MANAGING operations

1. MANAGING operations Andreas Rio, M.Eng.

2. Managing Operation The three major operational issues discussed: • outsourcing information systems functions • information security • planning for business continuity

3. Introduction • Due to mergers, the Internet, e-commerce, and the September 11, 2001, the subject of computer operations has been receiving a lot of attention. • Systems operations are important because, if they are not professionally run (and backed up properly), a computer or network crash could shut down a company’s business for some period of time.

4. Introduction The main change in operations is a shift in viewpoint. • Traditionally, managing operations has meant managing inward—managing one’s own operations staff, including those who work in the data center, data administration, network administration, and systems programming. • Today, it is just as likely to mean managing outward —managing the company’s relationships with IT external service providers(ESPs) who have taken over day-to-day operational work.

5. Introductions

6. Operations Why Talk About Operations? • Because it involves so much money, it’s complex, and it’s important to business operations. • 57% of budget is for operations • 33% of budget is for new development • 10% is administration and training.

7. Operations Solving Operational Problems • Problems: • Response time is slow, network are down, data is not available or data is wrong. • The best solution is to: • continually document and measure what you are doing, • uncover the real problems, not just the apparent ones, and then • set the standards.

8. Operations Operational Measures • The measures are internal (what IS needs to know) and external (what customers see). • Problems reported by the external measures can generally be explained by deviations in the internal measures. • Internal measures: • computer usage as a percentage of capacity • Availability of mainline system • Disk storage utilized • Job queue length • Number of job run • Age of applications • Number of unsolved problems. • Those measures have impact on user satisfaction.

9. Operations The Importance of Good Management • IS management needs to create a corporate culture that recognizes and values good operations. • The skills required of an operations manager are similar to those needed in a factory. • Scheduling work • Monitor performance • Respond quickly to production breakdown. • CIOs need to be concerned about operations.

10. What’s new in operations? • Companies Have Cleaned Their Operational House • More Operations Managers are Managing Outward • Operations are Being Simplified • Certain Operations are Being Offloaded

11. What’s new in operations? Companies Have Cleaned Their Operational House • Y2K and the Internet forced companies to “clean house”in their data and network center operations. • The resulting changes have led to far better operational structures because management took the time to define the rules for operations and put better policies and procedures in place. • Had they not gone through Y2K, most companies would not be operationally prepared for the Internet.

12. What’s new in operations? More Operations Managers are Managing Outward– • A growing number of companies are turning to a third party to run their data centers. • Even for companies keeping their own data centers, an increasing number are taking advantage of operational services provided by third parties, especially for e-business operations.

13. What’s new in operations? Operations are Being Simplified– • Operations are frequently simplified by centralizing programs –via server-based computing –rather than distributing them on PCs.

14. What’s new in operations? Certain Operations are Being Offloaded • Web “event management” means hosting a real-time event on the Web. When successful, these “Webcasts” lead to huge spikes in Web site hits. • To avoid being swamped and having the Web site crash, companies offload the operational aspects of these events to third parties that specialize in hosting such activities.

15. What’s new in operations? CASE EXAMPLE: Microsoft • When Microsoft officially announced a new version of Windows, it did so not only at a major launch event in San Francisco, California, but also via a public Internet broadcast, and a private Webcast to 6,000 original equipment manufacturer (OEM) system builders in 83 countries. • That private Webcast was handled by a company that has “edge servers” in 66 countries, giving users in far-flung locations fast downloads of Web content and streaming media.

16. Outsourcing Information System Function • Outsourcing means turning over a firm’s computer operations, network operations, or other IT function to a provider for a specified time—generally, at least a few years. • Outsourcing descended on IS departments as a follow-on to the merger and acquisition activities in the 1980s. • Companies faced global competition, so they had to focus on their core competencies, and do some restructuring. • Outsourcing is part of the drive for focus and value, and it is not solely an IT issue.

17. Outsourcing Information System Function • Relationships have expanded from buying professional services, to buying products and transactions, to integrating systems, to outsourcing –the most bundled approach to contracting. • IS organization bought professional service, such as planning (or consulting), building or maintaining applications, building or maintaining networks, and training. • They bought products, that may or may not include training. • System integration is project based, while outsourcing is time based.

18. Outsourcing Information System Function

19. Outsourcing Information System Function In this evolution: • CIOs have increasingly lost control, • vendors take on more risks, • margins increase, and • the importance of choosing the right provider becomes more important.

20. Outsourcing Information System Function IT outsourcing essentially began in 1989. • Company wanted to remove the huge IT investment and shift those fixed cost to variable cost. • Problems: • “us versus them” mindset • Culture clashed

21. Outsourcing Information System Function Today, the field also includes • transitional outsourcing (helping a company move to a new IT platform), • best of breed outsourcing (outsourcing each IT function to a best-of-breed provider), • offshore outsourcing (to providers in India and elsewhere around the world),

22. Outsourcing Information System Function • shared services (consolidating back-office function into one center in-house), • business process outsourcing (outsourcing a process with a large IT underpinning), and • e-business outsourcing (outsourcing the infrastructure supporting e-business).

23. Outsourcing Spectrum

24. Case Studies Kodak was the 1st major company to outsource its IS dept • It put in place a robust organizational structure: • a management board (including senior management from both companies and focuses on strategic issues), • advisory council (handling technical and operational issues by focusing on what Kodak wants, not how the services are delivered), • supplier and alliance management group (managing all longer-term outsourcing relationships and other contracts with large IT suppliers),

25. Case Studies Kodak was the 1st major company to outsource its IS dept • It put in place a robust organizational structure: • relationship (the focal point of Kodak’s relationship with one provider), • working groups (to facilitate changes in processes, promulgate standards), • achieve business recovery in case of disruption, and • promote effective use of IS services, and client surveys (conducted twice a year).

26. Information Security • Viruses • Insider Abuse • Laptop Theft • System Penetration • Denial of Service • Unauthorized Access • Theft of Proprietary Info • Financial Fraud • Telecom Fraud • Sabotage • Telecom Eavesdropping • Active Wiretapping

27. Information Security • Hackers use nine approaches to cause harm: cracking the password, tricking someone, network sniffing, misusing administrative tools, paying middlemen, denial of service attacks, Trojan horse programs, viruses, and spoofing. • Because airtight security is not possible, companies need to prioritize their risks and work on safeguarding against the greatest threats.

28. Information Security • Cracking the password • Guessing someone’s password is easier. • Use software that can test out all combinations • Tricking someone • Posing as a network manager, he/she ask passwords to solve a fictitious network problem • Network sniffing • Crackers launch software that monitors all traffic looking for password or other valuable information.

29. Information Security • Misusing administrative tools • Helpful tools can be turned against a network. A tool for uncovering weak spots in a network has been used by hackers. • Paying middlemen • Placing oneself between 2 communicating parties, and denying one party access to a session. • Denial of service attacks • Flooding so that the service becomes freezes. • Trojan horse programs • Viruses • Spoofing • Crackers can gain access to a site.

30. Information Security Security’s Five Pillars • Authentication • Identification • Privacy • Integrity • Nonrepudiation

31. Information Security • Authentication verifies the authenticity of users, • Identification identifies users to grant them appropriate access, • Privacy protects information from being seen, • Integrity keeps information in its original form, and • Non repudiation prevents parties from denying actions they have taken. • It can prove that someone was the actual sender and other the receiver.

32. Information Security Antivirus Software Firewalls Physical Security Access Control Intrusion Detection Encrypted Files Encrypted Login Reuseable Passwords Digital IDs PCMCIA Biometrics

33. Business Continuity • Safeguarding people during a disaster • Documenting business procedures • Giving employees the tools and space to handle personal issues • It is a business issue, because IT disaster recovery is just one component. • There are 2 options for disaster recovery: • Using Internal Resources • Using External Resources

34. Business Continuity Using Internal Resources • Organizations that rely on internal resources for IT disaster recovery generally see this planning as a normal part of systems planning and development. • They use multiple data centers, distributed processing, backup telecom facilities, and local area networks to provide the backup and recovery they need.

35. Business Continuity Using External Resources • In many cases, a cost-versus-risk analysis may not justify committing permanent resources to contingencies; therefore, companies use the services of a disaster recovery firm. • These firms provide integrated disaster recovery services, specialized disaster recovery services, and online and off-line data storage facilities.

36. Tugas Presentasi Kelompok • Case studies mengenai outsourcing bidang IT berupa contoh perusahaan yang menggunakan jasa outsourcing. • Analisis dari sisi: mengapa perusahaan tsb menggunakan jasa outsourcing, bagaimana sistem outsourcing itu diterapkan dalam perusahaan, seperti apa dampak outsourcing bagi kelangsungan bisnis perusahaan secara keseluruhan.