chapters 7 and 8

INFO 410 Chapters 7-81 INFO 4101

IT InfrastructureChapters 7 & 8

INFO 410

Glenn Booker

Images are from the text author’s slides

INFO 410 Chapters 7-82 INFO 4102

The Business of IT

Managing IT service delivery

INFO 410 Chapters 7-83

Proprietary internetworks

Before the Internet age, most companies relied on proprietary IT technology – 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


Open standards

Thanks to the open standards of the Internet– 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


Incremental service delivery

Increased reliability and security of the Internet has led to increased outsourcing of IT services– 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


Virtual integration

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)– How is information shared?


Infrastructure impact

How does this affect the infrastructure?– 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


New service models

Consider the evolution of computers and how that affects obtaining information– 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


Incremental outsourcing

Incremental outsourcing is outsourcing small specific services, often via the Internet (hence also called ‘Web services’)

Benefits include:– Handles shortage of IT workers, especially

for smaller companies– Reduce time to market by making new

capabilities easier to implement



– 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



Examples of this kind of outsourcing include– HR benefits administration– Retirement plan management– Sales force automation (Software as a Service, SaaS)

Web services allow fast provisioning of services – Not locked into long term contracts– Provider selection could be done via middleware


Computing models

The way in which assets are used for Web services have various labels– 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


Computing models

Financial and contracting models should address– 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


Computing models

Models could account for computing power, storage space, network bandwidth to be provided– Surges in needs must be accounted for

‘On demand’ models avoid specific HW, focus on making apps able to meet demand– Often requires centralizing or replacing existing

apps, and/or reengineering existing processes


Computing models

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


Middleware must address

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!


Incremental outsourcing risk

Deciding whether to outsource asks questions like– 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



Services which aren’t a competitive advantage are generally commodity-like– Word processing, e-mail, payroll, etc.

Incremental outsourcing reduces risk by making smaller decisions for outsourcing– Less severe impact if you’re wrong!– But can still have noticeable impact if there are

service or reliability problems



Also keep in mind that many small bad decisions can add up to a mess (Vietnam?)– Need an overall approach or strategy

Incremental outsourcing also provides a slow upgrade path for IT managers– Systematically replace parts of legacy systems,

without the risk of a huge all-at-once approach


Outsourcing example: hosting

Hosting the physical IT systems can be done at a huge range of levels of service– 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


Outsourcing example: hosting

– 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


Hosting models

Hosting service levels include– 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


Managing service providers

Choosing a service provider can be a complex process– 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


Proposal contents

The response to an RFP for IT hosting might include sections like this– 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


RFP response

– 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

Often no one host is perfect in all respects– Proposals are scored according to rules defined

in the RFP


Relationship management

Once you’ve chosen a service provider, managing your relationship formally begins– 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


Relationship management

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– Clear definitions and limits (e.g. on penalties) are

critical


SLA example for hosting service

– 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


Managing SLAs

Hence you could have SLAs that overlap, and you have to ensure that any failures are compensated by the right responsible party– 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!


Large scale outsourcing

Some organizations prefer to outsource most or all of their IT functions– 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


Why do large scale outsourcing?

– 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

Losing intangible IT assets; avoid capital investments Make fixed costs into variable ones, better able to

handle volatile demand


Designing large scale alliances

Contract flexibility to handle changes in technology, demand, economy; new service needs– Pay attention to their goals and values

Standards and control– Performance standards, backup plans, problem

response time

Scope! Exactly what is being outsourced?


Designing large scale alliances

Expected cost savings– 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


Managing an alliance

Transition to a large scale alliance is complex, often involving career shifts for some involved, outplacement, or separation

The CIO function remains critical– Need to plan IT resource needs and distribution,

in both short and long term– Manage relationship with service provider– Evaluate emerging technologies


Managing an alliance

Performance measurement– Monitor the performance of the provider,

quantify results, look for ways to improve value of relationship

Relationship interface– Want one contact between vendor and client– Client has responsibility for IT, not vendor– Manage both policy and operational issues


Managing legacy systems

Legacy systems are often decades old, and their inner workings may be mysterious– How good is YOUR documentation?

Legacy systems can have many problems– 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



– Nonstandard data definitions, like obsolete product identifiers, archaic acronyms, etc.

Therefore integrating legacy systems into new ones is often messy– Key technology issues are the protocols used,

data definitions, data relationships, and how the systems will work with new systems (processes)



Organizational and cultural implications are also often profound– 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?


Managing IT infrastructure assets

IT infrastructure assets used to be easy to identify – That 10,000 lb machine in the corner

Now IT assets are spread out everywhere– 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



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– E.g. Cost of each desktop PC is $250/month– Benefits are harder to measure; try how much are

various apps or services used??



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


Summary

We’ve looked at – 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


The Business of IT

Managing IT project delivery

chapters 7 and 8

Documents

computing models models

new service models

increased outsourcing

incremental outsourcing

kind of outsourcing

demand models

services contracts

financial models