1. IT Infrastructure and Platforms
Chapter Six (9th ed)

2. Chapter 6 and Our Questions
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

3. Chapter Six Outline

4. Significance of IT Infrastructure
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

5. The Connection between the Firm, IT Infrastructure, and Business Capabilities
Figure 6-1

6. Definitions of ITI
(1) ITI is the shared technology resources that provide the platform for the firm’s specific information system applications. These technology resources include hardware, software, and services (consulting, education, and training)
(2) ITI is a set of firm wide services budgeted by management and comprising both human and technical capabilities that provide services to employees, customers, and suppliers.
The latter definition puts more emphasis on the business value provided by investments in ITI

7. Listing of the Services from the Second Definition of ITI
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
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

8. Levels Of Infrastructure
Public infrastructure
The Internet
Public telephone system
Industry networks
Enterprise wide infrastructure
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

9. Evolution 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)

10. 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

11. Moore’s Law
Figure 6-5

12. Moore’s Law: Falling Cost of Chips
Figure 6-6

13. The Growth of Mass Digital Storage
Figure 6-8

14. Cost of Mass Digital Storage
Figure 6-9

15. Exponential Declines in Internet Communications Costs
Figure 6-10

16. 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

17. The IT Infrastructure Ecosystem
Figure 6-11

18. Computer 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

19. 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

20. 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.

21. 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

22. 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

23. 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.

24. 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.

25. Contemporary Hardware Platform Trends: Overview
Integration of Computing and Telecommunications Platforms
Grid Computing
On-Demand (utility) Computing
Autonomic Computing

26. 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.

27. 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

28. 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

29. 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.

30. Software Platform Trends: Overview
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

31. 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 and even client operating systems

32. Java
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

33. Software For Enterprise Integration
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.

34. Software For Enterprise Integration (continued)
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

35. Enterprise Application Integration (EAI) Software Versus Traditional Integration
Figure 6-13

36. Web Services And Service-Oriented 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.

37. Web Services And Service-Oriented Architecture (continued)
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 architecture (SOA)

38. 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

39. 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

40. Software Outsourcing: Custom Software
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?

41. Changing Sources of Firm Software
Figure 6-15

42. Management Challenges
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?
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)

43. Management 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 ownership

44. Six Questions to Ask
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?

45. Total 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 ( )