnership with one another
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COMPUTER HARDWARE PLATFORMS
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US firms spent about 145 billion dollars in 2005
on computer hardware. This component includes
client machines (desktop PCs, mobile computing
devices, laptops) and server machines.
 The client machines use primarily Intel or AMD
microprocessors. The client market is more
complex, using mostly Intel or AMD processors in
the form of blade servers in racks, but also
includes Sun SPARC microporcessors and IBM
PowerPC chips specially designed for server use
 Blade servers are ultrathin computers consisting
of circuit board with processors, memory and
network connections that are stored in racks
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COMPUTER HARDWARE PLATFORMS
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The marketplace for computer hardware has
increasingly become concentrated in top firms
such as IBM, HP, Dell and Sun Microsystems,
which produce 90 percent of the processors sold
in 2004.
 The industry has collectively settled on Intel as
the standard processor with major exceptions in
the server market for Unix and Linux machines,
which use Sun or IBM Unix processors
 Maniframes have not dissappeared. The
mainframe market has actually grown steadily
over the last decade, although the number of
providers has dwindled to one: IBM
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COMPUTER SOFTWARE PLATFORMS
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In 2005, the US market for operating systems,
which manage the resources and activities of
computer is expected to amount $110 billion. At
client level 95 percent of PCs and 45 percent of
handheld devices use Microsoft operating
systems. Androin and Apple IOS are widespread
operating systems in smart phones and tablets.
More than 85 percent of servers use Unix or open
source Linux operating system.
 Unix and Linux constitude the backbone of
corporate infrastructure throughout much of the
world because they are scalable, reliable and
much less expensive than mainframe OS
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COMPUTER SOFTWARE PLATFORMS
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Although windows continues to dominate the
client marketplace, many corproations have
begun to explore Linux as a low cost desktop OS
provided by commercial vendors such as Red Hat
 Corporations in US spent about $45 billion on
enterprise software systems. The largest provider
of enterprise systems are SAP and Oracle, which
acquired PeopleSoft and many other enterprise
software firms in recent years. BA provides
middleware software. Microfost is attempting to
move into lower end of this market by focusing on
small and medium size businesses
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DATA MANAGEMENT AND STORAGE
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There are few choices for enterprise database
management software, which is responsible for
organizing and managing the firms’ data so that
it can be efficiently accessed and used
 The leading database software providers are IBM
(DB2), Oracle, Microsoft (SQL Server) and
Sybase (Adaptive Server Enterprise), which
supply more than 90 percent of estimated $42
billion US market. A growing new entrant is
MySQL, a Linux open source relational database
product available for free on the Internet and
increasingly supported by HP and others
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DATA MANAGEMENT AND STORAGE
Management Information Systems Laudon&Laudon (2010)
The physical storage market is dominated by
EMC orporation for large systems and small
number of PC hard disk manufacturers led by
Seagate, maxtor and Western Digital
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NETWORKING/COMMUNICATION
PLATFORMS
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US firms spend enourmous $796 billion a year on
networking and telecommunications hardware
and services. Windows Server is predominantly
used as local area network OS, followed by Linux,
Novell and Unix. Large enterprise-wide area
networks primarily use some variant of Unix.
Nearly all WAN and LANs use TCP/IP protocol
suite as a standard
 The leading networking hardware providers are
Cisco, Lucent, Nortel and Jupiter Networks.
Telecommunications platforms are typically
provided by telecom companies
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INTERNET PLATFORMS
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Internet platforms overlap with and must relate to the
firm’s general networking infrastructure and hardware and
software platforms
The Internet revolution of the late 1990s led to a veritable
explosion in server computers with many firms collecting
thousands of small servers to run their Internet operations
The Internet hardware server market has been dominated
by Dell, HP/Compaq and IBM as prices have fallen
dramatically
The major web software application development tools and
suites are supplied by Microsoft (Frontpage and
Microsoft.Net). Sun’s Java is the most widely used tool for
developing interactiv web applications on the server and
client sides and macromedia/Adobe (Flash), media software
(real Media) and text tool (Adobe Acrobat) other tools to
mention
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CONSULTING AND SYSTEM INTEGRATION
SERVICES
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Although 20 years ago, large firms used to implement their
IT infrastructure, it is much less common today. Even large
firms do not have staff, experience and budget to do that.
Implementing new infrastructure requires significant
changes in busness procedures and processes, training,
education and software integration
Software integration means ensuring the new
infrastructure works with the firm’s older, so called legacy
systems and ensuring the new elements of the
infrastructure work with one another
Legacy systems are generally older TPSs created for
mainframe systems that continue to be used to to avoid
high costs of replacing them
Accenture, PricewaterhouseCoopers are the major
consulting firms in US
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HARDWARE PLATFORM TRENDS AND
EMERGING TECHNOLOGIES
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Although the cost of computing has fallen exponentially,
the cost of IT infrastructure has actually expended as a
percentage of corproate budgets
The cost of computing services (consulting, systems
integration) and software is high and the intensity of
computing and communication has increased as other costs
have declined
Employees now use much more sophisticated applications,
requiring more powerful and expensive hardware of many
different types
Firms face number of other challanges. They need to
integrate information stored in different applications on
different platforms
Firms also need to build resilient infrastructures that can
withstand huge increases in peak loads and assults from
hackers
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THE INTEGRATION OF COMPUTING AND
TELECOMMUNICATION PLATFORMS
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The most dominant theme in hardware platforms today is
the convergence of telecommunications and computing
platforms to the point where increasingly computing takes
place over the network
Today cell phones are taking on haldheld computers,
tablets have become a relatively powerful computing
platforms. High end cell phones come equipped for
dowloading music and video clips and for playing 3D
games.
At the server and network level, the growing success of
Internet telephone systems demonstrates how historically
seperate telecommunications and computing platforms are
converging toward a single network – the Internet
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GRID COMPUTING
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Grid computing involves connecting georaphically remote
computers into a single network to create a virtual
supercomputer by combining the computational power of
all computers on the grid
Since most computers use only in average 25 percent of
their computing power, leaving these idle resources
available for other processing tasks
Grid computing was impossible until high speed Internet
connections enabled firms to connect remote machines
economically and move enourmous quantities of data
Grid computing requires software programs to control and
allocate resources on the grid, such as open source software
provided by Globus Allience
The business case for using grid computing involves cost
savings, speed of computation and agility
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ON DEMAND COMPUTING (UTILITY
COMPUTING)
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On demand computing refers to firms off loading peak
demand for computing power to remote, large scale data
processing centers. Firms can reduce their investment in IT
infrastrucutre by investing just enough to handle average
processing loads and paying for only as much additional
computing power as the market demands
It is also called utility computing, which suggests that
firms purchase computing power from central computing
utilities and pay for the only amount they used like
electricity of water
In addition to lowering cost of owning hardware resources,
on demand computing gives firms greater agility to use
technology and greatly reduces the risk of over investing in
IT infrastructure. Provides firms flexible IT infrastructures
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AUTONOMIC COMPUTING AND EDGE
COMPUTING
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Computer systems have become so complex today that
some experts believe they may not be manageable in the
future
With OS, enterprise and database software weighing in at
millions of lines of code and large systems encompassing
many thousands of network devices, the problem of
managing these systems looms very large
Autonamic computing is an industry wide effort to develop
systems that can configure themselves, optimize and tune
themselves, heal themselves when broken and protect
themselves from outside intruders
Virus and firewall protection software can detect viruses on
PCs , automatically defeat the viruses and alert operators.
These programs can be updated automatically as the need
arises by connecting to an online virus protection service
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EDGE COMPUTING
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Edge computing is a multitier, load balacing scheme fro
web based applications in which significant parts of web
site content, logic and processing are performed by smaller,
less expensive servers located nearby the user in order to
increase response time and resilience while lowering
technology costs
Edge computing is another technique like grid computing
and on demand computing for using the Internet to share
the workload expereinced by a firm across many computers
located remotely on the network
There are three tiers in edge computing: the local client;
the nearby edge computing platform and enterprise
computers located at the firm’s main data center
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VIRTUALIZATION AND MULTICORE
PROCESSORS
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As computers deploy hudredsof thousands servers, many
have discovered that theya re spending more on electricity
to power and cool the systems than they did acquiring the
hardware
The average annual utility cost for a 100000 square foot
data center has reached $5.9 million
One way of curbing hardware proliferation and power
consumption in to use virtualization to reduce number of
computers required for computing. Virtualization is the
process of presenting a set of computers required for
processing so that they can all be accessed in virtualization
enables to run more than one OS at the same time on a
single machine
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VIRTUALIZATION AND MULTICORE
PROCESSORS
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Multicare processing is another way to reduce power
requirements and hardware sprawl. Multicaore processor is
an integrated circuit that contains two or more processors
Intel and AMD are making dual core processors and
introducing quad core processors. Sun Microsystems sells
servers using its eight core UltraSparc processors
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SOFTWRAE PLATFORM TRENDS AND
EMERGING TECHNOLOGIES
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There are six major themes in contemporary software
platform evolution
Linux and Open source software
Java
Enterprise software
Web servşces and servşce oriented architecture
Mashups and web based software applications
Software outsourcing
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THE RISE OF LINUX AND OPEN SOURCE
SOFTWARE
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Open Source software is software produced by a community
of several hundred thousands programmers around the
world. According to leading open source professional
assocaition, opensource.org open source software is free anc
can be modified by users
Most open source software is currently based on Linux or
Unix OS
Open source software is superior to other types of software
because thousands of programmers around the world work
on them perfect the software
Range of open source programs extends from OS to desktop
productivity suites, web browsers and games
Major hardware and software producers including IBM,
HP, Dell, Oracle and SAP now offer Linux compatible
versions of their products
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LINUX
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Perhaps the best known open source software is Linux, an
OS derived from Unix. Linux was created by finnish
programmer Linus Torvalds and first posted on the
Internet in 1991
Linux is the fastest growing Client/Server OS
Apllications for Linux is rapidly growing also. Many of
these applications are embedded in cell phones, hand held
computers and other devices
In server side Linux is much more prevelant
IBM, HP, Intel, Dell and Sun have made Linux a central
part of their offerings to corporations
The rise of open source software, particulary Linux and the
applications it supports has profound implications for
corporate software platforms: cost reduction, reliability,
resistence and integration
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LINUX
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Linux works on major hardware platforms from
mainframes to clients
Linux has potential to break Microsoft dominance in
desktops
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JAVA
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Java is an operating system independent, processor
independent, object oriented programming language that
has become leading interactive programming environment
for the web
Java was created by Sun Microsystems in 1992 and
widespread use started in 1995. nearly all Internet
browsers came with java built in.
Java software is designed to run on any computer or
computing device, regardless of the specific microprocessors
or OS the device uses. A Macintosh PC, IBM PC, a Sun
Server and Cell phone can use the java application. Java
virtual machine can interpret the appliacation for a specific
system that it runs
Java is particularly useful in network environments such
as Internet
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SOFTWARE FOR ENTERPRISE INTEGRATION
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The most urgent software priority for firms is integration of
existing legacy software applications with newer web based
applications into a coherent single system that can be
rationally managed
Firms typically built their own custom made software and
made their own choices about software platforms. This
strategy produced hundreds of thousands of computer
programs that frequently could not communicate with
other software platforms
Some integration of legacy applications can be achieved by
using special software called middleware to create or bridge
between two different systems. Middleware is software that
connects two otherwise separete appliacations, enabling
them to communicate with each other and share data
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SOFTWARE FOR ENTERPRISE INTEGRATION
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Firms can purchase enterprise application integration
(EAI) software packages to integrate seperate systems
EAIs are specific they work only with certain pieces of
application spoftware and operating system.
Web services refer to a set of looselt coupled software
components that exhange information with each other
using standard web communication languages
Extensible markup language (XML) is the foundation
technology for web services. This technology was developed
by world Wide Web Consortium (W3C) as a more powerful,
flexible markup language than hypertext markup language
for web pages. Hypertext markup Language (HTML) is a
page description language for specifying how text, graphics,
video and sound are placed on the web page documents
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SOFTWARE FOR ENTERPRISE INTEGRATION
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The collection of web services that are used to build a firm’s
software systems consititudes what is known as service
oriented arhitecture (SOA)
SOA is a set of self contained services that communicate
with each other to create a working software application
Business tasks are accomplished by executing series of
these services
Software developers reuse these services in other
combinations to assemble other applications as needed
SOA is not a universal solution for all firms and it does
raise issues all of its own. It is not clear what services to
develop at first, and even web services applications need to
be rewritten as business firms develop and change
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AJAX, MASHUP, WEB 2.0 AND WEB-BASED
SOFTWARE APPLICATIONS
Management Information Systems Laudon&Laudon (2010)

Ajax is a technique for allowing your client and server you
are working to hold a conversation in the background,
transferring your entries as they are made to the server
without your awarness. Click North on a map site, like
Google Maps and the server downloads just that part of the
application that changes with no wait for an entire new
map
On a smaller scale, enterpreneurs are creating new
software applications and services based on combining
different online software applications, called mashups.
These new combined applications depend on high speed
data networks, universal communication standards and
open source code
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SOFTWARE OUTSOURCING
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In the past, most of the firms in US developed their won software
applications by temas of programmers. Recently firms prefer to
turn over about one third of their software development to outside
developers, including enterprise software firms who will sell them
pre-packaged solutions customized to their needs. Most of the
outsourcing software is performed in US, but growing percents is
performed offshore like where low wages in India, China, Eastern
Europe, Africa and Latin America
A software package is prewritten comemrcially available set of
software programs that eliminates the need for a firm to write its
own software programs for certain functions, such as payroll
processing or order handling
Management Information Systems Laudon&Laudon (2010)

Today, most business firms contnue to operate their legacy
systems that continue to meet a business need and that would be
extremely costly to replace
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SOFTWARE OUTSOURCING
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ASP vendors are starting to provide tools to integrate the
applications thy manage with clients’ internal systems or with
applications hosted by different vendors
A third external source of software is outsourcing in which a firm
contracts custom software development or maintenance of
existing legacy programs to outside firms, frequently firms that
operate offshore in low wage areas of the world. The largest
expenditure of outsourcing is paid to domestic US firms providing
middleware, integration services and other software support to
operate mainframes
Management Information Systems Laudon&Laudon (2010)

A second external source of software is online application service
providers (ASP). ASP is a business that delivers and manages
applications and computer services from remote computer centers
to multiple users using the Internet or a private networklarge and
medium sized businesses are using ASPs or enterprise systems,
sales force automation or financial management and small
businesses are using them for functions such as invoicing, tax
calculations, electronic calendars and accounting
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DEALING WITH INFRASTRUCUTE CHANGE
– MANAGEMENT ISSUES
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A long standing issue among IS managers and CEOs has been the
question of who will control and manage the firm’s infrastucture
Should departments and divisions have responsibility of making
their own IS decisions or should IT infrastucture be centrally
controlled and managed?
IT infrasturcture is a major investment for the firm. If too much
is spent on infrastructure, it lies idle and constitudes a drag on
firm’s financial performance. If too little is spent, important
business services cannot be delivered and firm’s competitors will
outperform the underinvested firm
Management Information Systems Laudon&Laudon (2010)

As firms grow, they can quickly outgrow their infrastructure. As
firms shrink, they can get stuck with execcsive infrastructure
purchased in better times. How can a firm remain flexile when
most of the investments in IT infrastructure are fixed cost
purchases and licenses. Scalibility refers to the ability of a
computer, product or system to expand to serve a large number of
users without breaking down
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DEALING WITH INFRASTRUCUTE CHANGE
– MANAGEMENT ISSUES
Competitive forces Model for IT infrastructure investments

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Market demand for your firm’s services: Make an inventory of the services
you currently provide to customers, suppliers and employees. Survey each
group or hold focus groups to find out if the services you currently offer are
meeting the needs of each group
Your firms business strategy: Analyze your firm’s five business strategy
and try to assess what new services and capabilities required to achieve
strategic goals
Your firm’s IT strategy, inrastructure and costs: Examine your firm’s IT
plans for the next five years and assess its alignment with the firm’s
business plans. Detrmine total IT infrastructure costs
Information technology assessment: Is your firm behind the technology
curve or at the bleeding edge of IT? Both situations shall be avoided
Management Information Systems Laudon&Laudon (2010)

A related question is whether a firm should purchase its own IT
infrastructure components or rent them frome xternal suppliers.
A major trend in IT hardware and software is to outsource to
external providers
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DEALING WITH INFRASTRUCUTE CHANGE
– MANAGEMENT ISSUES
Competitive forces Model for IT infrastructure investments (cont’)

Management Information Systems Laudon&Laudon (2010)

Competitior firm services: Try to assess what technology services
competitors offer to customers, suppliers and employees. Establish
quantitative and qualitative measures to compare them to those of your
firm. If your firm’s service levels fall short, your company is at a
competitive diadvantage
Competitor firm IT infrastructure investments: benchmark your
expenditures for IT infrastructure against your competitors. Your firms
does not necessarily need to spend as much as or more than your
competitors. Perhaps it has discovered much less expensive ways of
providing services and this can lead to cost advantage. Alternatively, your
firm may be spending far less than competitors and experiencing
commensurat poor performance and loosing market share
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TOTAL COST OF OWNERSHIP OF
TECHNOLOGY ASSETS
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The actual cost of owning technology resources includes the
original cost of acquiring and installing hardware and software as
well as ongoing administrative for hardware and software
upgrades, maintenance, tehcnical support, trainig and even
utility and real estate costs of running and housing the
technology.
The Total Cost of Ownership (TCO) model can be used to analyze
these direct and indirect costs to help firms determine the actual
cost of specific technology investments
Hardware and software acquisition costs account for only about
20 percent of TCO, so managers muct pay close attention to
administration costs to understand the full cost of the firm’s
hardware and software
Management Information Systems Laudon&Laudon (2010)

In benchmarking your firm’s expenditures on IT infrastructure
with that of your competitors, you will need to consider wide
range of costs
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