Both of these concepts explain developments that have taken place in computer processing, memory chips, storage devices, telecommunications and networking hardware and software, and software design that have exponentially increased computing power while exponentially reducing costs.
Network economics: Metcalfe’s Law helps explain the mushrooming use of computers by showing that a network’s value to participants grows exponentially as the network takes on more members. As the number of members in a network grows linearly, the value of the entire system grows exponentially and theoretically continues to grow forever as members increase.
Declining communication costs: Rapid decline in costs of communication and the exponential growth in the size of the Internet is a driving force that affects the IT infrastructure. As communication costs fall toward a very small number and approach zero, utilization of communication and computing facilities explodes.
Technology standards: Growing agreement in the technology industry to use computing and communication standards. Technology standards unleash powerful economies of scale and result in price declines as manufacturers focus on the products built to a single standard. Without economies of scale, computing of any sort would be far more expensive than is currently the case.
3. What are the current trends in computer hardware platforms?
Describe the evolving mobile platform, grid computing, and cloud computing.
Mobile platform: more and more business computing is moving from PCs and desktop machines to mobile devices like cell phones and smartphones. Data transmissions, Web surfing, e-mail and instant messaging, digital content displays, and data exchanges with internal corporate systems are all available through a mobile digital platform. Netbooks, small low-cost lightweight subnotebooks that are optimized for wireless communication and Internet access, are included.
Grid computing: connects geographically remote computers into a single network to create a “virtual supercomputer” by combining the computational power of all computers on the grid.
Cloud computing: a model of computing where firms and individuals obtain computing power and software applications over the Internet, rather than purchasing their own hardware and software. Data are stored on powerful servers in massive data centers, and can be accessed by anyone with an Internet connection and standard Web browser.
Explain how businesses can benefit from autonomic computing, virtualization, and multicore processors.
Autonomic computing
Benefits of autonomic computing include systems that automatically do the following:
Configure themselves
Optimize and tune themselves
Heal themselves when broken
Protect themselves from outside intruders and self-destruction
Reduces maintenance costs
Reduces downtime from system crashes
Virtualization
Benefits of server virtualization include:
Run more than one operating system at the same time on a single machine.
Increase server utilization rates to 70 percent or higher.
Reduce hardware expenditures. Higher utilization rates translate into fewer computers required to process the same amount of work.
Mask server resources from server users.
Reduce power expenditures.
Run legacy applications on older versions of an operating system on the same server as newer applications.
Facilitates centralization of hardware administration.
Multicore processors
Benefits of multi-core processors:
Cost savings by reducing power requirements and hardware sprawl
Less costly to maintain as fewer systems need to be monitored.
Performance and productivity benefits beyond the capabilities of today’s single-core processors.
Able to handle the exponential growth of digital data and the globalization of the Internet.
Able to meet the demands of sophisticated software applications under development.
Run applications more efficiently than single-core processors – giving users the ability to keep working even while running the most processor intensive task in the background.
Able to increase performance in areas such as data mining, mathematical analysis, and Web serving.
4. What are the current trends in software platforms?
Define and describe open source software and Linux and explain their business benefits.
Open-source software provides all computer users with free access to the program code so they can modify the code, fix errors in it, or to make improvements. Open-source software is not owned by any company or individual. A global network of programmers and users manage and modify the software. By definition, open-source software is not restricted to any specific operating system or hardware technology. Several large software companies are converting some of their commercial programs to open source.
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Linux is the most well-known open-source software. It’s a UNIX-like operating system that can be downloaded from the Internet, free of charge, or purchased for a small fee from companies that provide additional tools for the software. It is reliable, compactly designed, and capable of running on many different hardware platforms, including servers, handheld computers, and consumer electronics. Linux has become popular during the past few years as a robust low-cost alternative to UNIX and the Windows operating system.
Thousands of open-source programs are available from hundreds of Web sites. Businesses can choose from a range of open-source software including operating systems, office suites, Web browsers, and games. Open-source software allows businesses to reduce the total cost of ownership. It provides more robust software that’s often more secure than proprietary software.
Define and describe Web services and the role played by XML.
Web services offer a standardized alternative for dealing with integration across various computer platforms. Web services are loosely coupled software components based on XML and open Web standards that are not product specific and can work with any application software and operating system. They can be used as components of Web-based applications linking the systems of two different organizations or to link disparate systems of a single company. Web services are not tied to a particular operating system or programming language. Different applications can use them to communicate with each other in a standard way without time-consuming custom coding.
XML provides a standard format for data exchange, enabling Web services to pass data from one process to another
Businesses use Web services to tie their Web sites with external Web sites creating an apparently seamless experience for users. The benefit derives from not having to re-create applications for each business partner or specific functions within a single company.
Define and describe software mashups and widgets.
Mashups are new software applications and services based on combining different online software applications using high-speed data networks, universal communication standards, and open-source code. Entrepreneurs are able to create new software applications and services based on combining different online software applications. The idea is to take different sources and produce a new work that is “greater than” the sum of its parts. 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.
Widgets are small software programs that can be added to Web pages or placed on the desktop to provide additional functionality. Web widgets run inside a Web page or a blog. Desktop widgets integrate content from an external source into the user’s desktop to provide services such as a calculator, dictionary, or display current weather conditions.
Businesses benefit most from these new tools and trends by not having to re-invent the wheel. Widgets have already been developed by someone else and a business can use them for its own purposes. Mashups let a business combine previously developed Web applications into new ones with new purposes. They don’t have to re-invent the previous applications from scratch-merely use them in the new processes.
Name and describe the three external sources for software.
Software packages from a commercial software vendor: prewritten commercially available set of software programs that eliminates the need for a firm to write its own software program for certain functions, such as payroll processing or order handling.
Software-as-a-service: 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 a per-transaction basis. The business must carefully assess the costs and benefits of the service, weighing all people, organizational, and technology issues. It must ensure it can integrate the software with its existing systems and deliver a level of service and performance that is acceptable for the business.
Outsourcing custom application development: an organization contracts its custom software development or maintenance of existing legacy programs to outside firms, frequently firms that operate offshore in low-wage areas of the world An outsourcer often has the technical and management skills to do the job better, faster, and more efficiently. Even though it’s often cheaper to outsource the maintenance of an IT infrastructure and the development of new systems to external vendors, a business must weight the pros and cons carefully. Service level agreements are formal contracts between customers and service providers that define the specific responsibilities of the service provider and the level of service expected by the customer.
5. What are the challenges of managing IT infrastructure and management solutions?
Name and describe the management challenges posed by IT infrastructure.
Creating and maintaining a coherent IT infrastructure raises multiple challenges including:
Making wise infrastructure investments: IT infrastructure is a major capital investment for the firm. If too much is spent on infrastructure, it lies idle and constitutes a drag on firm financial performance. If too little is spent, important business services cannot be delivered and the firm’s competitors will outperform the underinvesting firm
Coordinating infrastructure components: firms create IT infrastructures by choosing combinations of vendors, people, and technology services and fitting them together so they function as a coherent whole.
Dealing with scalability and technology change: as firms grow, they can quickly outgrow their infrastructure. As firms shrink, they can get stuck with excessive infrastructure purchased in better times. Scalability refers to the ability of a computer, product, or system to expand to serve a larger number of users without breaking down.
Management and governance: involves who will control and manage the firm’s IT infrastructure.
Explain how using a competitive forces model and calculating the TCO of technology assets help firms make infrastructure investments
The competitive forces model can be used to determine how much to spend on IT infrastructure and where to make strategic infrastructure investments, starting out new infrastructure initiatives with small experimental pilot projects and establishing the total cost of ownership of information technology assets.
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The total cost of owning technology resources includes not only the original cost of acquiring and installing hardware and software, but it also includes the ongoing administration costs for hardware and upgrades, maintenance, technical support, training, and even utility and real estate costs for running and housing the technology. The TCO model can be used to analyze these direct and indirect costs to help firms determine the actual cost of specific technology implementations.
Business Problem-Solving Case (page 230): Amazon’s New Store: Utility Computing
What technology services does Amazon provide? What are the business advantages to Amazon and to subscribers of these services? What are the disadvantages to each? What kinds of businesses are likely to benefit from these services?
Amazon provides cloud computing, also known as on-demand computing or utility computing. Similar to other utility providers like electric, water, and natural gas, Amazon provides computing capacity to businesses that want to pay only for what they use.
Amazon can generate extra revenue from other businesses by offering its excess capacity to those that need it. Like most companies, Amazon used only a small portion of it total computing capacity at any one time. Its infrastructure is considered by many to be among the most robust in the world. Subscribers to the Simple Storage Service (S3) can use only what they need without having to purchase their own hardware and software. That reduces the total cost of ownership for small and medium-size businesses. The system is scalable and reliable for both Amazon and subscribers. The Elastic Compute Cloud (EC2) service enables businesses to utilize Amazon’s servers for computing tasks without having the overhead costs. Risks associated with incorporating the technology are minimal for businesses-Amazon takes most of the risks.
Companies may want to go with more established names in computing; Amazon is not known as a technology company-its reputation is more as a retailer. It’s combating this perception by not requiring service contracts. However, its competitors like IBM, HP, and Sun Microsystems may follow Amazon’s lead and offer utility computing without requiring service-level agreements. Some companies are wary of using a supplier that doesn’t offer SLAs which guarantee the availability of services in terms of time. The growth of Amazon Web Services (AWS) could be harmful to its Web services line as well as its retail line if the company doesn’t position itself to handle a dramatic increase in demand on its infrastructure.
Customers may experience outages in the service and not have any recompense since there are no service level agreements-only Amazon’s word that it will maintain 99.9 percent availability.
Businesses, large and small, can benefit from using AWS. The service relieves small business from the TCO of having its own systems. AWS creates the opportunity for others to work at Web scale without making the mistakes that Amazon has already made and learned from. Large businesses can use AWS as an auxiliary unit without having to increase their hardware and associated TCO.
How do the concepts of capacity planning, scalability, and TCO apply to this case? Apply these concepts both to Amazon and to subscribers of its services.
Amazon must provide hardware capacity planning and scalability for not just its own needs but for all its subscribers. Overestimates will create a drain on Amazon’s financial assets. Underestimating capacity and scalability will create shortages for its own business and its subscribers. Too many instances of non-availability will create the impression that Amazon can’t manage the service. Estimating scalability for such a large, diverse number of users without breaking down is a huge task. Amazon must bear the total TCO of its services, all the while ensuring it can profit from it. The services’ subscribers benefit from not having to worry about these issues and not bearing the brunt of TCO issues.
Search the Internet for companies that supply utility computing. Select two or three such companies and compare them to Amazon. What services do these companies provide? What promises do they make about availability? What is their payment model? Who is their target client? If you were launching a Web startup business, would you choose one of these companies over Amazon for Web services? Why or why not? Would your answer change if you were working for a larger company and had to make a recommendation to the CTO?
Sun Microsystems offers utility computing through grid computing. It charges $1 per cpu hour. It provides platforms for its target users in computational mathematics, computer aided engineering, electronic design automation, financial services, life sciences computing tasks. Software developers use Sun’s Network.com service for building, testing, and deploying new applications to their customers. It promises 99.9 percent availability.
Hewlett-Packard (HP) provides utility computing for PCs, server storage, mail and messaging, print, and centralized data center infrastructure through its distributed grid technology. It targets small, medium and large sized companies for a variety of computing services. Costs were not available on its web site. Availability was listed as 99.9 percent.
Amazon seems to be an easier service to incorporate into a start-up business because it has been geared towards small and medium sized businesses since its inception. It doesn’t bring the same baggage to the table as the larger, more diverse companies do.
Name three examples each of IT infrastructure hardware components and software components that are relevant to this case. Describe how these components fit into or are used by Amazon’s Web services and/or the customers that subscribe to these services.
Amazon’s Web services use the following hardware components:
client/server architecture as the server
grid computing
distributed processing
storage area networks
virtualization
multicore processors
Customers using Amazon’s Web services utilize the following hardware components:
client/server architecture as the client
distributed processing
storage area networks
Amazon’s Web services use the following software components:
Linux and Unix operating system software
Java, Ajax, and HTML as the provider
XML
Software as a Service (Saas) as the software provider
Customers using Amazon’s Web services utilize the following software components:
Windows operating system or Mac OS
Java, Ajax, and HTML as the recipient
Software as a Service (Saas) as the software user
Mashups, widgets, cloud computing could be used by customers
Think of an idea for a Web-based startup business. Explain how this business could utilize Amazon’s S3 and EC2 services.
Students will present a variety of startup business ideas in this question. They should address the following components:
Costs associated with S3 data storage
Estimates of how much data will be stored
Costs per gigabyte of data
Access procedures for S3 data storage-they may have to research Amazon’s site to determine what the processes are
Costs associated with EC2
Estimate the number of instance-hours the business will consume
Estimate the inbound and outbound data traffic
Estimate the AMI costs
Access procedures for EC2
Interfaces that may be required between the business and Amazon’s services
Processes that may be necessary in case of outages
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