IT Infrastructure and PlatformsIT Infrastructure and Platforms

Chapter Six (9Chapter Six (9thth ed) ed)

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Chapter 6 and Our QuestionsChapter 6 and Our Questions

4. Why are technology infrastructures so 4. Why are technology infrastructures so important to modern organizations?important to modern organizations? Explain the nature of, and organizational Explain the nature of, and organizational

dependence on, technology and business dependence on, technology and business platformsplatforms

Compare open versus proprietary Compare open versus proprietary architecturesarchitectures

Recognize total cost of ownership for Recognize total cost of ownership for technology investments, (e.g., desk top technology investments, (e.g., desk top computing) computing)

Understand the problems in justifying Understand the problems in justifying investments in infrastructureinvestments in infrastructure

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Chapter Six OutlineChapter Six Outline

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Significance of IT InfrastructureSignificance of IT Infrastructure

IT infrastructure (ITI) is the foundation forIT infrastructure (ITI) is the foundation for Serving customersServing customers Working with suppliers andWorking with suppliers and Managing internal business processesManaging internal business processes

An example: If you are a bank and you want An example: If you are a bank and you want to sell banking services (savings, checking, to sell banking services (savings, checking, car loans, home loans, brokerage accounts, car loans, home loans, brokerage accounts, etc) to all of your customers on a global etc) to all of your customers on a global level, your choices of ITI will make or break level, your choices of ITI will make or break you.you.

ITI is critical component of any business ITI is critical component of any business strategystrategy

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The Connection between the Firm, IT Infrastructure, and Business

Capabilities

Figure 6-1

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Definitions of ITIDefinitions of ITI

(1) (1) ITI is the shared technology resources that ITI is the shared technology resources that provide the platform for the firm’s specific provide the platform for the firm’s specific information system applications. These information system applications. These technology resources include hardware, technology resources include hardware, software, and services (consulting, education, software, and services (consulting, education, and training)and training)

(2) ITI is a set of firm wide services budgeted by (2) ITI is a set of firm wide services budgeted by management and comprising both human and management and comprising both human and technical capabilities that provide services to technical capabilities that provide services to employees, customers, and suppliers.employees, customers, and suppliers.

The latter definition puts more emphasis on the The latter definition puts more emphasis on the business value provided by investments in ITIbusiness value provided by investments in ITI

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Listing of the Services from the Listing of the Services from the Second Definition of ITISecond Definition of ITI

Computing platforms Computing platforms that provide that provide computing services computing services

Telecommunication Telecommunication services provide services provide data, voice, and data, voice, and video connectivityvideo connectivity

Application software Application software services provide services provide access to ERP, SCM, access to ERP, SCM, CRM, and KMCRM, and KM

Physical facilities Physical facilities management management servicesservices

IT management IT management services for planning services for planning and managing ITIand managing ITI

IT standards services IT standards services for developing for developing policiespolicies

IT education services IT education services that provide trainingthat provide training

IT research and IT research and development services development services for developing future for developing future projectsprojects

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Levels Of Infrastructure 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 InfrastructureEvolution of IT Infrastructure

Electronic accounting machine era: (1930–1950)

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)

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Technology Drivers of Infrastructure Evolution

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 LawMoore’s Law

Figure 6-5

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Moore’s Moore’s Law: Law: Falling Cost of Chips

Figure 6-6

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The Growth of Mass Digital The Growth of Mass Digital StorageStorage

Figure 6-8

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Cost of Mass Digital StorageCost 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

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 PlatformsComputer Hardware Platforms

$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

100 billion annually spent in the United States

Continued dominance of Microsoft OS in the client (95%) and handheld market (45%)

Growing dominance of Linux (UNIX) in the corporate server market (85%)

Windows 2002 and 2003 Server remains strong in smaller enterprises and workgroup networks

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Enterprise Software Applications $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 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

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 $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

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

Integration of Computing and Telecommunications Platforms

Grid Computing

On-Demand (utility) Computing

Autonomic Computing

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Integration of Computing and Telecommunications Platforms

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

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 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 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 automatically download patches and updates.

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Software Platform Trends: Software Platform Trends: OverviewOverview

The open-source software movementThe open-source software movement Java and LinuxJava and Linux Software for enterprise integrationSoftware for enterprise integration

Enterprise wide systemsEnterprise wide systems Linkage to older systems and applications Linkage to older systems and applications

Enterprise application integrationEnterprise application integration MiddlewareMiddleware

Web services and service-oriented architectureWeb services and service-oriented architecture Software outsourcingSoftware outsourcing

Software packagesSoftware packages Application service providersApplication service providers Custom software development or Custom software development or

maintenance of existing systems to outside maintenance of existing systems to outside firmsfirms

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The Open-Source Software The Open-Source Software MovementMovement

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 and even client operating systems

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JavaJava 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 Software For Enterprise IntegrationIntegration

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 Software For Enterprise Integration (continued)Integration (continued)

How do you link new enterprise software with How do you link new enterprise software with older legacy applications?older legacy applications?

Middleware approachMiddleware approach Special software that creates an interface Special software that creates an interface

between two different systemsbetween two different systems Enterprise application integration approachEnterprise application integration approach

Enterprise application integration software Enterprise application integration software creates a single software hub where multiple creates a single software hub where multiple systems can exchange data through a single systems can exchange data through a single hub rather than building countless interfaces hub rather than building countless interfaces for each systemfor 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-Web Services And Service-Oriented ArchitectureOriented Architecture

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-Web Services And Service-Oriented Architecture (continued)Oriented Architecture (continued)

XML stands for extensible markup language and is a XML stands for extensible markup language and is a more powerful version of HTML that enables one to more powerful version of HTML that enables one to tag items that provide meaning to data.tag items that provide meaning to data.

Web Services Description Language (WSDL) describes Web Services Description Language (WSDL) describes the tasks performed by the Web service and the the tasks performed by the Web service and the commands and data it will accept so that it can be commands and data it will accept so that it can be used by other applications.used by other applications.

Universal description discovery and integration Universal description discovery and integration (UDDI) enables a Web service to be listed in a (UDDI) enables a Web service to be listed in a directory of Web services for easy location.directory of Web services for easy location.

The collection of Web services used to build a firm’s The collection of Web services used to build a firm’s software constitute what is know as a service-software constitute what is know as a service-oriented architecture (SOA)oriented architecture (SOA)

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Software Outsourcing: PackagesSoftware Outsourcing: Packages

• Prewritten off-the-shelf software built by a Prewritten off-the-shelf software built by a software companysoftware company

• Eliminates the need for the company to Eliminates the need for the company to write their ownwrite their own

• Available for all standard business Available for all standard business applications within and across industriesapplications within and across industries

• Includes all the transaction processing Includes all the transaction processing systems mentioned in earlier chapterssystems mentioned in earlier chapters

• Also includes the large enterprise Also includes the large enterprise applicationsapplications

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Software Outsourcing: Application Software Outsourcing: Application Service ProvidersService 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 Outsourcing: Custom SoftwareSoftware

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 ChallengesManagement Challenges ITI management must be guided by the firm’s need to ITI management must be guided by the firm’s need to

provide computer-based services to customers, provide computer-based services to customers, employees, and suppliers. To this wisely the firm must employees, and suppliers. To this wisely the firm must deal with:deal with: How do we make wise infrastructure investments?

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 SolutionsManagement Solutions

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 Develop benchmarks for the total cost of

ownershipownership

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Six Questions to AskSix Questions to Ask 1. What is the market demand for computer-based 1. What is the market demand for computer-based

services from customers, employees, and suppliers?services from customers, employees, and suppliers? 2. What is your firm’s business strategy or what new 2. What is your firm’s business strategy or what new

services are needed to achieve goals? services are needed to achieve goals? 3. What is the firm’s IT strategy with respect to ITI 3. What is the firm’s IT strategy with respect to ITI

and costs?and costs? 4. What is the position of your firm with respect to 4. What is the position of your firm with respect to

IT compared to your competition (ahead or behind)?IT compared to your competition (ahead or behind)? 5. What is the position of your firm with respect to 5. What is the position of your firm with respect to

computer-based services to customers, employees, computer-based services to customers, employees, and suppliers compared to your competition?and suppliers compared to your competition?

6. How do your expenditures for ITI compare with 6. How do your expenditures for ITI compare with your competition? your competition?

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Total Cost of OwnershipTotal Cost of Ownership 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/8-6/default.asp?View=Journal&x=50&y=7 )