Chapter 6
IT Infrastructure and
Platforms
6.1
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Management Information Systems
Chapter 6 IT Infrastructure and Platforms
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
6.2
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Chapter 6 IT Infrastructure and Platforms
OBJECTIVES (Continued)
• Assess contemporary computer hardware
platform trends
• Assess contemporary software platform trends
• Evaluate the challenges of managing IT
infrastructure and management solutions
6.3
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Chapter 6
IT Infrastructure and Platforms
Hong Kong’s New World Telecommunications Case
• 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
6.4
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Defining IT Infrastructure
• 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!
6.5
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
The Connection between the Firm, IT Infrastructure, and
Business Capabilities
6.6
Figure 6-1
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Management Information Systems
Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Levels of IT Infrastructure
Three major levels of infrastructure:
• Public
• Enterprise
• Business unit
6.7
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Levels of IT Infrastructure
6.8
Figure 6-2
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Management Information Systems
Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Evolution of IT Infrastructure: 1950–2005
• 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)
6.9
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Eras in IT Infrastructure Evolution
6.10
Figure 6-3
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
A Multitiered Client/Server Network (N-tier)
6.11
Figure 6-4
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Management Information Systems
Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Technology Drivers of Infrastructure Evolution
• 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
6.12
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Moore’s Law and Microprocessor Performance
6.13
Figure 6-5
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Falling Cost of Chips
6.14
Figure 6-6
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Examples of Nanotubes
6.15
Figure 6-7
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
The Capacity of Hard Disk Drives Grows Exponentially,
1980–2004
Source: Authors.
6.16
Figure 6-8
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
The Cost of Storing Data Declines Exponentially,1950–2004
6.17
Source: “Exponential Growth an Illusion?:
Response to Ilkka Tuomi,” by Ray Kurzweil,
KurzweilAl.net, September 23, 2003. Used
with permission.
Figure 6-9
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Chapter 6 IT Infrastructure and Platforms
IT INFRASTRUCTURE
Exponential Declines in Internet Communications Costs
Source: Authors.
6.18
Figure 6-10
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Management Information Systems
Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
Seven Key Infrastructure Components
• Computer Hardware Platforms
• Operating System Platforms
• Enterprise Software Applications
• Data Management and Storage
6.19
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
Seven Key Infrastructure Components (Continued)
• Networking/Telecommunications Platforms
• Internet Platforms
• Consulting and System Integration Services
6.20
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
The IT Infrastructure Ecosystem
6.21
Figure 6-11
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
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
6.22
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
Computer Hardware Platforms (Continued)
• 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
6.23
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
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
6.24
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
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.
6.25
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
Enterprise Software Applications
(Continued)
• 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.
6.26
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
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 midsize firms.
6.27
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
Data Management and Storage (Continued)
• $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
6.28
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
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
6.29
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
Networking/Telecommunications Platform (Continued)
• 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
6.30
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
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
6.31
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
Internet Platforms (Continued)
• 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.
6.32
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
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.
6.33
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Chapter 6 IT Infrastructure and Platforms
INFRASTRUCTURE COMPONENTS
Consulting and System Integration Services (Continued)
• 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.
6.34
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
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.
6.35
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
The Integration of Computing and Telecommunications
Platforms (Continued)
• 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.
6.36
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
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.
6.37
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
Grid Computing (Continued)
• 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
6.38
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CONTEMPORARY HARDWARE PLATFORM TRENDS
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.
6.39
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
On-Demand (Utility) Computing: (Continued)
• 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
6.40
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
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.
6.41
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
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.
6.42
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
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
6.43
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
Edge Computing: (Continued)
• Increases service levels
• Provides firm greater flexibility in responding to
service requests
• Seasonal spikes in demand can be off-loaded to
other edge servers.
6.44
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY HARDWARE PLATFORM TRENDS
Edge Computing Platform
6.45
Figure 6-12
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
The four major themes in contemporary software
platform evolution:
• Linux and open-source software
• Java
• Web services and service-oriented architecture
• Software outsourcing
6.46
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
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
6.47
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
The Rise of Linux and Open-Source Software
(Continued)
• 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.
6.48
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
Java Is Everywhere
Java:
• An operating system—Independent, processorindependent, 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.
6.49
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
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.
6.50
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
Software for Enterprise Integration: (Continued)
• 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.
6.51
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CONTEMPORARY SOFTWARE PLATFORM TRENDS
Enterprise Application Integration (EAI) Software Versus
Traditional Integration
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).
6.52
Figure 6-13
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
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.
6.53
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
Web Services and Service-Oriented Architecture
(Continued)
• 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.
6.54
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
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.
6.55
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
Service-Oriented Architecture (Continued)
• 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.
6.56
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
How Dollar Rent a Car Uses Web Services
6.57
Figure 6-14
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
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
6.58
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
Purchase of Software Packages and Enterprise Software
Enterprise software packages: prewritten off-the-shelf
software
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
6.59
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
Purchase of Software Packages and Enterprise Software
(Continued)
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
6.60
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Chapter 6 IT Infrastructure and Platforms
CONTEMPORARY SOFTWARE PLATFORM TRENDS
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?
6.61
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CONTEMPORARY SOFTWARE PLATFORM TRENDS
Changing Sources of Firm Software
6.62
Sources: BEA National Income and Product
Accounts, Forrester Research, December 2003;
eMarketer Inc., “IT Spending 2004,”
www.emarketer.com; and author estimates.
Figure 6-15
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Chapter 6 IT Infrastructure and Platforms
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS
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.
6.63
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Chapter 6 IT Infrastructure and Platforms
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS
Management Challenges:
• Making wise infrastructure investments
• Choosing and coordinating infrastructure
components
• Dealing with infrastructure change
• Management and governance
6.64
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Chapter 6 IT Infrastructure and Platforms
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS
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
6.65
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Chapter 6 IT Infrastructure and Platforms
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS
Competitive Forces Model for IT Infrastructure
6.66
Figure 6-16
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Chapter 6 IT Infrastructure and Platforms
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS
Starting out small:
• Experiment with new technologies on a smaller scale
before taking up a large-scale infrastructure project.
6.67
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Chapter 6 IT Infrastructure and Platforms
MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS
Total cost of ownership of technology assets:
When calculating the costs of systems, be sure to
include all the costs:
•
•
•
•
•
•
•
•
•
6.68
Hardware acquisition
Software acquisition
Installation
Training
Support
Maintenance
Infrastructure requirements
Downtime
Space and energy
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