Evolution of IT Infrastructure: Components and Trends

1. 7 Chapter IT Infrastructure Evolution

2. 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

3. Management Information Systems Chapter 6 IT Infrastructure and Platforms OBJECTIVES (Continued) • Assess contemporary computer hardware platform trends • Assess contemporary software platform trends

4. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE The Connection between the Firm, IT Infrastructure, and Business Capabilities

5. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE Levels of IT Infrastructure • Three major levels of infrastructure: • Public • Entails public infrastructure such as internet, national back bones e.g. Uganda’s NBI • Enterprise • Enterprise wide infrastructure • Business unit

6. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE Levels of IT Infrastructure

7. 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)

8. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE Eras in IT Infrastructure Evolution

9. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE A Multitiered Client/Server Network (N-tier)

10. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE Technology Drivers of Infrastructure Evolution • Moore’s law and microprocessing power • Moore's law is the observation that, over the history of computing hardware, the number of transistors on integrated circuits doubles approximately every two years • The law of mass digital storage • The amount of digital information is roughly doubling every year: the amount of digital information is roughly doubling every year and the cost of information storage is approximately halving

11. Metcalfe’s law and network economics • A network’s value to participants grows exponentially as the network takes on more members. As the number of members in a network grows linearly, the value of the entire system grows exponentially and theoretically continues to grow forever as members increase. • Declining communications costs and the Internet • Rapid decline in costs of communication and the exponential growth in the size of the Internet is a driving force that affects the IT infrastructure. As communication costs fall toward a very small number and approach zero, utilization of communication and computing facilities explodes. • Standards and network effects • Growing agreement in the technology industry to use computing and communication standards. Technology standards unleash powerful economies of scale and result in price declines as manufacturers focus on the products built to a single standard. Without economies of scale, computing of any sort would be far more expensive than is currently the case.

12. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE Moore’s Law and Microprocessor Performance

13. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE Falling Cost of Chips

14. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE The Capacity of Hard Disk Drives Grows Exponentially, 1980–2004 Source: Authors.

15. Management Information Systems Chapter 6 IT Infrastructure and Platforms IT INFRASTRUCTURE Exponential Declines in Internet Communications Costs Source: Authors.

16. Management Information Systems 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

17. Management Information Systems 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

18. Management Information Systems 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

19. Management Information Systems 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.

20. Management Information Systems 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.

21. Management Information Systems 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 mid-size firms.

22. Management Information Systems 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

23. Management Information Systems 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

24. Management Information Systems 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

25. Management Information Systems 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.

26. Management Information Systems 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

27. Management Information Systems 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

28. Management Information Systems Chapter 6 IT Infrastructure and Platforms CONTEMPORARY SOFTWARE PLATFORM TRENDS Java Is Everywhere Java: • An operating system—Independent, processor-independent, 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.

29. Management Information Systems 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.

30. Management Information Systems 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.

31. Management Information Systems Chapter 6 IT Infrastructure and Platforms 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).

32. Management Information Systems 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.

33. Management Information Systems 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.

34. Management Information Systems Chapter 6 IT Infrastructure and Platforms CONTEMPORARY SOFTWARE PLATFORM TRENDS How Dollar Rent a Car Uses Web Services

35. Management Information Systems 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

36. Management Information Systems 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

37. Management Information Systems 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

38. Management Information Systems 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?

39. Management Information Systems Chapter 6 IT Infrastructure and Platforms CONTEMPORARY INFRASTRUCTURE TRENDS Mobile platform: Mobile platform: more and more business computing is moving from PCs and desktop machines to mobile devices like cell phones and smartphones. Data transmissions, Web surfing, e-mail and instant messaging, digital content displays, and data exchanges with internal corporate systems are all available through a mobile digital platform. Netbooks, small low-cost lightweight subnotebooks that are optimized for wireless communication and Internet access, are included.

40. Management Information Systems Chapter 6 IT Infrastructure and Platforms CONTEMPORARY INFRASTRUCTURE TRENDS Grid and Cloud Computing Grid computing: connects geographically remote computers into a single network to create a “virtual supercomputer” by combining the computational power of all computers on the grid. Cloud computing: a model of computing where firms and individuals obtain computing power and software applications over the Internet, rather than purchasing their own hardware and software. Data are stored on powerful servers in massive data centers, and can be accessed by anyone with an Internet connection and standard Web browser.