Infrastructure Issues What are the issues in acquiring and managing the IT infrastructure

CIO, July 15, 1998

Critical Questions for IT How does IT influence the customer experience? Does IT enable or retard growth? Does IT favorably affect productivity? Does IT advance organizational innovation and learning? How well is IS run?

IT Goals zEarlyCost Savings and Control zMidAlignment with Organization Goals zCurrentIntegration Into the Business

Three Rules to Remember zDon't commit to any technology until after it has crossed the chasm. zUse normal rules of engagement when dealing with enabling technology kings and princes and application companies of any size. zWherever there is an enabling- technology gorilla, get on that bandwagon and no other.

Developing Architecture zObjectives: Define business functions zBusiness: Analyze service level expectations zIT: Determine requirements zTechnology: Specifications and design zDetailed Requirements: Product selection zSystem: Install new system components

Objectives Business Objectives Increase Revenue Reduce Cost Identify those business functions that will use the infrastructure and how IT will promote their business objectives. In business terms. Technical excellence is not enough!

Business Expectations Business Expectations Suggested measures At the highest level, an IT organization should be tracking a number of key ratios and indicators. [These should be reported on in terms of current value, trends, and rate of change]

Service Level Objectives Typically service levels are negotiated with users or management and carefully tracked.

Total Cost of Ownership

TCO A standardized environment costs less to install and maintain than a heterogeneous one. Electronic software distribution ensures consistent software installation and eliminates the need to physically install software on each computer. Use remote systems management tools to move software and data to and from laptops,as well as to store backup images of users' hard disks. Use automated technical support tools to reduce support personnel staff.

TCO Consider replacing personal computers with "thin clients" such as network computers. Client/server technology offers another take on TCO, without the need to invest in network computers. Use automated network management and monitoring systems to reduce the infrastructure costs of WANs.

IT IT Requirements zStandards zLogical Topology Centralization, distribution, separation and duplication of the appropriate components zManagement Strategy Primary and secondary control points, definition of responsibilities zSecurity Policies and Strategies

Network Architecture: Universal Goals zInteroperability: work with other users zScalability: ability to expand zFlexibility: ability to add or move users zSecurity: keep outsiders out zCentral Control: manage from one place

Detailed Requirements zLAN technologies and boundaries zInternetworking technologies zWAN access strategies zServer operating systems and middleware zProduct restrictions and capabilities

System System Acquisition and Installation zAcquisition Strategy Make or buy zInstallation Direct, phased, pilot, parallel zTraining and Evaluation Centralized or distributed Mandatory or voluntary

Strategic Partnerships Outsourcing, etc.

Installation zAcquisition yRFP and RFQ xbenchmarks and penalties yMaintenance zService yPreventive and restorative maintenance yOutsourcing

Outsourcing of IT Functions zTraditional Outsourcing: removing IT from a function for a long term (10 years) zTransitional Outsourcing: using outside services to move to a new environment over a short term (1-3 years) zProduct Acquisition: purchasing functionality rather than building it

Outsourcing Difficulties zContracts are structured for long periods (10 years is normal) zEarly benefits are clear for the customer; late benefits to the outsource supplier (When the benefits start building for the outsourcer, the customer starts wanting change) zFew outsourcers large enough for big projects (EDS, CSC, IBM, AT&T) zTechnology evolution changes strategic IT relevance

Outsourcing Features More than half of all firms are considering some sort of outsourcing activity zAcceptance of strategic alliances Win-win alliances in many business areas zIT’s changing environment Focus on networking and integration places extraordinary pressures on legacy and state of the art systems management

Outsourcing Drivers zManagement concern for cost and quality zBreakdown in IT performance zSupplier pressures zSimplified Company management agenda zFinancial Factors zCorporate culture

What Happens zVendor specialists zCurrent IT organization zBasic services

Request for Proposals OBJECTIVE: OPEN, FAIR COMPETITION WITH UNDERSTOOD CRITERIA Qualified vendors should be offered an opportunity to bid.

Intelligence zIn-house zVendors zConsultants zLiterature zSimilar installations zReview services (Auerbach, DataPro)

RFP Process zFirst Pass: Eliminate unacceptable alternatives; reduce the choices to 2-4 alternatives. zSecond Pass: Select the final product.

Need to publish: zWritten requirements zFormal presentation Don't let vendors run the selection zEvaluation standards

RFP Contents zIntroduction zInstructions Objectives Contacts Timetable zSystem Requirements Mandatory Requirements Desirable Features zEvaluation Method

Evaluation Criteria zFeatures Table Hard Dollar Evaluations Soft Dollar Evaluations zDelivery Date zAcceptance Criteria & Penalties zMandatory Features  Desirable features

Desirable Features zModularity zCompatibility zReliability zMaintainability  Vendor Support

Acquisition Strategies zRent: Short term, complete vendor support, high cost zLease: Intermediate term, local support, user specified equipment zPurchase: Cheaper, total user responsibility zContract: Full vendor responsibility, contract sensitive

Validation Test the proposed system to assure that it does what you want: yModeling ySimulation yBenchmarking yWork sample analysis

Managing Product Contracts zYou get what you negotiate zInstallation is expensive y3%-15% of the installation cost zOngoing Support zLease Conditions yBy user yBy device ySite zCustomization

Managing Service Contracts zIt depends on what you want yCommodity xService level agreements xPenalties yRelationship xDispute resolution zContracts and incentives zExit criteria

Copyright 1999 Doug Adams I thought it might be fun to link our websites.