IT Infrastructure
Chapters 7 & 8
INFO 410
Glenn Booker
Images are from the text author’s slides
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INFO 410
The Business of IT
Managing IT service
delivery
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Proprietary internetworks
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Before the Internet age, most companies
relied on proprietary IT technology
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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
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Chapters 7-8
Open standards
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Thanks to the open standards of the Internet
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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
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Incremental service delivery
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Increased reliability and security of the
Internet has led to increased outsourcing of
IT services
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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
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Virtual integration
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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)
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How is information shared?
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Infrastructure impact
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How does this affect the infrastructure?
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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
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New service models
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Consider the evolution of computers and how
that affects obtaining information
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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
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Chapters 7-8
Incremental outsourcing
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Incremental outsourcing is outsourcing small
specific services, often via the Internet
(hence also called ‘Web services’)
Benefits include:
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Handles shortage of IT workers, especially
for smaller companies
Reduce time to market by making new
capabilities easier to implement
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Incremental outsourcing
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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
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Chapters 7-8
Incremental outsourcing
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Examples of this kind of outsourcing include
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Web services allow fast provisioning of
services
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HR benefits administration
Retirement plan management
Sales force automation (Software as a Service, SaaS)
Not locked into long term contracts
Provider selection could be done via middleware
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Computing models
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The way in which assets are used for Web
services have various labels
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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
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Computing models
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Financial and contracting models should
address
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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
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Chapters 7-8
Computing models
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Models could account for computing power,
storage space, network bandwidth to be
provided
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‘On demand’ models avoid specific HW,
focus on making apps able to meet demand
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Surges in needs must be accounted for
Often requires centralizing or replacing existing
apps, and/or reengineering existing processes
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Computing models
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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
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Middleware must address
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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!
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Incremental outsourcing risk
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Deciding whether to outsource asks
questions like
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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
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Incremental outsourcing risk
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Services which aren’t a competitive
advantage are generally commodity-like
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Incremental outsourcing reduces risk by
making smaller decisions for outsourcing
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Word processing, e-mail, payroll, etc.
Less severe impact if you’re wrong!
But can still have noticeable impact if there are
service or reliability problems
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Incremental outsourcing risk
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Also keep in mind that many small bad
decisions can add up to a mess (Vietnam?)
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Incremental outsourcing also provides a slow
upgrade path for IT managers
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Need an overall approach or strategy
Systematically replace parts of legacy systems,
without the risk of a huge all-at-once approach
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Outsourcing example: hosting
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Hosting the physical IT systems can be done
at a huge range of levels of service
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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
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Outsourcing example: hosting
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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
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Hosting models
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Hosting service levels include
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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
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Managing service providers
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Choosing a service provider can be a
complex process
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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
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Proposal contents
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The response to an RFP for IT hosting might
include sections like this
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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
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RFP response
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Often no one host is perfect in all respects
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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
Proposals are scored according to rules defined
in the RFP
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Relationship management
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Once you’ve chosen a service provider,
managing your relationship formally begins
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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
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Relationship management
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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
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Clear definitions and limits (e.g. on penalties) are
critical
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SLA example for hosting service
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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
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Managing SLAs
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Hence you could have SLAs that overlap,
and you have to ensure that any failures are
compensated by the right responsible party
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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!
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Large scale outsourcing
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Some organizations prefer to outsource most
or all of their IT functions
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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
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Why do large scale outsourcing?
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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
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Losing intangible IT assets; avoid capital investments
Make fixed costs into variable ones, better able to
handle volatile demand
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Designing large scale alliances
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Contract flexibility to handle changes in
technology, demand, economy; new service
needs
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Standards and control
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Pay attention to their goals and values
Performance standards, backup plans, problem
response time
Scope! Exactly what is being outsourced?
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Designing large scale alliances
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Expected cost savings
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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
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Managing an alliance
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Transition to a large scale alliance is
complex, often involving career shifts for
some involved, outplacement, or separation
The CIO function remains critical
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Need to plan IT resource needs and distribution,
in both short and long term
Manage relationship with service provider
Evaluate emerging technologies
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Managing an alliance
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Performance measurement
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Relationship interface
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Monitor the performance of the provider,
quantify results, look for ways to improve
value of relationship
Want one contact between vendor and client
Client has responsibility for IT, not vendor
Manage both policy and operational issues
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Managing legacy systems
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Legacy systems are often decades old, and
their inner workings may be mysterious
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Legacy systems can have many problems
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How good is YOUR documentation?
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
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Managing legacy systems
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Therefore integrating legacy systems into
new ones is often messy
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Nonstandard data definitions, like obsolete
product identifiers, archaic acronyms, etc.
Key technology issues are the protocols used,
data definitions, data relationships, and how the
systems will work with new systems (processes)
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Managing legacy systems
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Organizational and cultural implications are
also often profound
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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?
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Managing IT infrastructure assets
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IT infrastructure assets used to be easy to
identify
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Now IT assets are spread out everywhere
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That 10,000 lb machine in the corner
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
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Managing IT infrastructure assets
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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
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E.g. Cost of each desktop PC is $250/month
Benefits are harder to measure; try how much are
various apps or services used??
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Managing IT infrastructure assets
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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
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Summary
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We’ve looked at
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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
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Chapters 7-8
The Business of IT
Managing IT project
delivery
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Chapters 7-8
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Chapters 7-8