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Managing IT Operations Dr. Merle P. Martin MIS Department CSU Sacramento Agenda What is IT Operations? IT Operation Trends Data Center Operations Improving Center Operations Data Center Economics Outsourcing Managing Networks Contingency Management Deloitte & Touche Study

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managing it operations
Managing IT Operations

Dr. Merle P. Martin

MIS Department

CSU Sacramento

agenda
Agenda
  • What is IT Operations?
  • IT Operation Trends
  • Data Center Operations
  • Improving Center Operations
  • Data Center Economics
  • Outsourcing
  • Managing Networks
  • Contingency Management
deloitte touche study
Deloitte & Touche Study
  • US and Canadian firms
  • Late 1995
  • 431 CIOs
  • Abbreviated “DT”
what is it operations
What is IT Operations?
  • Organization
  • Budget emphasis
  • Functions
it department
IT Department

CIO

Systems

Operations

Support

Development

Computer

Systems

Data

facilities

analysis and

administration

operations

design

Information

Data entry

Programming

center

Information

technology

cio turnover
CIO Turnover
  • DT Study, 1995
  • 1991 14%
  • 1992 17.5%
  • 1993 18.8%
  • 1994 15.5%
  • 1995 17.0%
why cios left
Why CIOs Left
  • Why predecessors left
  • Dismissed / demoted 34%
  • New position 23%
  • Left voluntarily 18%
  • Lateral move 10%
  • Retired 19%
  • Promoted 5%
  • 44% dismissed from old position
it operations budget
IT Operations Budget
  • 33% Systems and Programming
    • 85% maintenance
    • 15% new development
      • decreasing
  • 10% Administration / Training
  • 57% IT Operations
budget by platform
Budget by Platform
  • DT Study, 1995
  • Mainframe 44%
  • Client / Server 36%
  • Other 20%
it operations functions
IT Operations Functions
  • Systems operators
    • operate hardware
    • schedule application runs
    • input / output preparation
  • Data-entry operators
  • Maintenance technicians
it operations trends
IT Operations Trends
  • Decreasing hardware costs
  • “Lights Out” computer rooms
  • Increasing PCs / workstations
  • Expert System (ES) technology
    • maintenance troubleshooting
trends
Trends
  • Increasing use of automated tools
    • Increase in complexity
    • Blaab’s Law:

“Old technologies persist in

the face of new technologies”

improving data centers
Improving Data Centers
  • Application functional quality
    • how it meets user needs
  • Technical quality
    • how easy to maintain?
    • how efficient (MIPS)?
    • tension between these goals
improve centers
Improve Centers
  • Application age
    • legacy systems
    • NNC study (1987)
    • inefficient centers - 8.7 years
    • efficient centers - 4.2 years
legacy systems
Legacy Systems
  • DT Study, 1995
  • 65% legacy systems slated for replacement were to be replaced over next 2 years
  • Legacy systems still a problem, but not as significant
improve centers16
Improve Centers
  • Portfolio coverage
    • what % potential applications are actually developed?
    • beware of “hidden backlog”
    • NNC study:
      • inefficient centers - 24%
      • efficient centers - 40%
improve centers17
Improve Centers
  • Mix of Center staff:
    • NNC study:
      • inefficient centers - more employees
      • greater % of them were “hands on”
  • User feedback
  • Problem detection / correction
issue
Issue

17% CIO turnover rate per year AND 44% were dismissed or demoted.

  • Why would you want to be a CIO?
  • How can you be a “CIO Survivor”?

What do you think?

center economics
Center Economics
  • “Charge-back” mode
    • no operating budget
    • charge clients for services
    • clients can shop elsewhere
    • centers can spend what they collect - NO MORE!
    • Increasing quality at decreasing cost
center economics20
Center Economics
  • Economies of scale BIG IS BETTER!
  • Gorch’s Law

IP = IC ** 2

where:

IP = increase in computer power

IC = increase in computer costs

  • Used as barrier to PCs in 1980s
center economics21
Center Economics
  • Gorch’s Law works with Data Centers because:
    • Mainframes more efficient than PCs for large volumes
    • 3GL more efficient than 4GL
    • Telecommunications value =

n (n - 1) where n = # nodes

    • Larger network more effective
center economics22
Center Economics
  • Typical efficiency measures
  • Use Millions of Instructions per Second (MIPS)
  • Hardware Costs per MIPS
  • Storage Costs per MIPS
  • Software Costs per MIPS
  • Teale Data Center “Real Decisions” study - large IBM
center economics23
Center Economics
  • Hardware
    • Total Group $31K / MIPS
    • Comparable Size 27K / MIPS
    • Govt. Industry 29K / MIPS
    • Teale Data Center 12K / MIPS
center economics24
Center Economics
  • Storage costs - Teale 76% of Comparable Size group
  • Software costs
    • Total Group 10.0K /MIPS
    • Comparable Size 9.3K /MIPS
    • Govt. Industry 11.4K /MIPS
    • Teale 8.7K /MIPS
center economics25
Center Economics
  • Teale Quality goals:
    • > 99.9% availability
    • 4 hour network Mean Time to Repair (MTTR)
    • Subsecond transaction response
    • Immediate Help Desk assistance
center economics26
Center Economics
  • Strategies
    • Upgrade to latest equipment / software
    • Consolidation
    • Outsourcing
center consolidation
Center Consolidation
  • Chase Manhattan Bank
    • 100 data centers into 58
    • Saved $58 million in 2 years
  • First Interstate Bank
    • 13 data centers into 2
    • reduced staff 2300 to 700
    • lowered overall budget by $93 million
center consolidation28
Center Consolidation
  • JC Penny
    • 20 data centers to 4
    • Save $11 million a year
  • State of Wisconsin
    • 12 data centers into one
    • Goal: save $1 to $3 million a year
    • exempted from state procurement laws
outsourcing it functions
Outsourcing IT Functions
  • WHY?
    • overall business trend
    • global competition
    • value-added criterion
      • Would customer pay for this?
    • need for technical specialist
    • employee costs (fringe benefits)
outsourcing types
Outsourcing Types
  • Professional services (consulting)
  • Services (training / data entry)
  • Temporary employees
    • contract programmers
  • Transactions (credit reports)
  • Systems integrators
when to outsource
When to Outsource
  • Activity not strategic
  • Save at least 15%
  • Need technology specialists
  • Increase financial flexibility
    • capital to operating expenses
    • free personnel for development
    • acquire new technologies quicker
slide32

“Best-of-Breed”

Consolidate,Transfer Internally

Improve,Leverage

Quality

Redesign(Reengineer)

Outsource

NeedsImprove-ment

Non - Critical

Critical

Importance

what not to outsource
What NOT to Outsource
  • Strategy (IT Plan)
  • Architecture
    • tied to firm’s culture
  • Portfolio (What / When)
  • Vendor management
outsource tendencies
Outsource Tendencies
  • DT Study, 1995
  • Disaster recovery 75%
  • Network management 50%
  • Application development 44%
  • Application maintenance 40%
  • Data center operations 30%
  • Data entry 26%
outsource failures
Outsource Failures
  • DT Study, 1995
  • Vendor expertise and sophistication
  • Cost reduction
  • Improved delivery quality
  • Increased focus on core competencies
  • Balance sheet improvement
issue36
Issue

What IT functions in your company have been or should be outsourced?

  • Why?
  • What obstacles were there (or are there) to outsourcing?
network mgmt scope
Network Mgmt Scope
  • Fault handling
  • Performance monitoring
  • Change (project) management
  • Tactical (future) planning
  • Cost control
network mgmt trends
Network Mgmt Trends
  • Emerging standards
  • Integration as a goal:
    • different networks (LAN / WAN)
    • different vendors
  • Combine with management of computers
    • “finger pointing”
network cont
Network (Cont.)
  • Distributed applications
    • client / server
    • Oracle’s Lotus Notes
  • Increased automation
  • Increased outsourcing
contingency mgmt
Contingency Mgmt
  • NOT disaster recovery
    • reactive, not proactive
  • Worst case scenario
    • all our eggs in one basket
    • natural disaster
    • human error / sabotage
contingency mgmt methods
Contingency Mgmt. Methods
  • Disaster Recovery firm
    • outsource strategic function?
  • Off-line storage
  • Data redundancy
    • replicated databases
    • fragmented databases
off line storage
Off-line Storage
  • Teale Data Center
    • Airfreight data twice a year to Florida (Colorado)
    • Send an operator along
    • Electronic switching
    • Simulate switchover in Oakland
  • State of Alaska
    • At least 10 miles from site
contingency methods
Contingency Methods
  • Back-up power generators
  • “What if” scenarios
    • military war games
    • EDS
  • Scaled-down manual system
  • Back-up / recovery procedures
  • Martin, figure 15-12
slide44

Transactions

Record contents

Entry

End of day

Backup records

Off-linelog file

Onlinelog files

File recovery

Recoveredrecord contents

contingency methods45
Contingency Methods
  • Parallel systems
  • Processing backup facility
    • Foundation Health
  • Contingency Management Plan

How will IT outages affect your firm?

issue46
Issue

Tell us a Contingency Management war story

  • What happened?
  • How did the firm recover?
  • How could the situation have been
    • averted?
    • mitigated?
points to remember
Points to Remember
  • What is “IT Operations”?
  • IT Operation trends
  • Improving Data Center operations
  • Data Center economics
  • Outsourcing IT functions
  • Managing networks
  • Contingency management

These are management issues!

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