1. Managing Diverse IT Infrastructure
Chapter 7
Managing Diverse IT Infrastructure

2. IT Operations Via Proprietary Technologies (pre-commercial Internet Era—1990s)
Develop own communications infrastructure to reach customers
Duplication in infrastructure investment
Multiplicity of technologies confused partners and business customers
Technologies did not interoperate well
Complex software required to bridge between otherwise incompatible systems
Company locked in to specific vendor technologies
Little bargaining power with technology providers

3. IT Operations Via Public Infrastructure (open standards)
Companies share communication infrastructure common to all partners and customers
Interact via common interfaces (often, Web browsers)
Seamless interaction reduces complexity
Technologies interoperate well
TCP/IP (Transmission Control Protocol/Internet Protocol)
Software that bridges systems is simple, standardized, inexpensive (sometimes free)

4. Less locked in to specific vendor technologies
More competition among vendors
Lower prices, better performance
Combine technologies from numerous vendors
Services historically provided by IT departments acquired in real time from service providers
As communication technologies improve and become more compatible and modular, firms can obtain smaller and smaller increments of service from vendors with less lead time and contact durations

5. Job of IT Manager Formidable, But Not a Losing Game
Diverse IT infrastructure results from evolving service models
Legacy systems perform vital functions and must be supported
Accelerating trend toward heterogeneity in supported client devices
Increasingly, cell phones and personal digital assistants (PDAs), not personal computers, are interaction tools with IT
Variety of service delivery models and technologies creates complexity

6. New Ways of Thinking Needed to Manage Diverse, Distributed, and Complex Infrastructure and Technology Assets

7. Advantages of Incremental Outsourcing
Managing the shortage of skilled IT workers
Reduced time to market
Early mover advantage requires rapid deployment
Shift to 24 x 7 operations
Requires large capital investment
Skip startup difficulties
Reliability proven with select providers

8. Advantages of Incremental Outsourcing, cont.
Favorable cash flows profiles
Large in-house up-front outlays yield delayed and uncertain benefits
Subscription-based IT services result in faster payback flows (Figure 7.1)
Cost reduction in IT value chain
Business functionality delivered through centralized systems (ex., software upgrades; economies of scale)

9. Advantages of Incremental Outsourcing, cont.
Applications globally accessible
Location of PC irrelevant
Virtual workspace available for traveling employees; benefit will increase as client devices (PDAs) continue to evolve
Cost of moving employees eliminated

10. Evolution of the IT Services Value Chain (Figure 7.2)
Independent software vendors (ISVs) develop web-based software
Operates in vendor-owned security 24x7 facilities
Aggregators (distributors) collect the offerings of ISVs and hosters into coherent packages they sell through resellers (retailers) that offer value-added services (tech support, consulting)

11. Supporting Players
Network providers
Outsourcing partners that specialize in back-office businesses such as billing or help desk operations
Communication carrier providers
Backbone providers
Telephone companies
DSL services
Wireless providers
Customer firms using Web services negotiate and acquire services in real time from a dynamic and fluid market for those services

12. Advantages of the IT Value Chain
Specialization
Economies of Scale and Scope
Resellers focus on managing relationships with end customers
Aggregators focus on combining offerings of different software vendors so they interoperate
Hosters focus on reliable and secure operations of a type of system ( )

13. What to Outsource See Figure 7.3, pg 459
Systems core; strategic; provide competitive advantage?
Stakes are not so high with incremental outsourcing, versus outsourcing large segments of the IT function
Mistakes reversible, less costly
More experimentation is feasible
Does have across the organization consequences

14. Levels of Hosting (pp. 461-62)
Colocation hosting
Shared hosting
Dedicated hosting
Simple dedicated hosting
Complex dedicated hosting
Custom dedicated hosting

15. Relations with Service Providers (see Table 7.2)
Selecting a provider
Providers priorities and direction
Financial information
Proposed plan for meeting your needs
Mitigation of critical risks
Availability
Security
Service guarantee
Pricing

16. Relationship Management
Information sharing
Problem-tracking and customer relationship systems
Incentives among partners—avoid political problems
Service-level Agreement (SLA)
Describe the specific conditions by which the service provider is held liable for service interruptions and the penalties that will be incurred (see Table 7.4)
Designed with teeth
Difficult to determine appropriate penalty levels
Need shared objectives; help all receive a reasonable rate of return

17. Difficulties with Legacy Systems
Technology problems
Constraints result from inherent incompatibilities in older technologies
Proprietary technologies not designed to converse easily with technologies of other vendors
Residual process complexity
Systems address problems that no longer exist, such as limited bandwidth or processing power

18. Nonstandard data definitions
Local adaptation
Developed for very focused business purposes within functional hierarchies (not enterprise systems or real-time)
Nonstandard data definitions
No compatibility of data definitions throughout organization

19. Key Issues in Managing Legacies
How will new infrastructure exchange data with legacy systems?
Will new infrastructure obtain needed real-time interaction with legacy systems?
What works-arounds are necessary? Are they sustainable?
What is the long-term strategy for renewing legacy systems?

20. Key Issues with Legacy Organizations and Cultures
How will new infrastructures affect ways of working and communicating? Are anticipated changes acceptable?
Should technology drive organizational and cultural change?
Should organization and culture be protected from technology effects?
What are criteria for deciding whether systems or process will change when conflict exists?

21. Managing IT Assets
The variety of asset configurations in modern IT infrastructures makes certain business questions hard to answer.
How are IT investments deployed across business lines or units?
How are IT assets being used?
Are they being used efficiently?
Are they being deployed to maximum business advantage?
How can deployment create more value?

22. Extremely difficult as assets are less and less centralized.
Yet organizations over the last decade have focused on reclaiming management control over IT assets.

23. Total Cost of Ownership (TCO)
IT services analyzed in terms of costs and benefits associated with service delivery to each client device
Example: $250 per month to provide office productivity services to a PC desktop
Includes costs shared with other clients
Costs not necessarily accounted for as line items in budgets or accounting systems
Difficult not to miss costs
How to allocate among clients is difficult

24. Completing the equation on the benefit side is essential for evaluate return on the asset investment
Need more than just services used and with what frequency if you evaluate true value added
Usage information per client, per month can be used as a basis for comparison with service provider costs

25. Summary: Assessing Opportunities and Risks
What services within our IT infrastructures are candidates for incremental outsourcing? What are the opportunities to convert large up-front IT investments into spread-over-time subscription services?
Are service delivery partners technically and financially capable enough to support evolving IT service needs? Do we have well-defined processes for partner selection to ensure that we will continue to have highly capable partners?

26. Do we have detailed service-level agreements in place with our service providers? Have we made sure that the SLAs in our service delivery chains interlock and that incentives are aligned up and down the chain?
What are our short-term and long-term strategies for dealing with legacy system issues? What systems should we replace, and when should we replace them?