Chapter 5: IT Infrastructure and
Emerging Technologies
5.1
IT Infrastructure

Investments in infrastructure account for between 25-35% of IT expenditures in large firms

The services a firm is capable of providing to its customers, suppliers and employees are a direct
function of its IT infrastructure and its services
Defining IT Infrastructure

IT infrastructure
o
Set of physical devices and software applications that are required to operate the entire
enterprise
o

Set of firm-wide services including:

Computing platforms

Telecomm services

Data management services

Application software services

Physical facilities management services

IT management, standards, education, R&D services
“Service platform” perspective
Evolution of IT Infrastructure
General-Purpose Mainframe and Minicomputer Era (1959-present)

Mainframe: largest category of computers, used for major business processing

Mainframe era
o
Period of highly centralized computing under the control of professional programmers
and systems operators with most elements of infrastructure provided by a single vendor
 manufacturer of hardware and software

Minicomputer: middle-range computer used in systems for universities, factories or research
laboratories

Minicomputers offered powerful machines at far lower prices making decentralized computing
possible, customized to the specific needs of individual departments or business units rather than
time sharing on a single huge mainframe across the organization
Personal Computer Era (1981-present)

First truly personal computers w/ limited distribution
o
Xerox Alto
o
MITS’ Altair
o
Apple I & II

IBM PC in 1981 is considered to be the beginning of the PC era because it was the first to be
widely adopted by U.S. businesses

Wintel (Windows + Intel) is now standard desktop computer
Client/Server Era (1983-present)

Client/server computing: a model for computing that splits processing between clients and
servers on a network, assigning functions to the machine most able to perform the function

Client: the user point of entry for the required function in client/server computing. Normally a
desktop computer, workstation or laptop computer

Server: computer specifically optimized to provide software and other resources to other
computers over a network (also refers to software)

In client/server computing, desktops or laptops are called clients and are networked to powerful
server computers that provide the client computers with a variety of services and capabilities

The simplest client/server network consists of a client computer networked to a server computer,
with processing split between the 2 types of machines
o

2-tiered client/server architecture
Multitiered (N-tier): client/server network in which the work of the entire network is balanced
over several different levels of servers, depending on the kind of service being requested
o
Web server: a computer that uses Web server software to house and deliver Web pages
for a Web site
o
Application server: software that handles all application operations between browserbased computers and a company’s back-end business applications or databases

Client/server computing enables business to distribute computing work across a series of smaller,
less expensive machines that cost much less than minicomputers or centralized mainframe
systems
Enterprise/Internet Computing Era (1992-present)

After 1995, Internet became a trusted communications environment and more and more business
firms began using the TCP/IP networking standard

Links different pieces of computer hardware and smaller networks into an enterprise-wide
network so that information can flow freely across the organization between the firm and other
organizations
o

Mainframes, servers, PCs, mobiles; telephone systems & Internet
Enterprise infrastructure also requires software to link disparate applications and enable data to
flow freely among different parts of the business
Cloud Computing Era (2000-present)

Cloud computing: a model of computing in which firms and individuals obtain computing power
and software applications over the Internet, rather than purchasing their own hardware and
software

Growing bandwith power of the Internet
Technology Drivers of Infrastructure Evolution
Moore’s Law and Microprocessing Power

Moore’s Law: assertion that the number of components (generally transistors) in a chip doubles
every year


Interpretations
o
Power of microprocessors doubles every 18 months
o
Computing power doubles every 18 months
o
Price of computing falls by half, every 18 months
Nanotechnology: the use of individual atoms and molecules to create computer chips and other
devices that are thousands of times smaller than current technologies permit

More speed = more heat
o
Design new generation of chips, multiple processors on a single chip
Law of Mass Digital Storage

World produces as much as 5 exabytes of unique information per year (1 billion GB)

Amount of digital information is roughly doubling every year

Cost of storing digital information is falling at an exponential rate of 100% a year
Metcalfe’s Law and Network Economics

Increasing returns to scale that network members receive as more and more join the network

As the number of members in a network grows linearly, the value of the entire system grows
exponentially and continues to grow forever as member increase
Declining Communication Costs

Exponential growth in the size of the Internet due to lower costs
Standards and Network Effects

Technology standards: specifications that establish the compatibility of products and the ability
to communicate in a network

5.2
Economies of scale and price reductions
Infrastructure Components
Computer Hardware Platforms

Includes client machines (desktops, laptops, PDAs) and server machines

Server market is more complex in the form of blade servers or server farms

Blade server: ultra thin computer consisting of a circuit board with processor, memory and
network connections that are stored in racks
o

Take up less space than traditional box shaped servers
Mainframe systems are used as giant servers for enterprise networks and corporate websites
Operating System Platforms

Microsoft Windows for client machine software

Unix or Linux for server software
o
Linux available as open-source
o
Both are scalable  can increase capacity at relatively minimal expense
o
Both are reliable  don’t crash often
Enterprise Software Applications


Largest suppliers of enterprise software are
o
SAP
o
Oracle
o
PeopleSoft (acquired by Oracle)
Once a firm decides to work with an enterprise vendor, switching can be difficult and costly
Data Management and Storage



Leading database software
o
IBM (DB2)
o
Microsoft (SQL Server)
o
Sybase (Adaptive Server Enterprise)
o
MySQL
Physical data storage is dominated by
o
EMC Corp (for large-scale systems)
o
Small number of PC hard disk manufacturers

Seagate

Maxtor

Western Digital
Storage area network (SAN): network-based storage technology that connects multiple storage
devices on a separate high-speed network dedicated to storage
o
Creates a large central pool of storage that can be rapidly accessed and shared by
multiple servers
Networking/Telecommunications Platforms

Leading networking hardware providers
o
Cisco
o
Lucent
o
Nortel
o
Juniper Networks
Consulting and System Integration Services

Even large firms do not have resources for a full range of support for new, complex infrastructure

Software integration = ensuring new infrastructure works with legacy systems

Legacy systems: older transaction processing systems created for mainframes that continue to
be used to avoid the high costs of replacing and redesigning them
o
Replacing is expensive, not necessary if they can be integrated into contemporary
infrastructure
Internet Platforms

Internet platforms overlap with and must relate to the firm’s general networking infrastructure
and hardware and software platforms

Web hosting service maintains a large web server or series of servers and provides fee-paying
subscribers with space to maintain their websites
3.3

Contemporary Hardware Platform Trends
Firms need to integrate information stored in different applications and even on different
platforms

Need to build resilient infrastructure that can withstand huge increases in peak loafs and routine
assaults from hackers and viruses while conserving electrical power

Need to increase service levels to respond to growing customer and employee expectations for
service
The Emerging Mobile Digital Platform

Cell phones

Smartphones

Netbooks
Grid Computing

Grid computing: connection of geographically remote computers into a single network to create
a virtual supercomputer by combining the computational power of all computers on the grid

Grid computing requires software programs to control and allocate resources on the grid

Client software communicates with a server software application

Server software breaks data and application code into chunks that are then parcelled out to the
grid’s machines

Client machines can perform their traditional tasks while running grid applications in the
background

Grid computing is used for cost savings, speed of computation, and agility
Cloud Computing and Computing Utility

Data permanently stored in remote servers, accessed & updated over the Internet by users

Saves firms from purchasing excessive levels of infrastructure

Firms pay only for the computing power they use, as with an electrical utility
o

On-demand computing or utility computing
Cloud computing will gradually shift firms from having a fixed infrastructure capacity towards a
more flexible infrastructure, some of it owned by the firm and some of it rented from giant
computer centres owned by computer hardware vendors

Excellent for firms with spiked demand curves caused by seasonal variations in consumer demand,
e.g. holiday shopping
Autonomic Computing

Computer systems (both hardware and software) have become so complex that the cost of
managing them as risen

1/3 to 1/2 of IT budget is spent on preventing or recovering from system crashes
o

40% of those are from operator error
Autonomic computing: industry-wide effort to develop systems that configure, heal and protect
themselves
Virtualization and Multicore Processors

Virtual server uses the hardware of a physical computer to provide the appearance, services and
capabilities of multiple servers – each of which appear to be running their own operating system
and providing a unique operating environment

Virtualization: servers accessed in ways that are not restricted by physical configuration or
geographic location

Virtualization allows businesses to run their legacy applications on older versions of an operating
system on the same system as a newer application
o

Also facilities centralization of hardware administration
Multicore processors: integrated circuit to which 2 or more processors have been attached for
reduce power requirements, enhanced performance more efficient simultaneous processing of
multiple tasks
5.4
Contemporary Software Platform Trends
The Rise of Linux and Open-Source Software

Open-source software is produced by a community of several hundred thousand programmers
around the world, is free & can be modified by users

Developed and maintained by a worldwide network of programmers and designers under the
management of user communities

Linux is the most widely used open-source software program
o
Linux is an OS derived from Unix
Software for the Web: Java and Ajax

Java: an operating system-independent, processor-independent, object-oriented programming
language that has become the leading programming environment for the Web
o

Applets, e-commerce applications
Java software is designed to run on any computer or computing device, regardless of the specific
microprocessor operating system the device uses

Very robust language that can handle text, data, graphics, sounds, video within one program if
needed

Enables PC users to manipulate data or networked systems using web browser reducing the need
to write specialized software

Web browser: easy to use software tool with a graphical user interface for displaying web pages
and for accessing the Web and other Internet resources
Ajax

Asynchronous Java Script and XML

Allows client and server to exchange small pieces of data without requiring the page to be
reloaded
Web Services and Service-Oriented Architecture

Web services: set of loosely coupled software components that exchange information using Web
standards and languages


XML: Extensible Markup Language
o
More powerful and flexible markup language than HTML
o
Tagging allows computers to process data automatically
HTML: Hypertext Markup Language
o
Page description language for specifying how text, graphics, video are placed on a Web
page document
o

SOAP: Simple Object Access Protocol
o

Limited to describing how data should be presented in the form of Web pages
Set of rules for structuring messages enabling applications to pass data and instructions
UDDI: Universal Description, Discovery, and Integration
o
Enables Web service to be listed in a directory of Web services so that the Web service
can be easily located

Service-oriented architecture: set of self-contained services that communicate with each other
to create a working software application
o
Business tasks are accomplished by executing a series of these services
Mashups and Widgets

Mashups: combinations of two or more online applications, such as combining mapping software
(Google Maps) with local content
o
Idea is to take software from different sources and combine it in order to produce an
application that is “greater than” the sum of its parts

Widgets: small programs that can be added to Web pages or placed on the desktop to add
additional functionality
o
Web widgets run inside a Web page or blog
Software Outsourcing
Software Packages and Enterprise Software

Software package: prewritten commercially available set of software programs that eliminate the
need for a firm to write its own software program for certain functions
Software as a Service (SaaS)

Instead of buying and installing software programs, subscribing companies rent the same
functions from these services, with users paying either on a subscription or per transaction basis

Services for delivering and providing access to software remotely as a Web-based service

Companies considering the SaaS model need to carefully assess the costs and benefits of the
service, weigh all people, organizational and technology issues including the ability to integrate
with existing systems and deliver a level of service and performance that is acceptable for the
business
Software Outsourcing

A firm contracts custom software development or maintenance of existing legacy programs to
outside firms, frequently firms that operate offshore in low-wage areas of the world

In order to maintain their relationship with an outsourcer or technology service provider, firms will
need a contract that includes a service-level agreement
o
Service-level agreement (SLA): formal contract between customers and their service
providers that defines the specific responsibilities of the service provider and the level of
service expected by the customer
WINDOW ON ORGANIZATIONS
Salesforce.com: Software as a Service Goes Mainstream

Advantages of SaaS
o
Eliminates the need for large upfront capital investments & lengthy implementations on
corporate computers

5.5
o
No hardware, OSs, database servers, application servers to install
o
No consultants and staff
o
Can be customized
o
Better scalability
Salesforce.com challenges
o
Increased competition from Microsoft, SAP & Oracle
o
Expand its business model into other areas
Management Issues
Dealing with Platform and Infrastructure Change

As firms shrink or grow, IT needs to be flexible and scalable

Scalability: ability to expand to serve larger number of users without breaking down

Firms using mobile computing and cloud computing require new policies and procedures for
managing these new platforms
o
Contractual agreements with firms running clouds and distributing software required
Management and Governance

Who controls IT infrastructure?

Centralized/decentralized?

How are costs allocated between divisions and departments?
Making Wise Infrastructure Investments

Rent vs. buy
Competitive Forces Model for IT Infrastructure Investment

Market demand for firm’s services

Firm’s business strategy

Firm’s IT strategy, infrastructure and cost

Information technology assessment

Competitor firm services

Competitor firm IT infrastructure investments
Total Cost of Ownership of Technology Assets

Total cost of ownership model: designates the total cost of owning technology resources,
including initial purchase costs, the cost of hardware and software upgrades, maintenance,
technical support and training

o
Hardware, software account for only 20% of TCO
o
Installation, training, support, maintenance, infrastructure, downtime, space and energy
TCO can be reduced through greater centralization and standardization of hardware and software
resources

Companies could reduce the size of the information systems staff required to support their
infrastructure if the firm minimizes the number of different computer models and pieces of
software that employees are allowed to use

In a centralized infrastructure, systems can be administered from a central location and
troubleshooting can be performed from that location