1. INFO 410Chapters 7-8 1 INFO 410 1 IT Infrastructure Chapters 7 & 8 INFO 410 Glenn Booker Images are from the text author’s slides

2. INFO 410Chapters 7-8 2 INFO 410 2 The Business of IT Managing IT service delivery

3. INFO 410Chapters 7-8 3 Proprietary internetworks Before the Internet age, most companies relied on proprietary IT technology – Often resulted in the same system developed in many places, making for poor IT investments – Technologies didn’t play nicely with each other – At mercy of technology providers Trying to span multiple vendors often failed

4. INFO 410Chapters 7-8 4 Open standards Thanks to the open standards of the Internet – Infrastructures are based on common interfaces (e.g. Web browsers) – Various technologies all play somewhat nicely together, thanks to TCP/IP – This creates more competition among vendors, reducing customer prices and improving performance

5. INFO 410Chapters 7-8 5 Incremental service delivery Increased reliability and security of the Internet has led to increased outsourcing of IT services – Including smaller scale outsourcing of specific Web technologies or services; could scale down to tiny activities, like currency conversion – Analogous to paying to download a single song Makes new business models possible

6. INFO 410Chapters 7-8 6 Virtual integration As more vendors provide smaller amounts of service, leads to virtual integration of businesses – you have many service partners which each perform a few functions Key then is to manage many providers effectively, and keep them all happy and motivated and playing nicely (incentivized) – How is information shared?

7. INFO 410Chapters 7-8 7 Infrastructure impact How does this affect the infrastructure? – Increased diversity in devices, from legacy servers to PDAs and iPhones, not just PCs – Makes infrastructure more complex but also more flexible – Creates new possibilities for service models

8. INFO 410Chapters 7-8 8 New service models Consider the evolution of computers and how that affects obtaining information – It’s all on the mainframe *duh* – The server can talk to a PC client – Everything’s on the Web … somewhere Hence it’s now easier to own little of the physical infrastructure needed, and just pay for services from some provider

9. INFO 410Chapters 7-8 9 Incremental outsourcing Incremental outsourcing is outsourcing small specific services, often via the Internet (hence also called ‘Web services’) Benefits include: – Handles shortage of IT workers, especially for smaller companies – Reduce time to market by making new capabilities easier to implement

10. INFO 410Chapters 7-8 10 Incremental outsourcing – Shift to 24x7 operations is easier by using someone else’s high availability systems – Improves cash flow, by avoiding large up front IT expenditures – Reduces IT support costs, through centralized server software upgrades, no client upgrades needed, no physical software inventory – Apps are globally accessible

11. INFO 410Chapters 7-8 11 Incremental outsourcing Examples of this kind of outsourcing include – HR benefits administration – Retirement plan management – Sales force automation (Software as a Service, SaaS) Web services allow fast provisioning of services – Not locked into long term contracts – Provider selection could be done via middleware

12. INFO 410Chapters 7-8 12 Computing models The way in which assets are used for Web services have various labels – On demand, SaaS, Utility, and Grid computing are the four most common, but definitions vary Some financial models are as simple as leasing the equipment from a provider, and you do the rest

13. INFO 410Chapters 7-8 13 Computing models Financial and contracting models should address – How it can be easier and less risky to get and manage IT services – Contracts are based on desired service levels – Often requires reengineering existing apps to use the new services – Enhance the infrastructure for interoperability and improved efficiency

14. INFO 410Chapters 7-8 14 Computing models Models could account for computing power, storage space, network bandwidth to be provided – Surges in needs must be accounted for ‘On demand’ models avoid specific HW, focus on making apps able to meet demand – Often requires centralizing or replacing existing apps, and/or reengineering existing processes

15. INFO 410Chapters 7-8 15 Computing models All of these models treat IT infrastructure as a commodity – server capacity, disk space, etc. are all fluid resources Depend on middleware to manage key issues that make them possible

16. INFO 410Chapters 7-8 16 Middleware must address Provisioning to access new services or capacity on the fly Resource virtualization, so capacity is independent of location Change management to control infra changes centrally Performance monitoring and analysis, to prove you’re getting the service you paid for!

17. INFO 410Chapters 7-8 17 Incremental outsourcing risk Deciding whether to outsource asks questions like – Does the service provide a key competitive advantage? If so, keep it internal – If not, is outsourcing reliable and cheaper? – If so, outsource; otherwise keep it internal Naturally, if you can’t develop a key resource internally, then you have to outsource it

18. INFO 410Chapters 7-8 18 Incremental outsourcing risk Services which aren’t a competitive advantage are generally commodity-like – Word processing, e-mail, payroll, etc. Incremental outsourcing reduces risk by making smaller decisions for outsourcing – Less severe impact if you’re wrong! – But can still have noticeable impact if there are service or reliability problems

19. INFO 410Chapters 7-8 19 Incremental outsourcing risk Also keep in mind that many small bad decisions can add up to a mess (Vietnam?) – Need an overall approach or strategy Incremental outsourcing also provides a slow upgrade path for IT managers – Systematically replace parts of legacy systems, without the risk of a huge all-at-once approach

20. INFO 410Chapters 7-8 20 Outsourcing example: hosting Hosting the physical IT systems can be done at a huge range of levels of service – Real estate services; leasing floor space and physical facilities only – Network services; they manage connectivity within and to the facility, and monitor the network – Platform services; support the hardware and operating systems, reboot as needed, do backups, monitor your URLs

21. INFO 410Chapters 7-8 21 Outsourcing example: hosting – Application support services; app performance monitoring & tuning, design for scalability – Business operating services; administer and operate specific applications Hence the importance of knowing (and writing down!) what you expect from a hosting partner

22. INFO 410Chapters 7-8 22 Hosting models Hosting service levels include – Collocation hosting; cheap access to facility and infra; provides floor space, power, and connectivity – anything else is optional – Shared hosting; you buy space on their servers; clients may share a physical device – Dedicated hosting; servers are owned by host, but are not shared; are dedicated to a particular client

23. INFO 410Chapters 7-8 23 Managing service providers Choosing a service provider can be a complex process – Generally define your needs in some document (request for proposal, RFP) – Send it to various candidates – Get back proposals (RFP responses) – Evaluate the proposals – Pick a winner

24. INFO 410Chapters 7-8 24 Proposal contents The response to an RFP for IT hosting might include sections like this – Descriptive information about the provider, history, their priorities, future goals, size, experience, similar projects, etc. – Financial information to prove you’re a solvent provider – Proposed plan how to meet your service requirements

25. INFO 410Chapters 7-8 25 RFP response – Mitigation of critical risks, namely how you plan to address security and availability risks – Service guarantees; what levels of service are you guaranteeing with this proposal? – Pricing, which may include one-time set-up fees and recurring (monthly) costs Often no one host is perfect in all respects – Proposals are scored according to rules defined in the RFP

26. INFO 410Chapters 7-8 26 Relationship management Once you’ve chosen a service provider, managing your relationship formally begins – Based on their proposal, define a service contract, including your Service Level Agreement (SLA) to describe EXACTLY what you expect from them Problem tracking, and customer relationship management are often the critical areas

27. INFO 410Chapters 7-8 27 Relationship management A key hidden area is the incentives for both sides, not any technical issue The SLA defines not only what levels of service you expect, but also what you will get if they aren’t met – Clear definitions and limits (e.g. on penalties) are critical

28. INFO 410Chapters 7-8 28 SLA example for hosting service – Downtime, and credits if not met – Excess latency or packet loss – Response time, both inside the provider and outside – Communication timeline for problems identified – Time to fix problems within hosting provider, and credits if not met – Time limits to request credits, max credits / month

29. INFO 410Chapters 7-8 29 Managing SLAs Hence you could have SLAs that overlap, and you have to ensure that any failures are compensated by the right responsible party – How severe to make penalties is a major issue – Want shared objectives among partners, not legal battles! Ownership of data is also an important dimension – not by the provider!

30. INFO 410Chapters 7-8 30 Large scale outsourcing Some organizations prefer to outsource most or all of their IT functions – Tend to involve longer durations, large investments, more risks than incremental outsourcing – Adds complexity, since needs can change drastically during the agreement – In effect often becomes a strategic alliance

31. INFO 410Chapters 7-8 31 Why do large scale outsourcing? – Cost savings through economies of scale – Dissatisfaction with existing IT capabilities – Desire to focus on core competencies not IT – Force organizational changes – Access to skills and talent – Financial factors Losing intangible IT assets; avoid capital investments Make fixed costs into variable ones, better able to handle volatile demand

32. INFO 410Chapters 7-8 32 Designing large scale alliances Contract flexibility to handle changes in technology, demand, economy; new service needs – Pay attention to their goals and values Standards and control – Performance standards, backup plans, problem response time Scope! Exactly what is being outsourced?

33. INFO 410Chapters 7-8 33 Designing large scale alliances Expected cost savings – When and how much do you expect to save from this agreement? How often is technology renewed? Good problem solving and negotiation skills, shared values, and personal chemistry all are important too

34. INFO 410Chapters 7-8 34 Managing an alliance Transition to a large scale alliance is complex, often involving career shifts for some involved, outplacement, or separation The CIO function remains critical – Need to plan IT resource needs and distribution, in both short and long term – Manage relationship with service provider – Evaluate emerging technologies

35. INFO 410Chapters 7-8 35 Managing an alliance Performance measurement – Monitor the performance of the provider, quantify results, look for ways to improve value of relationship Relationship interface – Want one contact between vendor and client – Client has responsibility for IT, not vendor – Manage both policy and operational issues

36. INFO 410Chapters 7-8 36 Managing legacy systems Legacy systems are often decades old, and their inner workings may be mysterious – How good is YOUR documentation? Legacy systems can have many problems – Technology problems, such as incompatibility – Residual process complexity; processes may have been designed to work in batch mode – Local adaptation; systems often have very limited scope and design, are very inflexible

37. INFO 410Chapters 7-8 37 Managing legacy systems – Nonstandard data definitions, like obsolete product identifiers, archaic acronyms, etc. Therefore integrating legacy systems into new ones is often messy – Key technology issues are the protocols used, data definitions, data relationships, and how the systems will work with new systems (processes)

38. INFO 410Chapters 7-8 38 Managing legacy systems Organizational and cultural implications are also often profound – Will the new infrastructure change work and communication processes? – Will new technologies affect our organization and culture? – Are common processes across the organization going to be consistent? – How do we resolve process conflicts?

39. INFO 410Chapters 7-8 39 Managing IT infrastructure assets IT infrastructure assets used to be easy to identify – That 10,000 lb machine in the corner Now IT assets are spread out everywhere – PCs, laptops, corporate cell phones – Outsourcing can make it even harder to pinpoint So it’s hard to know how IT investments are being used

40. INFO 410Chapters 7-8 40 Managing IT infrastructure assets Are IT assets being used efficiently? Can we change how they’re deployed to be more efficient? Can try to do total cost of ownership (TCO) analysis – E.g. Cost of each desktop PC is $250/month – Benefits are harder to measure; try how much are various apps or services used??

41. INFO 410Chapters 7-8 41 Managing IT infrastructure assets Notice that usage and benefits are not synonymous! But usage is easier to measure This can provide a crude measure of cost/usage, to compare to alternative service possibilities

42. INFO 410Chapters 7-8 42 Summary We’ve looked at – How IT service models have changed in the Internet age, both in-house and outsourced – How outsourcing is done using RFPs and proposals, on both incremental and larger scales – Management of service providers – How legacy systems affect the IT infrastructure – Measuring IT infrastructure assets

43. INFO 410Chapters 7-8 43 The Business of IT Managing IT project delivery

44. INFO 410Chapters 7-8 44