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Chapter 13

Chapter 13. Information Technology Economics. Agenda. IT Organization IT Productivity IT Benefits Data Center Economics. IT Department. CIO. Systems. Operations. Support. Development. Computer. Systems. Data. facilities. analysis and. administration. operations. design.

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Chapter 13

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  1. Chapter 13 Information Technology Economics

  2. Agenda • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  3. IT Department CIO Systems Operations Support Development Computer Systems Data facilities analysis and administration operations design Information Data entry Programming center Information technology

  4. Agenda • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  5. Measuring Productivity • Traditional measure • Function point analysis

  6. Traditional Measure • Source lines of code (SLOC) • Lines of executable code (LOEC)

  7. Function Point Analysis • Count number with Low, Average, and High complexity • Multiply by function weight • Sum to arrive at function points

  8. Function Point Analysis • 5 functions are scored • amount of input (forms / screens) • Amount of output (reports / screens) • number of end-user queries • number logical files accessed / used • number interfaces to other applications

  9. Productivity Paradox • Not all investments in IT will result directly in productivity gains or decreased costs • Infrastructure • Staging for future opportunities • Delayed benefits • E-commerce

  10. Agenda • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  11. Measuring Benefits • What’s important to management? • Not always dollars • Customer relations • Employee morale • Cycle time • Ask, don’t assume

  12. Measuring Benefits • Use “Anchor” measures • Value of ratios for comparing across time and function • Sales per employee • Revenue per employee • Revenue per customer • Cost per transaction

  13. Agenda • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  14. Data Center Economics • Budgeting • Charge back • Outsourcing

  15. Budgeting • 33% Systems and Programming • 85% maintenance • 15% new development • decreasing • 10% Administration / Training • 57% IT Operations • Systems operators • Operate hardware • Schedule application runs • Input / output preparation • Data-entry operators • Maintenance technicians

  16. Charge-back • No operating budget • Charge clients for services • Clients can shop elsewhere • Centers can spend what they collect - NO MORE! • Increasing quality at decreasing cost • Strategies • Upgrade to latest equipment / software • Consolidation

  17. Outsourcing • Reasons • Overall business trend • Global competition • Need for technical specialists • Employee costs (fringe benefits) • Tax benefits

  18. Outsourcing Types • Professional services (consulting) • Services (training / data entry) • Temporary employees • Contract programmers • Transactions (credit reports) • Systems integrators

  19. When to Outsource • Activity not strategic • Save at least 15% • Need technology specialists • Increase financial flexibility • Capital to operating expenses • Free personnel for development • Acquire new technologies quicker

  20. What NOT to Outsource • Strategy (IT Plan) • Architecture • Tied to firm’s culture • Portfolio (What / When) • Vendor management

  21. Preventing Outsource Failures • Vendor expertise and sophistication • Improved delivery quality • Cost reduction • Increased focus on core competencies • Transition to new technologies • Good contract and lawyer

  22. Raleys • Prefer to acquire talented, retail-oriented staff • Augments IT projects with consultants, contractors • Outsource professional services such as training and data entry

  23. Raleys • Main drawback of outsourcing is failure of outsourcing company to understand Raley’s business goals objectives and objectives

  24. Points to Remember • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  25. Discussion Questions • What will happen in your organization if the IT is outage? • Does your organization measure its IT • Productivity? • Benefits?

  26. Assignment • Review chapters 8-13 & technology 3 • Read chapter 14 • Group assignment • Research paper

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