IT Infrastructure Chapters 7 & 8

Chapters 7-8 IT InfrastructureChapters 7 & 8 INFO 410 Glenn Booker Images are from the text author’s slides 1 INFO 410

Chapters 7-8 Managing IT service delivery The Business of IT 2 INFO 410

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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? Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

Incremental outsourcing • 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 Chapters 7-8

Incremental outsourcing • 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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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! Chapters 7-8

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 Chapters 7-8

Incremental outsourcing risk • 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 Chapters 7-8

Incremental outsourcing risk • 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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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! Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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? Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

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 Chapters 7-8

Managing legacy systems • 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) Chapters 7-8

Managing legacy systems • 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? Chapters 7-8

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 Chapters 7-8

Managing IT infrastructure assets • 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?? Chapters 7-8

Managing IT infrastructure assets • 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 Chapters 7-8

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 Chapters 7-8

The Business of IT Managing IT project delivery Chapters 7-8

Chapters 7-8

IT Infrastructure Chapters 7 & 8