1. IT INFRASTRUCTURE AND PLATFORMS 1

2.  New World Telecommunications enhanced its efficiency and competitiveness by better selection and management of its hardware and software technology  The company consolidated servers, updated its storage technology, and implemented software that could integrate its key business systems  These investments gave the company a more flexible IT infrastructure for meeting current and future business needs  As a manager, you’ll face many decisions about investments in hardware, software, and other elements of IT infrastructure that are necessary for your firm to conduct its business—and which may even give your firm new capabilities to surge ahead of competitors 2

3.  Information technology (IT) infrastructure is the shared technology resources that provide the platform for the firm’s specific information system applications ◦ Includes investment in hardware, software, and services—such as consulting, education, and training—that are shared across the entire firm or across entire business units in the firm ◦ Example: a firm’s investment in thousands of new desktop computers networked together and linked to the Internet is an infrastructure investment because it serves many groups, goals, and business initiatives ◦ Investments in infrastructure account for between 25 and 35 percent of information technology expenditures in large firms 3

4.  IT infrastructure provides the foundation for ◦ serving customers ◦ working with vendors ◦ managing internal firm business processes (see Figure 1-1)  IT infrastructure defines the capabilities of the firm today and in the near term of, say, three to five years (the length of time it takes to make a significant change in the firm’s IT infrastructure) ◦ For instance, to provide customers with a daily balance of cell phone charges on a Web site, and planning to use this capability as a strategic differentiating feature of the firm (implies certain infrastructure capabilities) 4

5. FIGURE 1-1 The connection between the firm, IT infrastructure, and business capabilities 5

6.  The services a firm is capable of providing to its customers, suppliers, and employees are a direct function of its IT infrastructure  Ideally, this infrastructure should support the firm’s business and information systems strategy 6

7.  Technology cluster: IT infrastructure is like the plumbing or electrical systems in a building: a set of physical devices and software applications that are required to operate the entire enterprise.  Service-based Cluster: focuses on the services provided by all this hardware and software. IT infrastructure is a set of firmwide services budgeted by management and comprising both human and technical capabilities. Services include :  Computing platforms used to provide computing services that connect employees, customers, and suppliers into a coherent digital environment, including large mainframes, desktop and laptop computers, and personal digital assistants (PDAs) and Internet appliances.  Telecommunications services that provide data, voice, and video connectivity to employees, customers, and suppliers. 7

8.  Data management services that store and manage corporate data and provide capabilities for analyzing the data.  Application software services that provide enterprise-wide capabilities such as enterprise resource planning, customer relationship management, supply chain management, and knowledge management systems that are shared by all business units.  Physical facilities management services that develop and manage the physical installations required for computing, telecommunications, and data management services.  IT management services that plan and develop the infrastructure, coordinate with the business units for IT services, manage accounting for the IT expenditure, and provide project management services. 8

9.  IT standards services that provide the firm and its business units with policies that determine which information technology will be used, when, and how.  IT education services that provide training in system use to employees and offer managers training in how to plan for and manage IT investments.  IT research and development services that provide the firm with research on potential future IT projects and investments that could help the firm differentiate itself in the marketplace. 9

10.  Firm infrastructure is organized at three major levels: ( Figure 1-2).  Public firms depend on public IT infrastructure (Internet, public switched telephone network, industry-operated networks, and other IT support facilities such as cable systems and cellular networks)  enterprise Enterprise-wide infrastructure includes services such as e-mail, a central corporate Web site, corporate-wide intranets, and an increasing array of enterprise-wide software applications  business unit Business units also have their own infrastructure that is uniquely suited to their line of business such as specialized production software and systems, customer and vendor systems, and local order entry and other transaction systems. 10

11. Some interesting questions:  What should be handled by enterprise infrastructure and what by local business units?  How much should local business units be charged (and on what basis) for use of enterprise architecture?  Local business units may have unique demands that an enterprise-wide infrastructure may not address.  In multiunit businesses, typical of most large firms, a central corporate infrastructure is also used to manage the entire enterprise, receive reports from business units, and exercise central oversight. 11

12. 12 FIGURE 1-2 Levels of IT infrastructure

13.  IT infrastructure is composed of seven major components. Figure 1-3 illustrates these different but related infrastructure components and the major vendors within each component category.  In the past, technology vendors were often in competition with one another, offering purchasing firms a mixture of incompatible, partial solutions. But increasingly the vendor firms have been forced by large customers to cooperate in strategic partnerships with one another.  IBM cooperates with all the major enterprise software providers, has strategic relationships with system integrators (often accounting firms), and promises to work with whichever database products its client firms wish to use (even though it sells its own database management software called DB2). 13

14. FIGURE 1-3 The IT infrastructure ecosystem 14

15. 15 U.S. firms will spend about $109 billion in 2005 on computer hardware. This component includes client machines (desktop PCs, mobile computing devices such as PDAs and laptops) and server machines. The client machines use primarily Intel or AMD microprocessors. In 2004, 150 million PCs were shipped to U.S. customers, and $30 billion was spent on clients. The server market uses mostly Intel or AMD processors in the form of blade servers in racks, but also includes Sun SPARC microprocessors and IBM PowerPC chips specially designed for server use. Blade servers are ultrathin computers consisting of a circuit board with processors, memory, and network connections that are stored in racks. They take up less space than traditional box-based servers. Secondary storage may be provided by a hard drive in each blade server or by external mass-storage drives.

16. The marketplace for computer hardware is concentrated on four top firms: IBM, HP, Dell, and Sun Microsystems, which produce 90 percent of the machines, and three chip producers, Intel, AMD, and IBM, which account for over 90 percent of the processors sold in 2004. The industry has collectively settled on Intel as the standard processor, with major exceptions in the server market for Unix and Linux machines, which might use SUN or IBM Unix processors. The mainframe market has actually grown steadily over the last decade, although the number of providers has dwindled to one: IBM. IBM has also repurposed its mainframe systems so they can be used as giant servers for massive enterprise networks and corporate Web sites. A single IBM mainframe can run up to 17,000 instances of Linux or Windows server software and is capable of replacing thousands of smaller blade servers.  A blade server is a thin, modular processing device that is intended for a single dedicated application (such as serving Web pages) and that can be easily inserted into a space-saving rack with many similar servers. 16

17. 17

18. 18

19. 19

20.  Operating systems, which manage the resources and activities of the computer, is expected to reach $100 billion in sales in U.S.A (2005).  Client marketplace: 95 % of PCs and 45 % of handheld devices use some form of Microsoft Windows operating system (Windows XP, Windows 2000, or Windows CE).  Server marketplace: more than 85 % of the corporate servers in the U.S use some form of the Unix operating system or Linux(an inexpensive and robust open-source relative of Unix). 20

21.  Although Microsoft Windows Server 2003 is capable of providing enterprise-wide operating system and network services, it is generally not used when there are more than 3,000 client computers in a network.  Unix and Linux constitute the backbone of corporate infrastructure throughout much of the world because they are scalable(expandable), reliable, and much less expensive than mainframe operating systems. They can also run on many different types of processors. The major providers of Unix operating systems are IBM, HP, and Sun, each with slightly different and partially incompatible versions. 21

22.  Windows continues to dominate the client marketplace but currently, many corporations explore Linux as a low-cost desktop operating system provided by commercial vendors such as RedHat Linux and Linux-based desktop productivity suites such as Sun’s StarOffice.  Linux is available in free versions downloadable from the Internet as open-source software ( software created and updated by a worldwide community of programmers and available for free). 22

23.  The largest providers of enterprise application software are SAP Oracle PeopleSoft ( In Dec2004 Oracle purchased PeopleSoft )  SAP and PeopleSoft provide software that works with any hardware or operating system;  Oracle applications run only on Oracle databases (although they are compatible with all operating systems and hardware platforms).  Middleware: software supplied by vendors such as BEA for achieving firmwide integration by linking the firm’s existing application systems.  Microsoft focus on small and medium-sized businesses ( most have not yet developed enterprise applications ). 23

24.  Enterprise database management software: responsible for organizing and managing the firm’s data so that it can be efficiently accessed and used  The leading database software providers are IBM (DB2) Oracle Microsoft (SQL Server) Sybase (Adaptive Server Enterprise) MySQL (a Linux open-source relational database product; supported by HP and others to prevent Microsoft from monopolizing the small and medium-sized firm database market with its SQL Server product). 24

25.  The physical data storage market is dominated by EMC Corporation for large-scale systems Seagate, Maxtor, and Western Digital (PC hard disk manufacturers).  Storage area networks (SANs): large firms use network- based storage technologies used by large networks. They 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. 25

26.  Networking services: consist mainly of telecommunications and telephone company charges for voice lines and Internet access  Windows Server 2003, Windows 2000 Server, and Windows NT are used as local area network operating systems, followed by Novell, Linux, and Unix.  Large enterprise wide area networks use some variant of Unix. Nearly all local area networks, as well as wide area enterprise networks, use the TCP/IP protocol suite as a standard  The leading networking hardware providers are Cisco Lucent Nortel Juniper Networks 26

27.  Telecommunications platforms are provided by telecommunications/telephone services companies that offer voice and data connectivity, wide area networking, and Internet access.  Leading telecommunications service vendors include MCI AT&T regional telephone companies such as Verizon  The market is exploding with new providers of cellular wireless, Wi-Fi, and Internet telephone services(VoIP). 27

28.  Internet platforms overlap with, and must relate to, the firm’s general networking infrastructure and hardware and software platforms.  Internet platforms consist of hardware, software, and management services to support a firm’s Web site, including Web hosting services, and for intranets and extranets.  Web hosting service: maintains a large Web server, or series of servers, and provides fee-paying subscribers with space to maintain their Web sites  server consolidation: reducing the number of server computers by increasing the size and power of each. 28

29.  leading Internet hardware server vendors Dell HP/Compaq IBM  The major Web software application development tools and suites are supplied by Microsoft ( FrontPage and the Microsoft.NET family of development tools used to create Web sites using Active Server Pages (ASP) for dynamic content ) Sun ( Sun’s Java is the most widely used tool for developing interactive Web applications on both the server and client sides ) Independent software developers, including Macromedia ( Flash ), media software ( Real Media ), and text tools ( Adobe Acrobat ). 29

30.  Even large firms do not have the staff, the skills, the budget, or the necessary experience to implement all its own I.T infrastructure  Implementing new IT Infrastructure requires significant changes in business processes and procedures, training and education, and software integration.  Software integration: ensuring the new infrastructure works with the firm’s older (legacy systems) and ensuring the new elements of the infrastructure work with one another  Legacy systems : older transaction processing systems created for mainframe computers that continue to be used to avoid the high cost of replacing or redesigning them  Replacing these systems is cost prohibitive and generally not necessary if these older systems can be integrated into a contemporary infrastructure 30

31.  Companies in the past relied on their accounting firms to provide consulting and system integration services (because they understood a company’s business processes & had the expertise to change its software)  In the U.S. accounting firms have been prohibited by law from providing such services and as a result have split off consulting services into separate entities, such as Accenture (formerly part of Arthur Andersen) KPMG Consulting (split off from the KPMG accounting firm and now part of IBM). 31

32.  Consulting and system integration can greatly expand the revenues of computer hardware and enterprise software vendors.  IBM’s consulting services revenues now equal its HW revenue  Enterprise software firms:(Oracle and SAP)  Consulting, integration, and maintenance revenue exceed the revenues from software sales 32

33.  The cost of the IT infrastructure has expanded as a percentage of corporate revenues and budgets ◦ Reasons: the cost of computing services (consulting, systems integration) has risen, the cost of software remains high, and the intensity of computing and communicating has increased as other costs have declined.  Example: Employees now use much more sophisticated applications, that require more powerful & expensive hardware of many different types ( laptop, desktop, handheld, and tablet computers ). 33

34. 34

35. 35

36. 36

37. Challenges Firms need to face: Integrate information stored in different applications, on different platforms ( telephone, legacy systems, intranet, Internet sites, desktop, and mobile devices ). Build flexible infrastructure that can withstand huge increases in peak loads and routine assaults from hackers and viruses. Increase their service levels to meet increasing customer demands 37

38.  The most dominant trend in hardware platforms is the convergence of telecommunications and computing platforms ( computing takes place over the network ). This convergence can be seen at several levels: At the client level: Communication devices (cell phones are taking on functions of handheld computers) Handheld personal digital assistants (PDAs) are taking on cell phone functions. Example: The Palm Treo 600 digital handheld combines phone, e-mail, camera, Web access and handheld computer in one device.  The convergence of computing and communications technologies has turned cell phones into mobile computing platforms. 38

39. At the server and network level the growing success of Internet telephone systems (now the fastest-growing type of telephone service) demonstrates how separate telecommunications and computing platforms are converging toward a single network —the Internet. Computing over high-capacity networks: The network is becoming the source of computing power, enabling business firms to expand their computing power greatly at very little cost. 39

40. There are four major themes in contemporary software platform evolution:  Linux and open-source software  Java  Web services and service-oriented architecture  Software outsourcing 40

41.  Open-source software :Software produced by a community of several hundred thousand programmers around the world.  Is free and can be modified by users. Works derived from the original code must also be free and the software can be redistributed by the user without additional licensing.  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 41

42.  Open-source software is based on the premise that it is superior to commercially produced proprietary software because thousands of programmers working for no pay can read, perfect, distribute, and modify the source code much faster, and with more reliable results, than small teams of programmers working for a single software company. 42

43.  Contributors to open-source software receive respect, prestige, and access to a network of knowledgeable programmers ( who in turn can be tapped for solutions, or even employment)  Open-source movement has been evolving for more than 30 years and has demonstrated that it can produce commercially acceptable, high-quality software  Open-source software includes operating systems, office suites, browsers such as Mozilla’s Firefox, and games 43

44.  Several large software companies are converting some of their commercial programs to open source ( IBM, is handing over its Java-based database program called Cloudscape to the Apache Software Foundation, an open-source group. Novell is investing heavily in open-source companies that sell versions of open- source server software ) 44

45. 45 TABLE 1-5 Proprietary and Open-Source Software Pricing Comparison

46.  Java : an operating system–independent, processor- independent, object-oriented programming language that has become the leading interactive programming environment for the Web. If an object moves on the Web or takes input from the user, a Java applet is likely behind it.  In computing, an applet is any small application that performs one specific task; sometimes running within the context of a larger program, perhaps as a plug-incomputingapplicationprogramplug-in 46

47.  A Java applet is an applet delivered to the users in the form of Java bytecode (form of instructions that the JVM executes). Java applets can run in a Web browser using a Java Virtual Machine (JVM), or in Sun's AppletViewer, a stand-alone tool for testing applets. Java applets were introduced in the first version of the Java language in 1995. Java applets are usually written in the Java programming language but they can also be written in other languages that compile to Java bytecode such as Jython, Ruby, or Eiffel.appletJava bytecode Web browserJava Virtual MachineSunAppletViewerJava programming languageJython RubyEiffel 47

48.  Applets are used to provide interactive features to web applications that cannot be provided by HTML alone. They can capture mouse input (like rotating 3D object) and also have controls like buttons or check boxes. In response to the user action an applet can change the provided graphic content. This makes applets well suitable for visualization and teaching. There are online applet collections for studying various subjects, from physics to heart physiology. Applets are also used to create online game collections that allow players to compete against live opponents in real-time. HTML buttonscheck boxesgame collections 48

49.  Java was created by James Gosling & the Green Team at Sun Microsystems in 1992 as a programming environment to support interactive cable television content delivery.  Widespread use of Java occurred in 1995 when large numbers of people started using the World Wide Web and Internet. Nearly all Web browsers come with a Java platform built in. 49

50.  More recently, the Java platform has migrated into cellular phones, automobiles, music players, game machines, and finally, into cable television systems serving interactive content and pay-per-view services.  Java software is designed to run on any computer or computing device, regardless of the specific microprocessor or operating system the device uses. 50

51.  For each of the computing environments in which Java is used, Sun has created a Java Virtual Machine that interprets Java programming code for that machine (the code is written once and can be used on any machine for which there exists a Java Virtual Machine).  Java is useful in network environments such as the Internet where it is used to create applets  Applets: miniature programs that are designed to reside on centralized network servers. The network delivers to client computers only the applets required for a specific function. 51

52.  Because Java applets reside on a network, the user does not need to maintain large software programs or data files on his desktop machine.  Java is 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. 52

53.  Web browser : an easy-to-use software tool with a graphical user interface for displaying Web pages and for accessing the Web and other Internet resources  At the enterprise level, Java is being used for more complex e- commerce and e-business applications that require communication with an organization’s back-end transaction processing systems. ◦ Back-end: The activities that support online order fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery. 53

54.  Problem: firms need to integrate existing legacy software applications with newer Web-based applications into a coherent single system that can be rationally managed.  Solution: replace isolated systems that cannot communicate with enterprise applications for customer relationship management, supply chain management, knowledge management, and enterprise systems, which integrate multiple business processes. 54

55.  But not all firms can jettison (reject) all of their legacy systems to convert to enterprise-wide platforms because they:  Are essential to daily operations  Are very risky to change, but they can become more useful if their information and business logic can be integrated with other applications. 55

56. Ways to integrate existing systems:  Using special software called middleware to create an interface or bridge between two different systems. Middleware: software that connects two otherwise separate applications, enabling them to communicate with each other and to exchange data.  Firms may write their own software to connect one application to another  Purchase enterprise application integration (EAI) software packages to connect disparate applications or application clusters. 56

57. EAI: software that enables multiple systems to exchange data through a single software hub rather than building countless custom software interfaces to link each system (WebMethods, Tibco, CrossWorlds, SeeBeyond, BEA, and Vitria are leading enterprise application software vendors) 57

58.  EAI advantages: creates a common platform through which all applications can freely communicate with each other. requires much less programming than traditional point-to-point integration 58

59. 59 FIGURE 1-4 Enterprise application integration (EAI) software versus traditional integration

60.  Enterprise application integration software tools are product specific (they can work only with certain pieces of application software and operating systems) ◦ For example: one EAI tool to connect a specific piece of sales order entry software to manufacturing, shipping, and billing applications might not work with another vendor’s order entry software.  Web services provide a standardized alternative for dealing with integration.  Web services: a set of loosely coupled software components that exchange information with each other using standard Web communication standards and languages. 60

61.  They can exchange information between two different systems regardless of the operating systems or programming languages on which the systems are based.  They can be used to build open standard Web-based applications linking systems of two different organizations, and they can also be used to create applications that link disparate systems within a single company.  Web services are not tied to any one operating system or programming language, and different applications can use them to communicate with each other in a standard way without time-consuming custom coding. 61

62.  The foundation technology for Web services is XML  XML: ( Extensible Markup Language ) a more powerful and flexible markup language than hypertext markup language (HTML) for Web pages. ◦ HTML: ( Hypertext markup language ) a page description language for specifying how text, graphics, video, and sound are placed on a Web page document.  Whereas HTML is limited to describing how data should be presented in the form of Web pages, XML can perform presentation, communication, and storage of data. 62

63. 63 In XML, a number is not simply a number; the XML tag specifies whether the number represents a price, a date, or a ZIP code. Table 1-6 sample XML statements.

64.  Tagging selected elements of the content of documents for their meanings, XML makes it possible for computers to manipulate and interpret their data automatically and perform operations on the data without human intervention.  Web browsers and computer programs, such as order processing or enterprise resource planning (ERP) software, can follow programmed rules for applying and displaying the data.  XML provides a standard format for data exchange, enabling Web services to pass data from one process to another. 64

65.  Standard Web protocols: SOAP (Simple Object Access Protocol): a set of rules for structuring messages that enables applications to pass data and instructions to one another. WSDL(Web Services Description Language): a common framework for describing the tasks performed by a Web service and the 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 listed in a directory of Web services so that it can be easily located. Using these protocols, a software application can connect freely to other applications without custom programming for each different application with which it wants to communicate. Everyone shares the same standards. 65

66.  Service-oriented architecture (SOA): set of self-contained services that communicate with each other to create a working software application  Business tasks are accomplished by executing a series of these services. Software developers reuse these services in other combinations to assemble other applications as needed. 66

67.  For example: (Dollar Rent A Car & Southwest Airlines) ◦ Dollar used Microsoft.NET Web services technology as an intermediary so a person booking a flight on SouthwestAir.com can reserve a car from Dollar without leaving the airline’s Web site. Reservations from Southwest are translated into Web services protocols, which are then translated into formats that can be understood by Dollar’s computers. 67

68. 68 How Dollar Rent a Car uses Web services Standard intermediate layer of software to “talk” to other companies’ IS By using this set of Web services, it can link to other companies ISs without having to build a separate link to each firm’s systems

69.  Major software vendors such as IBM, Microsoft, Sun, and HP provide tools and entire platforms for building and integrating software applications using Web services  FedEx publish the Web services they offer to customers, describing each service using Web Service Description Language (WSDL). FedEx customers, such as JCPenney, can then incorporate these Web services into their own systems such as a Web site 69

70.  Most business firms continue to operate their legacy systems that continue to meet a business need and that would be extremely costly to replace. But they will purchase most of their new software applications from external sources.  Nearly 25 % of software in U.S. originate outside the firm, either from enterprise software vendors selling firmwide applications or individual application service providers selling software modules.  Three external sources for software: 1. software packages from a commercial software vendor 2. software services from an application service provider(ASP) 3. outsourcing custom application development to an outside software firm 70

71. 71 Figure 1-15 rapid growth in external sources of software

72.  Software package: 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.  Enterprise application software vendors ( SAP, PeopleSoft, 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 72

73.  Somewhat like the “software in a box” purchased with a personal computer, 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 developed it themselves  These systems are so complex, and require so much experience, that very few corporations have the expertise required to develop these packages. 73

74.  A second external source of software is online application service providers (ASPs). Application service provider (ASP) is a business that delivers and manages applications and computer services from remote computer centers 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.  ASP `s solution combines package software applications, related hardware, system software, network, and other infrastructure services that the customer otherwise would have to purchase, integrate, and manage independently 74

75.  The ASP customer interacts with a single entity instead of an array of technologies and service vendors.  Time-sharing services of the 1970s, which ran applications such as payroll on their computers for other companies, were an earlier version of this application hosting. But today’s ASPs run a wider array of applications than these earlier services and deliver many of these software services over the Web. 75

76.  Large & medium-sized businesses are using ASPs for enterprise systems sales force automation financial management  Small businesses are using them for invoicing tax calculations electronic calendars accounting  Companies find it much easier to rent software from the ASP firm and avoid the expense and difficulty of installing, operating, and maintaining the hardware and software for complex systems, such as enterprise resource planning (ERP) systems 76

77.  Outsourcing: the firm contracts custom software development or maintenance of existing legacy programs to outside firms.  Dow Chemical hired IBM for $1.1 billion to create an integrated communication system based on Internet standards to handle text, video, and voice communications for more than 50,000 Dow employees in 63 countries. The contract extends to other infrastructure management services, such as LAN, e-mail, and application support.  Up until recently, this type of software development involved lower-level maintenance, data entry, and call center operations, but with the growing sophistication and experience of offshore firms, particularly in India, more and more new-program development is taking place offshore. 77