Unformatted text preview: MANAGEMENT INFORMATION SYSTEMS (MIS)
MANAGEMENT INFORMATION SYSTEMS (MIS) LECTURE NOTES 5 ENTERPRISE SOFTWARE APPLICATIONS AND INTEGRATION Spring 2010 EVOLUATION OF IT INFRASTRUCTURE
The figure below illustrates the typical Computing configurations characterized
by each of the five eras of IT Infrastructure evolution. ENTERPRISE INTERNET COMPUTING ERA
ENTERPRISE The success of the Client/Server Model posed a lot of problems. Many large
firms found it difficult to integrate Corporate Computing Environment. In late 1990s, firms turned to Networking standards and Software tools
that could integrate disparate Networks and Applications throughout the
firm into an Enterprise-wide Infrastructure using TCP/IP Networking
Standards to tie their networks together. The resulting Infrastructure linked different pieces of Computer
Hardware and smaller networks into an Enterprise-wide network so
that information can flow freely across the firm and between the firm
and other firms. The Enterprise Infrastructure also requires Software such as:
Enterprise Application Integration Software, and Web Services, to link
disparate Applications in order to enable data flow freely among
different parts of the organization. ENTERPRISE INTERNET COMPUTING ERA
ENTERPRISE The Enterprise Era promises to bring about a truly Integrated Computing
and IT Services Platform for the Management of Global Enterprises. The ultimate aim is to deliver critical business information painlessly and
seamlessly to Decision Makers when and where they need it to create
Customer value. IT INFRASTRUCTURE COMPONENTS
IT IT Infrastructure today is composed of seven Major Components Category .
The figure below illustrates the Seven Components and the Major Vendors /
Suppliers for each component.
These 7 IT Components must be coordinated to provide the firm with a
coherent IT Infrastructure.
coherent HARDWARE PLATFORMS TRENDS AND EMERGING TECHNOLOGIES
HARDWARE Although the cost of Computing has fallen exponentially, the cost of
the IT Infrastructure has actually expanded as a percentage of
corporate Budgets. Because the costs of Computing services such as Consulting, Systems
Integration and Software are still high, and the intensity of Computing
and Communicating has increased as other costs have declined. Firms also face a number of other challenges. They need to integrate
information stored in different Applications, and on different Platforms
(Legacy Systems, Intranet, Internet sites, Desktop, Mobile devices) Firms also need to build resilient infrastructure that can withstand huge
increases in Peak-loads and routine assaults from hackers and viruses
while conserving electrical power. Because Customer and Employee expectations for service are
increasing, firms need to increase their service levels to meet customer
The Trends in Hardware and Software Platforms address all of these challenges. THE INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS
THE The most dominant theme in Hardware Platforms today is the ‘’Convergence’’
of Telecommunications and Computing Platforms to the point where,
increasingly Computing takes place over the network.
increasingly Convergence at Client Level
Communication devices such as Cell phones are taken on functions of Handheld
Computers, whereas Hand held Computers (PDAs) are taken on Cell Phone
functions. Convergence at the Server and Network level
Is the growing success of Internet Telephone Systems demonstrates how
historically separate Telecommunications and Computing platforms are
converging towards a single network - the Internet.
the THE INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS
THE • One major trend in Hardware Platforms are based on Computing over
High-capacity Networks. • The Network in many respects is becoming the source of Computing power,
enabling business firms to expand their Computing power greatly at very little
cost. INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS
GRID COMPUTING Grid Computing involves connecting geographically remote Computers into
a single Network to create Virtual Supercomputer by combining the
computational power of all Computers on the grid.
computational Grid Computing concept is based on the assumption that most Computers
use their CPU on average 25% of for the work they have been assigned, and
thus leaves 75% idle CPU resources available for other processing tasks.
Grid Computing was impossible until High Speed Internet Connections
enabled firm to connect remote Computers economically and move enormous
quantities of data over the network.
• Grid Computing requires Software Programs such as: Open-source
Software provided by Globos Alliance or private providers to allocate
and control CPU resources on the Grid. THE INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS
THE GRID COMPUTING • The Server Software breaks Data, and Application Ptrogram Codes into
chunks that are then parcelled out to the Grid Machines.
• The Client Machines can perform their traditional tasks while running
Applications in the background.
THE ADVANTAGES OF GRID MACHINE
• Cost saving,
• Speed of Computation
Example: Royal Dutch/ Shell Group uses a scalable Grid Computing
Platform that improves the accuracy and speed of its Scientific
Modelling Applications to find the best oil reserves.
The Grid Platform links 1024 IBM Servers running under Linux, in effect
creating one of the largest commercial Linux Supercomputers in the world.
creating THE INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS
THE ON-DEMAND COMPUTING (UTILITY COMPUTING) Refers to firms ’’Off-loading Peak Demand’’ for Computing
power to remote , large scale Data Processing Centres.
Firms can reduce their investment in IT Infrastructure, in this manner, by
investing just enough to handle ‘’Average Processing Loads’’ and paying for
only as much additional Computing power based on their usage as the
Hardware Manufacturers such as: IBM, HP, ORACLE and Sun
Microsystems all offer Utility Computing Services on demand.
Microsystems THE INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS
THE ON-DEMAND COMPUTING (UTILITY COMPUTING)
On-demand Computing has some benefits such as: It lowers the cost of owning Hardware resources,
Gives firms greater agility to use technology,
Greatly reduces the risk of over-investing in IT Infrastructure.
Shifts firms from having a fixed Infrastructure capacity towards a
highly flexible infrastructure (some of it owned by firm and some of it
rented from giant Computer centres owned by Computer Hardware
manufacturers.) THE INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS
THE AUTONOMIC COMPUTING AND EDGE COMPUTING
It is estimated that 30 - 50% of a firm’s total IT Budget spent on preventing or
recovering from System crashes.
About 40% of these crashes caused by Operator errors. The reason for crash is not
because Operators are not well trained or do not have the right capabilities. Rather, it
is because the complexity of today’s Computer Systems make them too difficult to
understand, and IT Operators and Managers are under pressure to make decisions
about problems in seconds.
One approach to dealing with this problem is to employ Autonomic Computing.
Autonomic Autonomic Computing is an industry-wide effort to develop Computer
Systems that can configure themselves, optimize and tune themselves, heal
themselves when broken, and protect themselves from outside intruders and
self-destruction. A few of Autonomic Computing capabilities are present in Desktop
Operating Systems. e.g. Virus and Firewall Protection Software can detect viruses THE INTEGRATION OF COMPUTING AND TELECOMMUNICATIONS PLATFORMS
THE EDGE COMPUTING
It is a Multitier, Load-balancing Scheme for Web-based Applications, in which
significant parts of Web Site Content (data) , Logic and Processing are
performed by smaller, less expensive Servers located nearby the User in order
to increase response time and resilience while lowering technology costs. Edge Computing is another technique like Grid Computing and On-demand
Computing for using the Internet to share the workload experienced by a
firm across many Computers located remotely on the network. EDGE COMPUTING
Edge Computing involves the use of Internet to balance the processing load of
Enterprise Platforms across the Client and Edge Computing Platform
• In an Edge Computing Platform, Application requests from the User/Client
Computer are initially processed by the Edge Servers . Presentation components such as Static Web page content, Reusable Code
fragments, and Interactive elements gathered on forms are delivered by the
Edge Server to the Client. Database and Business Logic elements are delivered by the Enterprise
Computing Platform. EDGE COMPUTING
EDGE There are three tiers in Edge Computing:
- The Local Client
- Edge Computing Platform (Server positioned at any Internet service Providers)
- Enterprise Computers (Located at the firm's main Data canter.
**** The Edge Computing Platform is owned by an Internet Service provider. *****
The VIRTUALISATION AND MULTICORE PROCESSORS
As companies deploy hundreds or even thousands of Servers across many
geographic locations , many have discovered that they are spending more on
electricity to power and cool their Systems than acquiring the Hardware.
Cutting power consumption in Data centres is now a priority of most
• One way of curbing Hardware proliferation and power consumption is to use Virtualization to reduce the number of Computers required for processing.
Virtualization is the process of presenting a set of Computing Resources
so that they can be all accessed in ways that are not restricted by physical
configuration or geographic location.
• Server Virtualization enables companies to run more than one Operating
System at the same time on a single machine.
• Server Virtualization Software runs between the Operating System and the
Hardware , masking Server Resources, including the number and identity of
physical Servers, Processors, and Operating Systems, from Server Users.
e.g. VMWare is the leading Server Virtualization Software vendor for |
Windows and Linux Operating Systems. Microsoft also offers its own
Virtual Server product and has built Virtualization capabilities into the
newest version of Windows Server.
Most Servers run at just 10 – 15% of capacity and Virtualization can boost
In addition to reducing Hardware and Power expenditures , Virtualization
allows firms to run their Legacy Applications on older Versions of an Operating
System on the same Server as newer Applications. MULTICORE PROCESSORS
Another way to reduce power consumption and Hardware sprawl is to use
Multicore Processor is an integrated circuit that contains two or more
• In the past, chip makers increased the Processors Speed by increasing their
frequency from a few Megahertz to today’s Gigahertz frequencies.
frequency • This strategy increased both the Heat and Power consumption to the poi
where high Gigahertz chip require water cooling. Dual-Core Processors combine two or more slower Processors in a single chip
that enables two Processor engines with reduced power requirements and
heath dissipation to perform tasks faster than a resource-hungry chip with a
single processing core.
single MULTICORE PROCESSORS
MULTICORE The Dual-core Processors implementation requires half of the Servers as the
Single- core approach and is less costly to maintain because there are fewer
Systems to monitor.
• INTEL and AMD make Dual-core Microprocessors and are introducing
Quad-core Processors. Sun Microsystems sell Servers with Eight-core
UltraSparc T1 Processors. DATA MANAGEMENT AND STORAGE PLATFORMS
There are few choices for Enterprise Database Management Software.
• The leading Database Software provider are IBM (DB2), Oracle,
Microsoft (SQL Server) and Sysbase.
- Also MySQL ( A Linux Open-source Relational Database product ) is a
new entrant, is available free on the Internet and increasingly supported
by HP and others.
In additional to the traditional Disk Array technologies, large firms are turning
to Network-based Storage technologies called Storage Area Networks (SANs).
• Storage Area Networks connect multiple storage devices on a separate
high-speed Network dedicated to storage.
The SAN creates a large central pool of storage that can be rapidly
accessed and shared by multiple Servers. NETWORKING AND TELECOMMUNICATIONS PLATFORM
Windows Server is predominantly used as the Local Area Network (LAN)
Operating System followed by Novell, Linux and Unix.
• Large Enterprise-Wide Area Networks primarily use some variant of Unix.
• Nearly all LAN and Enterprise-Wide Networks use TCP/IP protocol suite .
• The leading Networking Hardware providers are, Cisco, Lucent, Nortel
and Jupiter Networks.
Telecommunications Platforms are typically provided by national
Telecommunications/Telephone Services companies that offer voice and data
connectivity, Wide area Networking (WAN) and Internet access.
e.g. AT & T, British Telecom, Turktelecom. Etc/ INTERNET PLATFORMS
Internet Platforms overlap with, and must relate to, the organization’s general
Networking Infrastructure, Hardware and Software Platforms.
The Internet-related Infrastructure encompass Hardware, Software, and
Management Services to support Company Web Sites, including Web Hosting
Services , and Intranets and Extranets.
• The Internet Hardware Server market has become increasingly concentrated
in the hands of Dell, HP and IBM.
• The major Web Software Application Development Tools and Suites are
- Microsoft (FrontPage, and Microsoft .NET family of development tools
used to create Web sites using Active Server Pages (ASP)
- IBM (WebSphere line of Internet Management Tools)
- Sun (Java (is the most widely tool for developing interactive Web CONSULTING AND SYSYTEM INTEGRATION SERVICES
Although 20 years ago, it might have been possible for a large organization to
implement all its own IT Infrastructure , today many organizations do not
have the staff, the skills, the budget or necessary experience implement their
own IT infrastructure. Software Integration means ensuring the new infrastructure works with the
firm’s older, so-called Legacy Systems (older mainframe based Transaction
Processing Systems) and ensuring the new elements of the infrastructure work
with one another.
Firms use Consulting Services and System Integrators for implementing new
Infrastructure, since it involves with significant changes in business processes
and procedures, training and education and Software Integration.
• The world renowned Consulting and System Integration Services are
provided by Accenture and PwC Consulting (An IBM subsidiary
company) SOFTWARE PLATFORM TRENDS AND EMERGING TECHNOLOGIES
There are six major themes in contemporary Software Platform Evolution:
6. Linux and Open-source Software
Web Services and Service Oriented Architecture (SOA)
Mashup and Web-based Software Applications
Software SOFTWARE PLATFORM TRENDS AND EMERGING TECHNOLOGIES
1. THE RISE OF LINUX AND OPEN SOURCE SOFTWARE
THE Open-source Software is produced by a community of several hundred
thousand Programmers around the world.
Open-source Software is free and can be modified by users.
Open-source Software is by definition not restricted to any specific
Operating System or Hardware technology, although most Open-Source
Software is currently based on a Linux or Unix Operating System.
Open-source is based on the promise that it is superior to commercially
produced proprietary Software because :
Thousands of programmers around the world working for no pay can
read, perfect, distributed and, modify the source code much faster and
with more reliable results, than small teams of programmers working
for single Software company.
for SOFTWARE PLATFORM TRENDS AND EMERGING TECHNOLOGIE
1. THE RISE OF LINUX AND OPEN SOURCE SOFTWARE
Although it may seem that the Open Source Software contributors receive
nothing in return, in fact they receive respect, prestige, and access to a
network of knowledgeable programmers,. They are dedicated
professionals who have well defined organizational structures and set of
procedures for getting the work done.
The Open-source Software movement has been evolving for more than 30
years and by now thousands of Open-source programmes are available
from hundreds of Web sites.
The range of Open-source Software extends from Operating Systems to
Desktop Productivity suites, Web Browsers, and Games.
Major Hardware and Software vendors, including IBM, HP, Dell, Oracle
and SAP now offer Linux-compatible versions of their products.
and SOFTWARE PLATFORM TRENDS AND EMERGING TECHNOLOGIES
1. THE RISE OF LINUX AND OPEN SOURCE SOFTWARE
1. THE LINUX
Perhaps the most well known Open-source Software is Linux Operating
System , derived from Unix.
Linux is the world fastest growing Client and Server Operating System.
Applications for Linux are rapidly growing . Many of these Applications
are embedded in Cell phones , PDAs and other Handheld devices.
Although Linux is currently a small but rapidly growing presence on the
Desktop environment , it plays a major role in the Back-office running
Web Server and Local Area Networks (LAN).
IBM, Dell, HP , Intel and Sun have made Linux a central part of their
offering to corporations. SOFTWARE PLATFORM TRENDS AND EMERGING TECHNOLOGIES
SOFTWARE 2. JAVA
Java is an Object-oriented Programming language m independent of
Operating Systems, and Processors.
Operating Java has become the leading interactive Programming environment for
the Web. Java is designed to run on any Computer or Computing device,
regardless of the specific microprocessor or Operating System device
uses. Java is particularly useful in Network environments such as the Internet,
where Java is used to create miniature programs called Applets that are
designed to reside on centralized Network Servers.
The Network delivers to Client Computers only the Applets required
for a specific function. With Java Applets residing on Network, a
User SOFTWARE PLATFORM TRENDS AND EMERGING TECHNOLOGIES
SOFTWARE 1.JAVA (Continued) T he User does not need to maintain large Software programmes or Data
files on their Desktop machine. Java is also a very robust language that can handle text, data, graphics,
sound, and video, all within one program if needed. Java enables PC users to manipulate data on Networked Systems using
Web Browsers, reducing the need to write specialized Software. JAVA at Enterprise level is used for more complex e-commerce and
e-business Applications that require communication with an
organization back-end Transaction Processing Systems. SOFTWARE PLATFORM TRENDS AND EMERGING TECHNOLOGIES
SOFTWARE 3. SOFTWARE FOR ENTERPRISE INTEGRATION
In the past organizations built their own custom Software and made their
own choice about their Software platforms. This strategy produced
hundreds of thousands of Computer programs that frequently could not
communicate with other Software programs, were difficult and expensive
to maintain, and were nearly impossible to change quickly as business
One solution is to replace the isolated Systems that cannot communicate
with each other with Enterprise Applications such as Customer
Relationship Management, Supply Chain Management, Knowledge
Management and Enterprise Resource Planning Systems , that can
integrate with multiple business processes.
The existing Legacy mainframe Applications are essential to
operations and are very risky to change, but they can become more
useful if their information and business logic can be integrated with
other Applications. However, not all firms can manage to convert all
of their Legacy Systems to Enterprise Platform. 3. SOFTWARE FOR ENTERPRISE INTEGRATION
Some Integration of Legacy Applications can be achieved by using special
Software called Middleware to create an interface or bridge between two
Is a Software that connects two otherwise separate Applications, enabling
them to communicate with each other and to exchange data.
Organizations can choose to write their own Software to connect one
application to another but increasingly are purchased specific software
package called ‘’Enterprise Application Integration Software (EAI) for
this purpose to connect disparate Applications, or Application clusters.
Enterprise Application Interface Software enables multiple Systems to
exchange data through a single Software hub rather than building countless
Custom software interfaces to link Systems.
. 3. SOFTWARE FOR ENTERPRISE INTEGRATION
• EAI uses special Middleware that creates a common platform which all
Applications can be freely communicate with each other as demonstrated in
fig. (a) .
• EAI requires much less programming than Traditional Point-to-point
Integration as shown in fig. (b)/. SOFTWARE FOR ENTERPRISE INTEGRATION
SOFTWARE FOR ENTERPRISE INTEGRATION The largest providers of Enterprise Application Software are SAP and,
ORACLE. • Some of the leading EAI vendors that provide Enterprise wide
Integration by linking the firms existing Application Systems are
WebMethods, Tibco, SeeBeyond, BEA and Vitra.
Microsoft is also attempting to move into the lower ends of this
by focusing on small and medium sized companies. 1. WEB SERVICES AND SERVICE_ORIENTED ARCHITECTURE (SOE)
1. Enterprise Application Integration Software (EAI) tools are product
specific, meaning that they can work only with certain piece of Application
Software and Operating Systems.
E.g. One EAI tool to connect a specific Order Entry Software to
Manufacturing , Shipping and, Billing Application Software might not
work with another Vendor’s Order Entry Software.
The alternative way to EIA in dealing with Integration problems is
Web 1. WEB SERVICES AND SERVICE_ORIENTED ARCHITECTURE (SOE)
4.1 WEB SERVICES
WEB Provide a standardized alternative for dealing with Integration Problems
by creating a communications environment that is Vendor independent.
Web Services refer to a set of loosely coupled Software components that
exchange information with each other using standard Web Communication
Standards and Languages.
Web Server facilitates information exchange in a standard way without
time- consuming custom coding between two different Systems regardless
of the Operating Systems or Programming Languages on which the
Systems are based.
The foundation technology of Web Services is XML (Extensible Mark-up
Language). 4. 1 WEB SERVICES
WEB XML tags the selected elements of the content documents for their meanings
and makes it possible for computers to manipulate and interpret their data
automatically and perform operations on the data without human
XML Provides a Standard Format for Data exchange, enabling Web services
to pass data from one process to another.
Web Services communicate through XML messages over standard Web
SOAP (Simple Object Access Protocol) is a set of rules for structuring messages that
enables applications to pass data and instructions to one another.
WSDL (Web Services Description Language is a common Framework for describing
the tasks performed by a Web Services and Commands and data it will accept so
that it can be used by other Applications
UDDI (Universal Description, Discovery, and Integration enables a Web Service to be 4.2 SERVICE ORIENTED ARCHITECTURE (SOA) SOA is set of self contained Services that communicate with each other to
create a working Software Application.
SOA is an entirely new way of developing Software for a firm.
• In the past organizations used to build Software Applications to serve a
specific purpose such as calculate and printing out Invoices. Often
multiple programs performed all of these tasks without communicating
to each other.
In a SOA environment, it is different. For example an ‘’INVOICE
SERVICE’ can be written that is the only program responsible for
calculating Invoice information and printing invoices’.
calculating All major Software Vendors such as IBM, Microsoft., Oracle, SAP., Sun
and HP provide tools and entire platforms for building and Integrating
Software Applications using Web Services. IBM included Web Services
Tools in its Websphere e-budsiness Software Platform, Microsoft has
incorporated WEB services Tools in its Microsoft.Net Platform
incorporated 4.2 SERVICE ORIENTED ARCHITECTURE (SOA)
SOA is not a universal salve for all firms and it does raise issues all of its own.
SOA requires the staff to master a whole new set of tools and a new mentality
about Software development. 4.2 SERVICE ORIENTED ARCHITECTURE (SOA)
Example of an Inter-organizational SOA at work
Dollar Rent A Car’s Systems use Web services to link its online Booking Systems with
Southwest Airline’s Web site. Although both companies Systems are based on different
technology platforms, a person booking a flight on Southwest.com can reserve a car from
Dollar without leaving the Airline’s Web site.
Dollar used Microsoft.Net Web Services technology as an intermediary to translate
reservations into Web services Protocols, which are then translated into formats that can be
understood by Dollar’s computers.
Web Services provide Standard way for Dollar’s Computer to ‘’talk’’ other companies
Information Systems without having to build special links to each other.
Information 5. AJAX, MASHUPS, WEB 2.0 , AND WEB-BASED SOFTWARE APPLICATIONS
Is A New Software technique that prevents all inconveniences and makes the User
experience more seamless environment. (such as make a mistake and then start all
Ajax allows Client and the Server to hold a conversation in the background,
transferring the entries as they are made to the Server without user awareness.
e.g. Click North on a map site and the Server will downloads just that part of the
Application that changes with no wait for an entire new map.
Ajax and RIA (Rich Internet Applications) are important for new Web-based
Application Development. 5. AJAX, MASHUPS, WEB 2.0 , AND WEB-BASED SOFTWARE APPLICATIONS
MASHUP On a smaller scale, entrepreneurs are creating new Software
and services based on combining different Online Software Applications
These new combined Applications depend on: High-speed data Networks, Universal Communication Standards, Open-source code.
The idea is to take different sources and produce a new work that is greater
than the sum of its parts. AJAX, MASHUPS, WEB 2.0 , AND WEB-BASED SOFTWARE APPLICATIONS
WEB 2.0 Part of the movement called Web 2.o, and the spirit of Musical Mashups. Web
Mashups combine the capabilities of two or more online Applications to create a kind
of hybrid that provides more customer value than the original sources alone. One area of real innovation is the Mashup of mapping and satellite image software
with local content. 6. SOFTWARE OUTSOURCING
Today most business firms continue to operate their Legacy Systems that
continue to meet a business need and that would be extremely costly to
However, firms will purchase most of their new Software Applications from
External sources from now on. 6. SOFTWARE OUTSOURCING (Continued) In the past, most of the Software was develop inside the firm by teams of
Software Developers. Firms still retain sizable IT Staff but they are no longer
exclusively in the Software business..
In year 2006, firms have turned over about one-third of their Software
Development to outside Software Developers, including Enterprise Software
firms, who will sell them Pre-packed Software solutions customized to their
A firm contracts Custom Software Development or maintenance of existing
Legacy Programs to outside firms, frequently firms that operate offshore in
low-wage areas of the world like India.
Outsourcing Services may give a company access to highly trained
technology specialists that were not available internally. 6.1 SOFTWARE PACKAGES AND ENTERPRISE SOFTWARE A Software Package is a prewritten commercially available set of Software
Programs that eliminates the need for a firm to write its own Software
Programs for certain functions, such as payroll processing or order handling.
Software Vendors such as SAP and Oracle have developed powerful
Software packages that can support the primary business processes of a firm
worldwide from Warehousing, Customer Relationship Management , Supply
Chain Management, and Finance to Human Resources.
These large-scale Enterprise Software Systems provide a single, integrated
Worldwide Software System for firms at a cost much less than they would
pay if they develop it themselves.
These Systems are so complex, and require so much experience, that very
few corporations have the expertise required to develop these packages. 6.2 APPLICATION SERVICE PROVIDERS (ASP)
An Application Service Provider (ASP) is a firm that delivers and
manages Applications and Computer Services from remote Computer
centres to multiple Users using the Internet or a Private network.
Instead of buying and installing Software Programs, subscribing
companies can rent the same functions from these services. Users pay for
the use of this Software either on a subscription or per-transaction basis.
The ASP solution combines Packaged Software Applications and all of the
related Hardware, System Software, Networks, and other Infrastructure
services that the customer otherwise would have to purchase, integrate,
The ASP Customer interacts with a single entity instead of a an array of
technologies and Service Vendors. 6,2 APPLICATION SERVICE PROVIDERS (ASP) (Continued)
Large and medium sized Businesses are using ASPs for Enterprise Systems
such as Sales Force Automation, Financial Management Systems
Small Business use ASP for functions such as Invoicing , Tax calculations
Some companies find it much easier to rent Software from the ASP vendor
and avoid the expenses and difficulty of installing, operating and
maintaining the contacts, guarantee a level of services and support to
ensure that the Software is available and working at all times. MAKING WISE INFRASTRUCTURE INVESTMENTS
IT Infrastructure is a major investment for an Organization. If too much is spent on Infrastructure, it lies idle and constitutes a drag
on firm’s financial performance. If too little is spent, important business services cannot be delivered and
the firm’s competitors will outperform the under investing firm. How much should the firm spend on Infrastructure?
This questing is not easy to answer! A related question is whether a firm should purchase its own IT
Infrastructure components or rent them from External suppliers.
A major trend in Computing platforms (both Hardware and Software)
is to Outsource to the External Service providers.
The Decision either to Purchase own IT assets or Rent them from
External providers is typically called the Rent versus Buy decision. HOW MUCH SHOULD OUR FIRM SPEND ON IT INFRASTRUCTURE?
There are six factors you can use to answer the question of How much a firm
should spend on Infrastructure?. HOW MUCH SHOULD OUR FIRM SPEND ON IT INFRASTRUCTURE?
1. Market demand for your firm’s Services Make an Inventory or the Services your currently provide to customers,
suppliers, and employees. Survey each group to find out if the services you currently offer are meeting
the needs of each group.
1. Make Firm’s Business Strategy
Analyze your firm’s 5 years Business Strategy and try to assess what new services
and capabilities will be required to achieve Strategic goals
3. Yours Firm’s IT Strategy, Infrastructure and Cost Examine the 5 years IT plans and assess its alignment with the firm’s Business
plans. Determine total IT infrastructure Costs. Perform a Total Cost of Ownership (TCO) Analysis. HOW MUCH SHOULD OUR FIRM SPEND ON IT INFRASTRUCTURE?
1. Information Technology Assessment Is your firm behind the Technology curve or at the bleeding edge of IT?
Both situations are to be avoided.
It is usually not desirable to spend resources on advanced. Technologies that are still experimental, often expensive and sometimes
unreliable. However, you do not want to put off investment in new
technologies or allow competitors to develop now business models and
capabilities based on the new Technologies.
1. Competitor Firm Services Try to asses what Technology services competitors offer to customers,
suppliers, and employees.
Establish measures to compare them with those of your firms. If your firm’s levels are all short, your company is at a competitive
disadvantage. Look for ways your firm can excel at Service levels. HOW MUCH SHOULD OUR FIRM SPEND ON IT INFRASTRUCTURE?
6. Competitors Firm IT Infrastructure Investments Benchmark your expenditures for IT Infrastructure against your
competitors. Many companies are quite open about their innovative expenditures
If competing firms try to keep IT expenditures secret, you may be
able to find IT investment information in Public companies. Your firm does not need to spend as much as, or more than, your
competitors. Perhaps it has discovered much less expensive ways of providing
services, and this can lead to Cost advantage. Alternatively your firm may be spending far less than competitors
and experiencing commensurate poor performance and losing
market share. TOTAL COST OF OWNERSHIP (TCO) OF TECHNOLOGY ASSETS
In Benchmarking your firm’s expenditures on IT Infrastructure with that of
your competitors, you will need to consider a wide range of Costs: The actual Cost of owning Technology resources includes the Original
Cost of acquiring and installing Hardware and Software Ongoing Administration costs for Hardware and Software upgrades,
maintenance, downtime, technical support, and training, Utility and real estate costs for housing and providing power for the
The Total Cost of Ownership (TCO) model can be used to analyze these
direct and indirect costs to help firms determine the Actual cost of specific
technology implementations. ...
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- Spring '11