1. 6.1 © 2006 by Prentice Hall 6 Chapter IT Infrastructure and Platforms

2. 6.2 © 2006 by Prentice Hall OBJECTIVES Define IT infrastructure and describe the components and levels of IT infrastructure Identify and describe the stages of IT infrastructure evolution Identify and describe the technology drivers of IT infrastructure evolution Management Information Systems Chapter 6 IT Infrastructure and Platforms

3. 6.3 © 2006 by Prentice Hall OBJECTIVES (Continued) Management Information Systems Chapter 6 IT Infrastructure and Platforms Assess contemporary computer hardware platform trends Assess contemporary software platform trends Evaluate the challenges of managing IT infrastructure and management solutions

4. 6.4 © 2006 by Prentice Hall Challenge: fragmented, high-cost IT infrastructure slowed down market and customer response times Solutions: integrated storage area network to enable the flow of information among different types and brands of computer servers Reduce number of servers from 107 to 70 Illustrates the importance of IT infrastructure for achieving business objectives Management Information Systems Chapter 6 IT Infrastructure and Platforms Hong Kong’s New World Telecommunications Case

5. 6.5 © 2006 by Prentice Hall IT INFRASTRUCTURE Defining IT Infrastructure Management Information Systems Chapter 6 IT Infrastructure and Platforms Includes hardware, software, and services A set of physical devices and software applications that are required to operate the entire enterprise Your firm is largely dependent on its infrastructure for delivering services to customers, employees, and suppliers. You can think of infrastructure as digital plumbing, but its much more than that!

6. 6.6 © 2006 by Prentice Hall IT INFRASTRUCTURE The Connection between the Firm, IT Infrastructure, and Business Capabilities Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-1

7. 6.7 © 2006 by Prentice Hall IT INFRASTRUCTURE Levels of IT Infrastructure Management Information Systems Chapter 6 IT Infrastructure and Platforms Three major levels of infrastructure: Public Enterprise Business unit

8. 6.8 © 2006 by Prentice Hall IT INFRASTRUCTURE Levels of IT Infrastructure Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-2

9. 6.9 © 2006 by Prentice Hall IT INFRASTRUCTURE Management Information Systems Chapter 6 IT Infrastructure and Platforms 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) Evolution of IT Infrastructure: 1950–2005

10. 6.10 © 2006 by Prentice Hall IT INFRASTRUCTURE Eras in IT Infrastructure Evolution Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-3

11. 6.11 © 2006 by Prentice Hall IT INFRASTRUCTURE A Multitiered Client/Server Network (N-tier) Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-4

12. 6.12 © 2006 by Prentice Hall IT INFRASTRUCTURE Management Information Systems Chapter 6 IT Infrastructure and Platforms Moore’s law and microprocessing power The law of mass digital storage Metcalfe’s law and network economics Declining communications costs and the Internet Standards and network effects Technology Drivers of Infrastructure Evolution

13. 6.13 © 2006 by Prentice Hall IT INFRASTRUCTURE Moore’s Law and Microprocessor Performance Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-5

14. 6.14 © 2006 by Prentice Hall IT INFRASTRUCTURE Falling Cost of Chips Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-6

15. 6.15 © 2006 by Prentice Hall IT INFRASTRUCTURE Examples of Nanotubes Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-7

16. 6.16 © 2006 by Prentice Hall IT INFRASTRUCTURE The Capacity of Hard Disk Drives Grows Exponentially, 1980–2004 Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-8 Source: Authors.

17. 6.17 © 2006 by Prentice Hall IT INFRASTRUCTURE The Cost of Storing Data Declines Exponentially,1950–2004 Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-9 Source: “Exponential Growth an Illusion?: Response to Ilkka Tuomi,” by Ray Kurzweil, KurzweilAl.net, September 23, 2003. Used with permission.

18. 6.18 © 2006 by Prentice Hall IT INFRASTRUCTURE Exponential Declines in Internet Communications Costs Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-10 Source: Authors.

19. 6.19 © 2006 by Prentice Hall Computer Hardware Platforms Operating System Platforms Enterprise Software Applications Data Management and Storage Management Information Systems Chapter 6 IT Infrastructure and Platforms INFRASTRUCTURE COMPONENTS Seven Key Infrastructure Components

20. 6.20 © 2006 by Prentice Hall Networking/Telecommunications Platforms Internet Platforms Consulting and System Integration Services Management Information Systems Chapter 6 IT Infrastructure and Platforms INFRASTRUCTURE COMPONENTS Seven Key Infrastructure Components (Continued)

21. 6.21 © 2006 by Prentice Hall The IT Infrastructure Ecosystem Management Information Systems Chapter 6 IT Infrastructure and Platforms INFRASTRUCTURE COMPONENTS Figure 6-11

22. 6.22 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Computer Hardware Platforms $110 billion annually spent in the United States Dominance of Intel, AMD, and IBM 32-bit processor chips at the client level Server market increasingly dominated by inexpensive generic processors from the same manufacturers INFRASTRUCTURE COMPONENTS

23. 6.23 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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 INFRASTRUCTURE COMPONENTS Computer Hardware Platforms (Continued)

24. 6.24 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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 INFRASTRUCTURE COMPONENTS

25. 6.25 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Enterprise Software Applications $165 billion annually spent in the United States for basic enterprise software infrastructure SAP, Oracle, PeopleSoft (now Oracle), and Siebel dominate this market. Middleware firms like BEA and JD Edwards serve smaller firms, and work also in the Web services space. INFRASTRUCTURE COMPONENTS

26. 6.26 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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. INFRASTRUCTURE COMPONENTS Enterprise Software Applications (Continued)

27. 6.27 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Data Management and Storage $70 billion annually spent in the United States. Oracle and IBM continue to dominate the database software 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. INFRASTRUCTURE COMPONENTS

28. 6.28 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms $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 INFRASTRUCTURE COMPONENTS Data Management and Storage (Continued)

29. 6.29 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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 INFRASTRUCTURE COMPONENTS

30. 6.30 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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 INFRASTRUCTURE COMPONENTS Networking/Telecommunications Platform (Continued)

31. 6.31 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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 INFRASTRUCTURE COMPONENTS

32. 6.32 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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. INFRASTRUCTURE COMPONENTS Internet Platforms (Continued)

33. 6.33 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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. INFRASTRUCTURE COMPONENTS

34. 6.34 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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. INFRASTRUCTURE COMPONENTS Consulting and System Integration Services (Continued)

35. 6.35 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms The 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. CONTEMPORARY HARDWARE PLATFORM TRENDS

36. 6.36 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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. CONTEMPORARY HARDWARE PLATFORM TRENDS The Integration of Computing and Telecommunications Platforms (Continued)

37. 6.37 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Grid Computing: Involves connecting geographically remote computers into a single network capable of working in parallel on business problems that require short-term access to large computational capacity Rather than purchase huge mainframes or super computers, firms can chain together thousands of smaller desktop clients into a single computing grid. CONTEMPORARY HARDWARE PLATFORM TRENDS

38. 6.38 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Most computers in the world are loafing, and at night they are sleeping. 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 CONTEMPORARY HARDWARE PLATFORM TRENDS Grid Computing (Continued)

39. 6.39 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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. CONTEMPORARY HARDWARE PLATFORM TRENDS

40. 6.40 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Excellent for firms with spiked demand curves caused by seasonal variations in consumer demand, e.g. holiday shopping Example: Harry and David use IBM’s On-Demand computing Saves firms from purchasing excessive levels of infrastructure CONTEMPORARY HARDWARE PLATFORM TRENDS On-Demand (Utility) Computing: (Continued)

41. 6.41 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Autonomic Computing: 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. CONTEMPORARY HARDWARE PLATFORM TRENDS

42. 6.42 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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 Example: Windows XP and Max X OS automatically download patches and updates. CONTEMPORARY HARDWARE PLATFORM TRENDS

43. 6.43 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Edge Computing: Edge computing is a multitier, load-balancing scheme for Web-based applications. Processing load is distributed closer to the user and handled by lower-cost servers. Lowers cost of hardware CONTEMPORARY HARDWARE PLATFORM TRENDS

44. 6.44 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Increases service levels Provides firm greater flexibility in responding to service requests Seasonal spikes in demand can be off-loaded to other edge servers. CONTEMPORARY HARDWARE PLATFORM TRENDS Edge Computing: (Continued)

45. 6.45 © 2006 by Prentice Hall Edge Computing Platform Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-12 CONTEMPORARY HARDWARE PLATFORM TRENDS

46. 6.46 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms The four major themes in contemporary software platform evolution: Linux and open-source software Java Web services and service-oriented architecture Software outsourcing CONTEMPORARY SOFTWARE PLATFORM TRENDS

47. 6.47 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms The Rise of Linux and Open-Source Software 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 CONTEMPORARY SOFTWARE PLATFORM TRENDS

48. 6.48 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Linux is the most widely used open-source software program. Linux is an operating system derived from Unix. Mozilla Firefox browser and Thunderbird mail clients are the most widely used open-source applications. Others include MySQL. IBM, HP, Intel, Dell, and Sun have adopted and support Linux. Linux is a major alternative to Windows server and even client operating systems. CONTEMPORARY SOFTWARE PLATFORM TRENDS The Rise of Linux and Open-Source Software (Continued)

49. 6.49 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Java: An operating system—Independent, processor- independent, object-oriented programming language 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, and browsers. Java is a leading interactive programming environment for the Web. CONTEMPORARY SOFTWARE PLATFORM TRENDS Java Is Everywhere

50. 6.50 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Software for Enterprise Integration: One of the most important software trends of the last decade is the growth of “enterprise in a box” or the purchase of enterprise-wide software systems by firms. Rather than build all their own software on a custom basis, large firms increasingly purchase enterprise applications prewritten by specialized software firms like SAP, Oracle, PeopleSoft, and others. CONTEMPORARY SOFTWARE PLATFORM TRENDS

51. 6.51 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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. Today's enterprise systems are capable of integrating older legacy applications with newer Web-based applications. CONTEMPORARY SOFTWARE PLATFORM TRENDS Software for Enterprise Integration: (Continued)

52. 6.52 © 2006 by Prentice Hall Enterprise Application Integration (EAI) Software Versus Traditional Integration Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-13 CONTEMPORARY SOFTWARE PLATFORM TRENDS EAI software (a) creates a common platform through which all applications can freely communicate with each other. EAI requires much less programming than traditional point-to-point integration (b).

53. 6.53 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Web Services and Service-Oriented Architecture Web Services: An alternative to enterprise systems 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. CONTEMPORARY SOFTWARE PLATFORM TRENDS

54. 6.54 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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. CONTEMPORARY SOFTWARE PLATFORM TRENDS Web Services and Service-Oriented Architecture (Continued)

55. 6.55 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Service-Oriented Architecture SOA refers to the use of Web services in a firm to achieve integration among disparate applications and platforms. A firm might have applications (payroll) running on older AS400 IBM machines, IBM mainframes (customer data and inventory) and newer applications running on client/server networks. CONTEMPORARY SOFTWARE PLATFORM TRENDS

56. 6.56 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms In SOA, these applications are integrated so that information stored on various systems can be brought together and fed into newer applications running on more contemporary equipment. SOA is generally less expensive than rebuilding all the older applications and adopting a new enterprise wide system. CONTEMPORARY SOFTWARE PLATFORM TRENDS Service-Oriented Architecture (Continued)

57. 6.57 © 2006 by Prentice Hall How Dollar Rent a Car Uses Web Services Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-14 CONTEMPORARY SOFTWARE PLATFORM TRENDS

58. 6.58 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Software Outsourcing Today large and small firms purchase most of their software from outside vendors. Three kinds of outsourcing: Purchase of software packages Using application service providers Custom outsourcing CONTEMPORARY SOFTWARE PLATFORM TRENDS

59. 6.59 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms 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 Enterprise software packages: prewritten off-the-shelf software CONTEMPORARY SOFTWARE PLATFORM TRENDS Purchase of Software Packages and Enterprise Software

60. 6.60 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Application Service Providers: Rather than purchase hardware and software, firms can go onto the Internet and find providers who offer the same functionality over the entertainment, and charge on a per-user or license basis. Example: Salesforce.com provides customer relationship management and sales force management services to firms CONTEMPORARY SOFTWARE PLATFORM TRENDS Purchase of Software Packages and Enterprise Software (Continued)

61. 6.61 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Software Outsourcing of Custom Applications 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? CONTEMPORARY SOFTWARE PLATFORM TRENDS

62. 6.62 © 2006 by Prentice Hall Changing Sources of Firm Software Management Information Systems Chapter 6 IT Infrastructure and Platforms Figure 6-15 CONTEMPORARY SOFTWARE PLATFORM TRENDS Sources: BEA National Income and Product Accounts, Forrester Research, December 2003; eMarketer Inc., “IT Spending 2004,” www.emarketer.com; and author estimates. www.emarketer.com

63. 6.63 © 2006 by Prentice Hall MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Management Information Systems Chapter 6 IT Infrastructure and Platforms Management Opportunities: Because of changes in hardware and software platforms, firms face significant new opportunities to obtain hardware and software capabilities that are more reliable, less costly, and more flexible than in the past.

64. 6.64 © 2006 by Prentice Hall MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Management Information Systems Chapter 6 IT Infrastructure and Platforms Management Challenges: Making wise infrastructure investments Choosing and coordinating infrastructure components Dealing with infrastructure change Management and governance

65. 6.65 © 2006 by Prentice Hall MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Management Information Systems Chapter 6 IT Infrastructure and Platforms Solution Guidelines: Consider your strategic situation Start out small, develop one module at a time Consider the total cost of ownership Figure 6-16, “Competitive Forces Model for IT infrastructure” illustrates six strategic factors you should consider when making infrastructure decisions

66. 6.66 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Competitive Forces Model for IT Infrastructure Figure 6-16 MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

67. 6.67 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Experiment with new technologies on a smaller scale before taking up a large-scale infrastructure project. MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Starting out small:

68. 6.68 © 2006 by Prentice Hall Management Information Systems Chapter 6 IT Infrastructure and Platforms Total cost of ownership of technology assets: 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 MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS