1
IT I NFRASTRUCTURE AND
EMERGING TECHNOLOGIES
Chapter 5
Doç.Dr. Aykut Hamit TURAN

D REAMWORKS P ICTURES



Dreamworks uses world class creative talent and advanced computer technology to produce successful computer generated animated films
Dreamworks has plenty of competition from Pixar. To gain edge in this fiercely competitive market, Dreamworks
Animation has made enterteinment films to all audiences, while leveraging latest technology and finest talent available
Dreamworks has set an ambitious plan to work two animated films at one time in a year. To do that
Dreamworks used the latest technology, powerful and fast computers, high speed network links to link powerful computers
2

D REAMWORKS P ICTURES



Dreamworks management believes that its exclusive software and other technology infrastructure investments will not only pay off, but also provide a strategic advantage
To render animation films, Dreamworks uses a network of
2700 HP processors running Linux Operating System, which are organized to act a single computer system that is distributed among the company’s studios and HP research facility in Palo Alto, California
Hardware and software investments can play in improving business performance and achieving strategic advantage by using information technology to create differentiated products more rapidly than competitors
3

IT I NFRASTRUCTURE




IT infrasturcture is the shared technology resources that provide the platform for the firm’s specific information technology applications
IT infrustrucutre includes investments in hardware, software and services such as consulting, education and training that are shared accross the entire firm
A firm’s IT infrastructure provides the foundation for serving customers, working with vendors and managing internal firm business processes
US IT infrastructure business is a 1.8 trillion dollar industry when telecommunications, networking equipment and telecommunications services are included
4

D EFINING IT I NFRASTRUCTURE





IT infrastrucutre consists of a set of physical devices and software applications that are required to operate the entire enterprise
But IT infrastucture is also set of firmwide services budgeted by management and comprising both human and technical capabilities. These services include
Computing platforms used to provide computing services that connect employees, customers and suppliers into a coherent digital environment including large mainframes, desktop and laptop computers as well as handheld devices
Telecommunications services that provide data, voice and video connectivity to employees, customers and suppliers
Data management services that store and manage corporate data and provide capabilities for analyzing the data
5

D EFINING IT I NFRASTRUCTURE




Application software services that provide enterprise wide capabilities such as enterprise resource planning, customer relationship management, supply chain management and knowledge management systems that are shared by all business units
Physical facilities management services that develop and manage the physical installations required for computing, telecommunications and data management services
IT management services that plan and develop the infrastructure, coordinate with the business units for IT services
IT standards services that provide the firm and its business units with policies that determine which information technology will be used, when and how 6

D EFINING IT I NFRASTRUCTURE


It education services that provide training in system use to employees and offer managers training in how to plan for and management IT investments
IT research and development services that provide the firm with research on potential future IT projects and investments that could help the firm differentiate itself in the market
7

E VOLUTION OF IT I NFRASTRUCTURE 1950
- 2007




Today’s IT infrasturcture is an outgrowth of over 50 years of evolution in computing platforms
Five different stages have been identified in this evolution, each represeting different confuguration of computing power and infrastructure elements
These eras do not necessarily end for all organizations at the same time and technologies that chracterize one era may also be used in other time period for other purposes. Some companies still run mainframe or minicomputers
Electronic Accounting Machine era: 1930 – 1950: The first era of business computing used specialized machines that could sort computer cards into bins, accumulate totals and print reports.
Although the electronic accounting machine was efficient processor of accounting tasks, the machines were large and cumbersome. Computer programs were hardwired into circuit boards and they could be changed by altering the wired connections
8

E VOLUTION OF IT I NFRASTRUCTURE 1950
- 2007


General purpose mainframe and minicomputer era: 1959 to present: The first commercial all electronic vacuum tube computers appeared in the early 1950s with the intrduction of
UNIVAC computers and IBM 700 series. Introduction of IBM
1401 ve 7090 transistorized machines started widespread use of mainframe computers. In 1956, the general purpose commercial mainframe computer truly came into its own with the introduction of IBM 360 series
IBM dominated mainframe computing ans still dominate 27 billion dollar market. Mainframe era was a period of higly centralized computing under the control of professional programmers and system operators with most elements of infrasture provided by single vendor, the manufacturer of hardware and software. This started to change with the introduction of minicomputers produced by Digital Equipment
Corporation (DEC). This mahines enabled decentralized computing, customized to the specific needs of individual departments or business units
9

E VOLUTION OF IT I NFRASTRUCTURE 1950
- 2007


Personal Computer Era: 1981 to present: The appreance of IBM
PC in 1981 considered the beginning of PC era. These machines are largely adopted by Amrican business afterwords. First PCs have DOS text based operating systems and later PCs adopted
Wintel standard (windows operating systems with Intel processors) and this has bcome standard in the industry. Today
95 percent of 1 billion PCs use this standard. Proliferation of PCs in the early 1980s and 1990s launced wide variety of desktop productivity tools, word processors, spreadsheets, electronic presentation softwares and small data management programs.
After 1990s PC operating systems enabled PCs to connect networks
Client/Serve Era: 1983 to present: In client/server computing, desktop computers called clients are networked to powerful server computers that provide clients with a variety of services and capabilities 10

E VOLUTION OF IT I NFRASTRUCTURE 1950
- 2007


Computing processing work is split between these two types of machines. The client is the user point of entery, whereas the server typically processes and stores shared data, serves up web pages or manages network activities. Client/server computing enables businesses to distribute computing work across a series of smaller, inexpensive machines that cost much less than minicomputers or centralized mainframes. The result is an explosion in computing power and applications throughout the firm. Today Microsoft is the market leader with its Windows operating system by dominating 78 percent of local area network market. Linux is the fastest growing network operating system yet
Enterprise computing era: 1992 to present: The success of the client/server model posed a new set of problems. Many large firms found it difficult to integrate all of their local area networks
(LANs) into a signle, coherent corproate computing environment 11

E VOLUTION OF IT I NFRASTRUCTURE 1950
- 2007

Applications developed by local departments and divsions in a firm or in different georgraphic areas could not communicate easily with one another and share data. In the arly 1990s, firms turned to networking standards and software tools that could integrate disparate networks and applications throughout the firm into a enterprise wide infrastructure. İrms began using
TCP/Ip standars as Internet develop to tie their disparate networks together. The resulting IT infrasturcure links different pieces of computer hardware and smaller networks into an enterprise wide network so that information can now freely flow across the organization and between the firm and other organizations.
12

T ECHNOLOGY D RIVERS OF
I NFRASTRUCTURE E VOLUTION


There is a reason to believe computing power increase and prices falling down will continue in the future. Chip manufacturers continue to miniaturize components By using nanotechnology,
Intel believes it can shrink the size of transistors down the width of several atoms
The law of mass Digital Storage: A second technology driver of IT infrastucture change is the law of mass digital storage. The world produces as much as 5 exabytes of unique information every year
(an exabyte is a billion gigabytes). The amount of digital information is roughly doubling every year. Fortunately the cost of storing digital information is falling at an exponential rate. The number of kilobytes storedon magnetic disks for one dollar 1950 to 2005 doubled roughly every 15 months
13

T ECHNOLOGY D RIVERS OF
I NFRASTRUCTURE E VOLUTION
14

T ECHNOLOGY D RIVERS OF
I NFRASTRUCTURE E VOLUTION


The changes in IT infrasturcture have resulted from dvelopments in computer processing, memory chips, storage devices, telecommunication and networking hardware and software design that have exponentially increased computing power while exponentially reducing costs
Moore’s law and microporcessing power: In 9165 Gordon Moore, the director of Fairchild Semiconductor’s research and
Development Laboratories wrote since first microchips introduced
1959, the number of components on chips had doubled each year.
The interpretation of Moore’s law: the power of microporessors doubles every 18 months, computing power doubles every 18 months and price of computing falls by half every 18 months
15

T ECHNOLOGY D RIVERS OF
I NFRASTRUCTURE E VOLUTION
16

T ECHNOLOGY D RIVERS OF
I NFRASTRUCTURE E VOLUTION


Metcalfe’s law and Network economies: Moore’s law and law of
Mass Storage help us understand why computing resources are now so readily available. But why people want more computing and storage power? Robert Metcalfe, inventor of ethernet LAN technology, claimed in 1970 that the value or power of a networks grows exponentailly as a function of the number of network members. Metcalfe and other point to the increasing returns to scale that network members receive as more and more poeple join the network
Declining communication costs and the Internet: A fourth technology driver transforming IT infrasturcture is the rapid decline in the costs of communication and the exponential growth in the size of the ınternet. More than 1 billion people has Internet access. Internet made telecommunication costs to drop drastically. To take advantage of business value assocaited with
Internet, firms must greatly expand their Internet connections, including wireless connectivity and mobile computing services
17

T ECHNOLOGY D RIVERS OF
I NFRASTRUCTURE E VOLUTION




Standards and network effects: Today’s enterprise infrastructure and Internet computing would be impossible without agreements among manufacturers and widespread consumer acceptance of technology standards
Technology standards are specifications that establish the compatibility of products and the ability to communicate in a network
Technology standards enleash powerful economies of scale and result in price decline as manufacturers focus on the products built to a single standard. Without these economies of scale, computing of any sort would be far more expensive that its current case
Begining 1990s, corporations started moving toward tandard computing and communication platforms. The Wintel PC and the
Windows operating system and Microsoft office productivity tools became the standard destop and mobile client computing platform.
18

I NFRASTURCTURE C OMPONENTS



IT infrasturcture today is composed of seven major components.
Investment in each component must be coordinated with one another to provide the firm with a coherent infrastructure
In the past, technology vedors supplying these components were often in competition with one another, offering purchasing firms a mixture of incompatible, proprietary, partial solutions. But increasingly, the vendor firms have been forced by large customers to cooperate with strategic partnership with one another
19

C OMPUTER H ARDWARE P LATFORMS


US firms spent about 145 billion dollars in 2005 on computer hardware. This component includes client machines (desktop PCs, mobile computing devices, laptops) and server machines.
The client machines use primarily Intel or AMD microprocessors. The client market is more complex, using mostly Intel or AMD processors in the form of blade servers in racks, but also includes Sun SPARC microporcessors and IBM
PowerPC chips specially designed for server use

Blade servers are ultrathin computers consisting of circuit board with processors, memory and network connections that are stored in racks
20

C OMPUTER H ARDWARE P LATFORMS



The marketplace for computer hardware has increasingly become concentrated in top firms such as IBM, HP, Dell and Sun Microsystems, which produce 90 percent of the processors sold in 2004.
The industry has collectively settled on Intel as the standard processor with major exceptions in the server market for Unix and Linux machines, which use Sun or IBM Unix processors
Maniframes have not dissappeared. The mainframe market has actually grown steadily over the last decade, although the number of providers has dwindled to one: IBM
21

C OMPUTER S OFTWARE P LATFORMS


In 2005, the US market for operating systems, which manage the resources and activities of computer is expected to amount $110 billion. At client level 95 percent of PCs and 45 percent of handheld devices use Microsoft operating systems. Androin and Apple IOS are widespread operating systems in smart phones and tablets.
More than 85 percent of servers use Unix or open source Linux operating system.
Unix and Linux constitude the backbone of corporate infrastructure throughout much of the world because they are scalable, reliable and much less expensive than mainframe OS
22

C OMPUTER S OFTWARE P LATFORMS


Although windows continues to dominate the client marketplace, many corproations have begun to explore Linux as a low cost desktop OS provided by commercial vendors such as Red Hat
Corporations in US spent about $45 billion on enterprise software systems. The largest provider of enterprise systems are SAP and Oracle, which acquired PeopleSoft and many other enterprise software firms in recent years. BA provides middleware software. Microfost is attempting to move into lower end of this market by focusing on small and medium size businesses
23

D ATA M ANAGEMENT AND S TORAGE


There are few choices for enterprise database management software, which is responsible for organizing and managing the firms’ data so that it can be efficiently accessed and used
The leading database software providers are IBM
(DB2), Oracle, Microsoft (SQL Server) and
Sybase (Adaptive Server Enterprise), which supply more than 90 percent of estimated $42 billion US market. A growing new entrant is
MySQL, a Linux open source relational database product available for free on the Internet and increasingly supported by HP and others
24

D ATA M ANAGEMENT AND S TORAGE

The physical storage market is dominated by
EMC orporation for large systems and small number of PC hard disk manufacturers led by
Seagate, maxtor and Western Digital
25

N ETWORKING /C OMMUNICATION
P LATFORMS


US firms spend enourmous $796 billion a year on networking and telecommunications hardware and services. Windows Server is predominantly used as local area network OS, followed by Linux,
Novell and Unix. Large enterprise-wide area networks primarily use some variant of Unix.
Nearly all WAN and LANs use TCP/IP protocol suite as a standard
The leading networking hardware providers are
Cisco, Lucent, Nortel and Jupiter Networks.
Telecommunications platforms are typically provided by telecom companies
26

I NTERNET P LATFORMS




Internet platforms overlap with and must relate to the firm’s general networking infrastructure and hardware and software platforms
The Internet revolution of the late 1990s led to a veritable explosion in server computers with many firms collecting thousands of small servers to run their Internet operations
The Internet hardware server market has been dominated by Dell, HP/Compaq and IBM as prices have fallen dramatically
The major web software application development tools and suites are supplied by Microsoft (Frontpage and
Microsoft.Net). Sun’s Java is the most widely used tool for developing interactiv web applications on the server and client sides and macromedia/Adobe (Flash), media software
(real Media) and text tool (Adobe Acrobat) other tools to mention
27

C ONSULTING AND S YSTEM I NTEGRATION
S ERVICES




Although 20 years ago, large firms used to implement their
IT infrastructure, it is much less common today. Even large firms do not have staff, experience and budget to do that.
Implementing new infrastructure requires significant changes in busness procedures and processes, training, education and software integration
Software integration means ensuring the new infrastructure works with the firm’s older, so called legacy systems and ensuring the new elements of the infrastructure work with one another
Legacy systems are generally older TPSs created for mainframe systems that continue to be used to to avoid high costs of replacing them
Accenture, PricewaterhouseCoopers are the major consulting firms in US
28

H ARDWARE P LATFORM TRENDS AND
EMERGING T ECHNOLOGIES





Although the cost of computing has fallen exponentially, the cost of IT infrastructure has actually expended as a percentage of corproate budgets
The cost of computing services (consulting, systems integration) and software is high and the intensity of computing and communication has increased as other costs have declined
Employees now use much more sophisticated applications, requiring more powerful and expensive hardware of many different types
Firms face number of other challanges. They need to integrate information stored in different applications on different platforms
Firms also need to build resilient infrastructures that can withstand huge increases in peak loads and assults from hackers
29

T HE I NTEGRATION OF C OMPUTING AND
TELECOMMUNICATION P LATFORMS



The most dominant theme in hardware platforms today is the convergence of telecommunications and computing platforms to the point where increasingly computing takes place over the network
Today cell phones are taking on haldheld computers, tablets have become a relatively powerful computing platforms. High end cell phones come equipped for dowloading music and video clips and for playing 3D games.
At the server and network level, the growing success of
Internet telephone systems demonstrates how historically seperate telecommunications and computing platforms are converging toward a single network – the Internet
30

G RID C OMPUTING





Grid computing involves connecting georaphically remote computers into a single network to create a virtual supercomputer by combining the computational power of all computers on the grid
Since most computers use only in average 25 percent of their computing power, leaving these idle resources available for other processing tasks
Grid computing was impossible until high speed Internet connections enabled firms to connect remote machines economically and move enourmous quantities of data
Grid computing requires software programs to control and allocate resources on the grid, such as open source software provided by Globus Allience
The business case for using grid computing involves cost savings, speed of computation and agility
31

O N D EMAND C OMPUTING (U TILITY
C OMPUTING )



On demand computing refers to firms off loading peak demand for computing power to remote, large scale data processing centers. Firms can reduce their investment in IT infrastrucutre by investing just enough to handle average processing loads and paying for only as much additional computing power as the market demands
It is also called utility computing, which suggests that firms purchase computing power from central computing utilities and pay for the only amount they used like electricity of water
In addition to lowering cost of owning hardware resources, on demand computing gives firms greater agility to use technology and greatly reduces the risk of over investing in
IT infrastructure. Provides firms flexible IT infrastructures
32

A UTONOMIC C OMPUTING AND EDGE
C OMPUTING




Computer systems have become so complex today that some experts believe they may not be manageable in the future
With OS, enterprise and database software weighing in at millions of lines of code and large systems encompassing many thousands of network devices, the problem of managing these systems looms very large
Autonamic computing is an industry wide effort to develop systems that can configure themselves, optimize and tune themselves, heal themselves when broken and protect themselves from outside intruders
Virus and firewall protection software can detect viruses on
PCs , automatically defeat the viruses and alert operators.
These programs can be updated automatically as the need arises by connecting to an online virus protection service
33

E DGE C OMPUTING



Edge computing is a multitier, load balacing scheme fro web based applications in which significant parts of web site content, logic and processing are performed by smaller, less expensive servers located nearby the user in order to increase response time and resilience while lowering technology costs
Edge computing is another technique like grid computing and on demand computing for using the Internet to share the workload expereinced by a firm across many computers located remotely on the network
There are three tiers in edge computing: the local client; the nearby edge computing platform and enterprise computers located at the firm’s main data center
34

V IRTUALIZATION AND M ULTICORE
P ROCESSORS



As computers deploy hudredsof thousands servers, many have discovered that theya re spending more on electricity to power and cool the systems than they did acquiring the hardware
The average annual utility cost for a 100000 square foot data center has reached $5.9 million
One way of curbing hardware proliferation and power consumption in to use virtualization to reduce number of computers required for computing. Virtualization is the process of presenting a set of computers required for processing so that they can all be accessed in virtualization enables to run more than one OS at the same time on a single machine
35

V IRTUALIZATION AND M ULTICORE
P ROCESSORS


Multicare processing is another way to reduce power requirements and hardware sprawl. Multicaore processor is an integrated circuit that contains two or more processors
Intel and AMD are making dual core processors and introducing quad core processors. Sun Microsystems sells servers using its eight core UltraSparc processors
36

S OFTWRAE P LATFORM TRENDS AND
EMERGING TECHNOLOGIES







There are six major themes in contemporary software platform evolution
Linux and Open source software
Java
Enterprise software
Web servşces and servşce oriented architecture
Mashups and web based software applications
Software outsourcing
37

T HE RISE OF L INUX AND O PEN S OURCE
S OFTWARE





Open Source software is software produced by a community of several hundred thousands programmers around the world. According to leading open source professional assocaition, opensource.org open source software is free anc can be modified by users
Most open source software is currently based on Linux or
Unix OS
Open source software is superior to other types of software because thousands of programmers around the world work on them perfect the software
Range of open source programs extends from OS to desktop productivity suites, web browsers and games
Major hardware and software producers including IBM,
HP, Dell, Oracle and SAP now offer Linux compatible versions of their products
38

L INUX






Perhaps the best known open source software is Linux, an
OS derived from Unix. Linux was created by finnish programmer Linus Torvalds and first posted on the
Internet in 1991
Linux is the fastest growing Client/Server OS
Apllications for Linux is rapidly growing also. Many of these applications are embedded in cell phones, hand held computers and other devices
In server side Linux is much more prevelant
IBM, HP, Intel, Dell and Sun have made Linux a central part of their offerings to corporations
The rise of open source software, particulary Linux and the applications it supports has profound implications for corporate software platforms: cost reduction, reliability, resistence and integration
39

L INUX


Linux works on major hardware platforms from mainframes to clients
Linux has potential to break Microsoft dominance in desktops
40

JAVA




Java is an operating system independent, processor independent, object oriented programming language that has become leading interactive programming environment for the web
Java was created by Sun Microsystems in 1992 and widespread use started in 1995. nearly all Internet browsers came with java built in.
Java software is designed to run on any computer or computing device, regardless of the specific microprocessors or OS the device uses. A Macintosh PC, IBM PC, a Sun
Server and Cell phone can use the java application. Java virtual machine can interpret the appliacation for a specific system that it runs
Java is particularly useful in network environments such as Internet
41

S OFTWARE FOR ENTERPRISE I NTEGRATION



The most urgent software priority for firms is integration of existing legacy software applications with newer web based applications into a coherent single system that can be rationally managed
Firms typically built their own custom made software and made their own choices about software platforms. This strategy produced hundreds of thousands of computer programs that frequently could not communicate with other software platforms
Some integration of legacy applications can be achieved by using special software called middleware to create or bridge between two different systems. Middleware is software that connects two otherwise separete appliacations, enabling them to communicate with each other and share data
42

S OFTWARE FOR ENTERPRISE I NTEGRATION




Firms can purchase enterprise application integration
(EAI) software packages to integrate seperate systems
EAIs are specific they work only with certain pieces of application spoftware and operating system.
Web services refer to a set of looselt coupled software components that exhange information with each other using standard web communication languages
Extensible markup language (XML) is the foundation technology for web services. This technology was developed by world Wide Web Consortium (W3C) as a more powerful, flexible markup language than hypertext markup language for web pages. Hypertext markup Language (HTML) is a page description language for specifying how text, graphics, video and sound are placed on the web page documents 43

S OFTWARE FOR ENTERPRISE I NTEGRATION





The collection of web services that are used to build a firm’s software systems consititudes what is known as service oriented arhitecture (SOA)
SOA is a set of self contained services that communicate with each other to create a working software application
Business tasks are accomplished by executing series of these services
Software developers reuse these services in other combinations to assemble other applications as needed
SOA is not a universal solution for all firms and it does raise issues all of its own. It is not clear what services to develop at first, and even web services applications need to be rewritten as business firms develop and change
44

A JAX , M ASHUP , W EB 2.0 AND W EB BASED
S OFTWARE A PPLICATIONS


Ajax is a technique for allowing your client and server you are working to hold a conversation in the background, transferring your entries as they are made to the server without your awarness. Click North on a map site, like
Google Maps and the server downloads just that part of the application that changes with no wait for an entire new map
On a smaller scale, enterpreneurs are creating new software applications and services based on combining different online software applications, called mashups.
These new combined applications depend on high speed data networks, universal communication standards and open source code
45

S OFTWARE O UTSOURCING



Today, most business firms contnue to operate their legacy systems that continue to meet a business need and that would be extremely costly to replace
In the past, most of the firms in US developed their won software applications by temas of programmers. Recently firms prefer to turn over about one third of their software development to outside developers, including enterprise software firms who will sell them pre-packaged solutions customized to their needs. Most of the outsourcing software is performed in US, but growing percents is performed offshore like where low wages in India, China, Eastern
Europe, Africa and Latin America
A software package is prewritten comemrcially available set of software programs that eliminates the need for a firm to write its own software programs for certain functions, such as payroll processing or order handling
46

S OFTWARE O UTSOURCING



A second external source of software is online application service providers (ASP). ASP is a business that delivers and manages applications and computer services from remote computer centers to multiple users using the Internet or a private networklarge and medium sized businesses are using ASPs or enterprise systems, sales force automation or financial management and small businesses are using them for functions such as invoicing, tax calculations, electronic calendars and accounting
ASP vendors are starting to provide tools to integrate the applications thy manage with clients’ internal systems or with applications hosted by different vendors
A third external source of software is outsourcing in which 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. The largest expenditure of outsourcing is paid to domestic US firms providing middleware, integration services and other software support to operate mainframes
47

D EALING W ITH I NFRASTRUCUTE C HANGE
– M ANAGEMENT I SSUES




As firms grow, they can quickly outgrow their infrastructure. As firms shrink, they can get stuck with execcsive infrastructure purchased in better times. How can a firm remain flexile when most of the investments in IT infrastructure are fixed cost purchases and licenses. Scalibility refers to the ability of a computer, product or system to expand to serve a large number of users without breaking down
A long standing issue among IS managers and CEOs has been the question of who will control and manage the firm’s infrastucture
Should departments and divisions have responsibility of making their own IS decisions or should IT infrastucture be centrally controlled and managed?
IT infrasturcture is a major investment for the firm. If too much is spent on infrastructure, it lies idle and constitudes a drag on firm’s financial performance. If too little is spent, important business services cannot be delivered and firm’s competitors will outperform the underinvested firm
48

D EALING W ITH I NFRASTRUCUTE C HANGE
– M ANAGEMENT I SSUES


A related question is whether a firm should purchase its own IT infrastructure components or rent them frome xternal suppliers.
A major trend in IT hardware and software is to outsource to external providers
Competitive forces Model for IT infrastructure investments




Market demand for your firm’s services: Make an inventory of the services you currently provide to customers, suppliers and employees. Survey each group or hold focus groups to find out if the services you currently offer are meeting the needs of each group
Your firms business strategy: Analyze your firm’s five business strategy and try to assess what new services and capabilities required to achieve strategic goals
Your firm’s IT strategy, inrastructure and costs: Examine your firm’s IT plans for the next five years and assess its alignment with the firm’s business plans. Detrmine total IT infrastructure costs
Information technology assessment: Is your firm behind the technology curve or at the bleeding edge of IT? Both situations shall be avoided
49

D EALING W ITH I NFRASTRUCUTE C HANGE
– M ANAGEMENT I SSUES

Competitive forces Model for IT infrastructure investments (cont’)


Competitior firm services: Try to assess what technology services competitors offer to customers, suppliers and employees. Establish quantitative and qualitative measures to compare them to those of your firm. If your firm’s service levels fall short, your company is at a competitive diadvantage
Competitor firm IT infrastructure investments: benchmark your expenditures for IT infrastructure against your competitors. Your firms does not necessarily need to spend as much as or more than your competitors. Perhaps it has discovered much less expensive ways of providing services and this can lead to cost advantage. Alternatively, your firm may be spending far less than competitors and experiencing commensurat poor performance and loosing market share
50

T OTAL COST OF OWNERSHIP OF
TECHNOLOGY ASSETS




In benchmarking your firm’s expenditures on IT infrastructure with that of your competitors, you will need to consider wide range of costs
The actual cost of owning technology resources includes the original cost of acquiring and installing hardware and software as well as ongoing administrative for hardware and software upgrades, maintenance, tehcnical support, trainig and even utility and real estate costs of running and housing the technology.
The Total Cost of Ownership (TCO) model can be used to analyze these direct and indirect costs to help firms determine the actual cost of specific technology investments
Hardware and software acquisition costs account for only about
20 percent of TCO, so managers muct pay close attention to administration costs to understand the full cost of the firm’s hardware and software
51