05-LECTURE NOTES 5 - IT INFRASTRUCTURE AND EMERGING TECHNOLOGIES

05-LECTURE NOTES 5 - IT INFRASTRUCTURE AND EMERGING TECHNOLOGIES

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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 Enterprise and Web 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 . IT The figure below illustrates the Seven Components and the Major Vendors / Suppliers for each component. Suppliers These 7 IT Components must be coordinated to provide the firm with a These coherent IT Infrastructure. coherent HARDWARE PLATFORMS TRENDS AND EMERGING TECHNOLOGIES HARDWARE Although the cost of Computing has fallen exponentially, the cost of Although 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 Demand. Demand. 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 Communication Computers, whereas Hand held Computers (PDAs) are taken on Cell Phone functions. functions. Convergence at the Server and Network level Convergence Is the growing success of Internet Telephone Systems demonstrates how Is 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 INTEGRATION 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 Grid enabled firm to connect remote Computers economically and move enormous quantities of data over the network. quantities • Grid Computing requires Software Programs such as: Open-source Software provided by Globos Alliance or private providers to allocate Globos 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 Data, 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 Speed • Agility. Agility. 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 Refers ’’ power to remote , large scale Data Processing Centres. power Firms can reduce their investment in IT Infrastructure, in this manner, by Firms investing just enough to handle ‘’Average Processing Loads’’ and paying for investing ’’ only as much additional Computing power based on their usage as the market demands. market Hardware Manufacturers such as: IBM, HP, ORACLE and Sun Hardware 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. Greatly 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 It 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. about One approach to dealing with this problem is to employ Autonomic Computing. One Autonomic Autonomic Computing is an industry-wide effort to develop Computer Autonomic Systems that can configure themselves, optimize and tune themselves, heal themselves when broken, and protect themselves from outside intruders and self-destruction. 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 It 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 Edge Computing involves the use of Internet to balance the processing load of Edge Enterprise Platforms across the Client and Edge Computing Platform Enterprise • 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 The - Edge Computing Platform (Server positioned at any Internet service Providers) Edge - Enterprise Computers (Located at the firm's main Data canter. Enterprise **** The Edge Computing Platform is owned by an Internet Service provider. ***** The VIRTUALISATION AND MULTICORE PROCESSORS VIRTUALISATION As companies deploy hundreds or even thousands of Servers across many As geographic locations , many have discovered that they are spending more on electricity to power and cool their Systems than acquiring the Hardware. electricity Cutting power consumption in Data centres is now a priority of most Cutting Companies. Companies. • One way of curbing Hardware proliferation and power consumption is to use Virtualization to reduce the number of Computers required for processing. Virtualization VIRTUALIZATION VIRTUALIZATION Virtualization is the process of presenting a set of Computing Resources Virtualization 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 | VMWare 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 Most VIRTUALIZATION VIRTUALIZATION In addition to reducing Hardware and Power expenditures , Virtualization In allows firms to run their Legacy Applications on older Versions of an Operating System on the same Server as newer Applications. MULTICORE PROCESSORS MULTICORE Another way to reduce power consumption and Hardware sprawl is to use Another Multicore Processors. Multicore MULTICORE PROCESSOR Multicore Processor is an integrated circuit that contains two or more Multicore processors. • 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 This where high Gigahertz chip require water cooling. Dual-Core Processors combine two or more slower Processors in a single chip Dual-Core that enables two Processor engines with reduced power requirements and that 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 The Single- core approach and is less costly to maintain because there are fewer Systems to monitor. Systems • 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 supplied by: - 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 SOFTWARE There are six major themes in contemporary Software Platform Evolution: There 1. 2. 3. 4. 5. 6. Linux and Open-source Software Linux Java Java Enterprise Software Enterprise Web Services and Service Oriented Architecture (SOA) Web Mashup and Web-based Software Applications Mashup Software Outsourcing Software SOFTWARE PLATFORM TRENDS AND EMERGING TECHNOLOGIES SOFTWARE 1. THE RISE OF LINUX AND OPEN SOURCE SOFTWARE THE Open-source Software is produced by a community of several hundred Open-source 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. Software Open-source is based on the promise that it is superior to commercially Open-source produced proprietary Software because : produced Thousands of programmers around the world working for no pay can Thousands 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 SOFTWARE 1. THE RISE OF LINUX AND OPEN SOURCE SOFTWARE 1. THE 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 The 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 SOFTWARE 1. THE RISE OF LINUX AND OPEN SOURCE SOFTWARE 1. THE LINUX Perhaps the most well known Open-source Software is Linux Operating Perhaps System , derived from Unix. System Linux is the world fastest growing Client and Server Operating System. Applications for Linux are rapidly growing . Many of these Applications Applications are embedded in Cell phones , PDAs and other Handheld devices. are Although Linux is currently a small but rapidly growing presence on the Although 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 2. JAVA Java is an Object-oriented Programming language m independent of Java 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 Applets 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 JAVA 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 3. SOFTWARE In the past organizations built their own custom Software and made their In 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 models changed. models One solution is to replace the isolated Systems that cannot communicate One 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. integrate 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 SOFTWARE Some Integration of Legacy Applications can be achieved by using special Some Software called Middleware to create an interface or bridge between two Middleware different Systems. different MIDDLEWARE MIDDLEWARE 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 SOFTWARE • 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 market 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. Software E.g. One EAI tool to connect a specific Order Entry Software to E.g. Manufacturing , Shipping and, Billing Application Software might not work with another Vendor’s Order Entry Software. work The alternative way to EIA in dealing with Integration problems is Web Services. Web 1. WEB SERVICES AND SERVICE_ORIENTED ARCHITECTURE (SOE) 1. 4.1 WEB SERVICES WEB Provide a standardized alternative for dealing with Integration Problems Provide by creating a communications environment that is Vendor independent. by Web Services refer to a set of loosely coupled Software components that Web 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. Systems The foundation technology of Web Services is XML (Extensible Mark-up The Language). 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 intervention. 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 Protocols. 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. create SOA is an entirely new way of developing Software for a firm. SOA • In the past organizations used to build Software Applications to serve a In specific purpose such as calculate and printing out Invoices. Often multiple programs performed all of these tasks without communicating to each other. to 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 Example Dollar Rent A Car’s Systems use Web services to link its online Booking Systems with Dollar 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 Dollar used Microsoft.Net Web Services technology as an intermediary to translate Dollar reservations into Web services Protocols, which are then translated into formats that can be understood by Dollar’s computers. understood Web Services provide Standard way for Dollar’s Computer to ‘’talk’’ other companies Web Information Systems without having to build special links to each other. Information 5. AJAX, MASHUPS, WEB 2.0 , AND WEB-BASED SOFTWARE APPLICATIONS AJAX, 5.1 AJAX (Asynchronous JavaScript And XML) 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 such over again) 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 AJAX, 5.2 MASHUP MASHUP On a smaller scale, entrepreneurs are creating new Software Applications and services based on combining different Online Software Applications called MASHUP. 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 AJAX, 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 replace. 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 needs. 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, and manage independently. 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 Systems etc… 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 on IT. 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 technology. 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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