1 module 9 : managing diverse it infrastructure matakuliah: j0422 / manajemen e-corporation tahun:...

1

MODULE 9 :Managing Diverse IT Infrastructure

Matakuliah : J0422 / Manajemen E-Corporation

Tahun : 2005

Versi : 1 / 2

2

Learning Outcomes

In this chapter, we will study: The benefits of increments of outsourcing. Choose hosting models for IT infrastructure How to select Service Provider Partners Cost and benefit analysis for IT assets and platforms

provides a basis for evaluating a company’s current IT services against new service alternatives.

Case Study : Ford Company : Supply Chain Strategy.

3

Outline Topic

New Services Models. Managing Risk through Incremental Outsourcing. Managing Relationships with Service Providers. Managing Legacies. Managing IT Infrastructure Assets. Case Study : Ford Motor Company (Supply Chain

Strategy).

4

Content

Before emergence of the commercial Internet in 1990s, companies accomplished much now achieved through public Internetworks by using proprietary technologies installed and managed inside each firm. This approach was expensive and unsatisfactory.

To reach business partners and customers, every company had to develop its own communication infrastructure, a process

that led to massive duplication in infrastructure investment. Often the multiplicity of technologies confused and confounded the

partners and customers businesses wanted to reach.

The technologies did not interoperate well. Many companies maintained complex software programs that had no purpose except to serve as a bridge between other incompatible systems.

Reliance on proprietary technologies meant that companies were locked in to specific vendor technologies. Once locked in,

firms had little bargaining power and were at the mercy of the margin- maximizing inclinations of their technology providers.

5

Managing Diverse IT Infrastructure

The new approaches compare favorably and in many cases enhance previous approaches in numerous ways. Today, for example: Companies can share a communication infrastructure common to

all business partners and customers. Customers and business partners can interact via common interfaces This seamless

interaction dramatically reduces complexity and confusion.

Because of the open Transmission Control Protocol/Internet Protocol (TCP/IP) standard, communication technologies

interoperate very well. Software that bridges systems is simple, standardized, and inexpensive. In some cases, acquired for free.

Companies are much less locked in to specific vendor technologies, a fact that creates more competition among

vendors. More competition leads to lower prices and better- performing technology.

At last, companies can combine technologies from numerous vendors and expect them to interconnect seamlessly

6

New Service Models

Since the emergence of PC and client-server computing, end-user software has been designed to execute on PCs or on servers that are housed locally.

Saved work--documents and other data--usually remains on a PCs hard drive or on storage devices connected to a nearby server or mainframe. In this scenario, when the software malfunctions, the user contacts his or her IT department, which owns and operates most, if not all of the IT infrastructure.

With advent of reliable, high-capacity networks, however, local software execution no longer is the only alternative, nor is it necessarily the best alternative.

Increasingly, software is designed to operate in geographically distant facilities that belong to specialized service providers, each of which deliver software services across the Internet to many different customers.

7

New Service Models

Even if actual software applications are not acquired externally, other increments of outsourcing may make sense.

The benefits of increments of outsourcing include the following:

• Managing the shortage of skilled IT workers

• Reduced time to market

• The shift to 24 x 7 operations

• Favorable cash flow profiles

• Cost reduction in IT service chains

• Making applications globally accessible

8

Managing Risk through Incremental Outsourcing

Increments of outsourcing offers new and attractive choices to managers seeking to improve IT infrastructure. In the past, managers often felt they faced two equally unpleasant choices: Do nothing and risk slipping behind competitors Wholesale replacement of major components of

computing infrastructure, which risks huge cost overruns and potential business disruptions as consequences of an

implementation failure. Decisions to replace wholesale legacy networks with TCP/IP-

based networks have run this second risk as have decisions about whether to implement enterprise systems.

With the TCP/IP networks installed today, however, managers have intermediate options that lie between all-or-nothing choices.

9


An Incremental Outsourcing Example: Hosting Outsource hosting of a company’s systems involves

deciding where they should be located physically. The Hosting Service Provider Industry

Proponents of service provider-based infrastructures describe a world in which companies routinely obtain a majority of the IT functionality needed for day-to-day business from over-the-Net service chains.

10

Incremental Service Levels in Hosting Hosting models can be categorized along service level

lines as:• Co-location hosting• Shared hosting• Dedicated hosting• Simple dedicated hosting• Complex dedicated hosting• Custom dedicated hosting


11

Managing Relationships with Service Providers When they acquire IT services externally, companies inevitably find

themselves engaged in relationships with a growing number of service provides.

Services are only as good as the weakest link in the service provider chain. Choosing reliable services providers and managing strong vendor relationships therefore are critical skills for an IT manager.

Selecting Service Provider Partners The most critical step in assembling an IT service chain is the

selection of providers. The most common process for selecting service providers involves

writing a “request for proposal” (RFP) and submitting it to a set of apparently qualified vendors.


12


Selecting Service Provider Partners Typically RFPs request information in the following categories:

• Descriptive information– How it describes its business reveals much

about a service provider’s priorities and future direction.

• Financial information– A service provider’s financial strength is a critical factor

in evaluating the continuity of service and service quality a vendor is likely to provide.

• Proposed plan for meeting service requirements– How the provider offers to meet the requirements laid out in the

RFP indicates whether it truly understand the requirements.

13


Selecting Service Provider Partners Typically RFPs request information in the following categories:

• Mitigation of critical risks– A good RFP asks specific questions about potential service

risks. Availability and security are two areas for customers to be sure they understand a service provider’s approach.

• Service guarantees.– A service provider’s guarantees (levels of performance it is

willing to back with penalty clauses in a contract) are important signals of the real level of confidence vendor managers have in their services.

• Pricing – Pricing usually includes one-time and variable components and

may be structured in other ways as well.

14

Relationships with service provider partners require ongoing attention.

The most formidable obstacles are sometimes not technical but “political.”

A service-level agreement (SLA) is the prevalent contractual tool used to align incentives in relationships with service providers.


15

Managing Legacies

The difficulties that arise from legacy systems can be categorized as

• Technology problems Sometimes constraints embedded in legacy systems result from inherent incompatibilities in older technologies.

• Residual process complexity Some difficulties with legacy systems arise because the systems address problems that no longer exist.

16

Managing Legacies

The difficulties that arise from legacy systems (Cont’d)• Local Adaptation

Many legacy systems were developed for very focused business purposes within functional hierarchies.

• Non standard data definitions Throughout most companies, business units and divisions have used different conventions for important data elements.

17

Managing IT Infrastructure Assets

In the mainframe era, keeping track of the assets that made up a company’s IT infrastructure was relatively easy. The majority consisted of a small number of large mainframe machines in the corporate date center.

After emergency of PCs, clients and servers, the Web, portable devices, and distributed network infrastructure, a company’s investments in IT became much more diffuse.

Computing assets were scattered in a large number of small machines located in different buildings. Some moved around with their users and left the company’s premises on a regular basis.

18


The variety of asset configurations in modern IT infrastructures makes certain business questions hard to answer: How are IT investments deployed across business lines/units? How are IT assets being used? Are they being used efficiently? Are they deployed to maximum business advantage? How can we adjust their deployment to create more value?

One approach to this problem is called total cost of ownership (TCO) analysis.

IT services are analyzed in terms of costs and benefits associated with service delivery to each client device.

19


For example, the total cost of delivering office productivity services to a PC desktop within an enterprise might be expressed as “$250 per client per month.”

Cost and benefit analysis for IT assets and platforms provides a basis for evaluating a company’s current IT services against new service alternatives. Outsourcing vendors often are asked to bid on a per platform basis. These prices can be compared to study results to evaluate a company’s options and identify incremental opportunities for service deliver improvement.

20

Ford Motor Company: Supply Chain Strategy

Case Study : Form Motor Company : Supply Chain Strategy

21


What are the roadblocks that make the direct model

difficult to implement at Ford What historical “legacies” affect Ford’s ability to move to a

BTO model• Ford is 100 yrs old Founded 1903, Dell on the other hand

was founded 15 years ago

• Product variety– Necessitates the management of large number of individual

component inventories

– Production capacity for individual components get set long in advance and cannot be changed quickly

22


What historical “legacies” affect Ford’s ability to move to

a BTO model Process Complexity

• A large number of suppliers• 3 tiers of suppliers• Business was usually over the phone and fax• Ford a $150billion company enjoy a tremendous leverage

over its suppliers– Annual component price decrease and open book

23


What historical “legacies” affect Ford’s ability to move to a BTO model Powerful independent dealer network

Unionized labor force

Incompatible systems• Ford credit – DEC• Parts and service – IBM• Suppliers and dealers – Variety of systems

24


What practical challenges must Ford address as it tries to establish Internet linkages with its supply base Difficulties in establishing B2B linkages Lack of technology and technological sophistication that

prevail in the supply chain, especially at lower tiers.

25


How should Ford use Internet technologies to interact with suppliers

To address this problem Ford must think about its relationships not only with suppliers but also with dealers and customers.

As supply chain systems staff members study the Dell model in particular, they come to appreciate that “virtual integration” must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that had long been considered separately within the Ford hierarchy.

The question is in fact explosive in its implications, because it inevitably leads to fundamental questions about the way Ford has historically operated internally and how it has interacted with important partner constituencies (including dealers)

26


Recommendation on moving forward One group are enthusiastic about the technology and think

that the only appropriate way to answer the question is to consider, evaluate and recommend radical changes to Ford overall business model; this group considers Dell a serious model for Ford’s business

Another group is more cautious and believes that the fundamental differences between Dell’s industry and Ford’s industry necessitate significant differences in business models.

27


Recommendation on moving forward

What is your own recommendation?

28

Chapter Summary

The following questions should help a company assess the opportunities and the risks: What services within our IT infrastructure are candidates

for incremental outsourcing? Where are there opportunities to convert large up-front IT

investments into spread-over-time subscription services?

Are our service delivery partners technically and financially capable enough to support our evolving IT service needs?

Do we have well-defined processes for partner selection to ensure that we will continue to have highly capable partners?

29

Chapter Summary

Do we have detailed service-level agreements in place with our service providers?

Have we made sure the SLAs in our service deliver chains interlock and that incentives are aligned up and down the chain?

Do we have systems in place for virtually integrating with service delivery partners?

Have we specified contract terms with service providers that preserve our options for incrementally improving our infrastructure?

What our short-term and long-term strategies for dealing with legacy system issues?

What systems should we replace, and when should we replace them?

1 module 9 : managing diverse it infrastructure matakuliah: j0422 / manajemen e-corporation tahun:...

Documents