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IT Organization, Productivity, Benefits, and Data Center Economics

This chapter explores the various aspects of IT organization, including productivity measurement, benefits assessment, data center economics, and outsourcing strategies.

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IT Organization, Productivity, Benefits, and Data Center Economics

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  1. Chapter 13 Information Technology Economics

  2. Agenda • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  3. IT Department CIO Systems Operations Support Development Computer Systems Data facilities analysis and administration operations design Information Data entry Programming center Information technology

  4. Agenda • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  5. Measuring Productivity • Traditional measure • Function point analysis

  6. Traditional Measure • Source lines of code (SLOC) • Lines of executable code (LOEC)

  7. Function Point Analysis • Count number with Low, Average, and High complexity • Multiply by function weight • Sum to arrive at function points

  8. Function Point Analysis • 5 functions are scored • amount of input (forms / screens) • Amount of output (reports / screens) • number of end-user queries • number logical files accessed / used • number interfaces to other applications

  9. Productivity Paradox • Not all investments in IT will result directly in productivity gains or decreased costs • Infrastructure • Staging for future opportunities • Delayed benefits • E-commerce

  10. Agenda • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  11. Measuring Benefits • What’s important to management? • Not always dollars • Customer relations • Employee morale • Cycle time • Ask, don’t assume

  12. Measuring Benefits • Use “Anchor” measures • Value of ratios for comparing across time and function • Sales per employee • Revenue per employee • Revenue per customer • Cost per transaction

  13. Agenda • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  14. Data Center Economics • Budgeting • Charge back • Outsourcing

  15. Budgeting • 33% Systems and Programming • 85% maintenance • 15% new development • decreasing • 10% Administration / Training • 57% IT Operations • Systems operators • Operate hardware • Schedule application runs • Input / output preparation • Data-entry operators • Maintenance technicians

  16. Charge-back • No operating budget • Charge clients for services • Clients can shop elsewhere • Centers can spend what they collect - NO MORE! • Increasing quality at decreasing cost • Strategies • Upgrade to latest equipment / software • Consolidation

  17. Outsourcing • Reasons • Overall business trend • Global competition • Need for technical specialists • Employee costs (fringe benefits) • Tax benefits

  18. Outsourcing Types • Professional services (consulting) • Services (training / data entry) • Temporary employees • Contract programmers • Transactions (credit reports) • Systems integrators

  19. 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

  20. What NOT to Outsource • Strategy (IT Plan) • Architecture • Tied to firm’s culture • Portfolio (What / When) • Vendor management

  21. Preventing Outsource Failures • Vendor expertise and sophistication • Improved delivery quality • Cost reduction • Increased focus on core competencies • Transition to new technologies • Good contract and lawyer

  22. Raleys • Prefer to acquire talented, retail-oriented staff • Augments IT projects with consultants, contractors • Outsource professional services such as training and data entry

  23. Raleys • Main drawback of outsourcing is failure of outsourcing company to understand Raley’s business goals objectives and objectives

  24. Points to Remember • IT Organization • IT Productivity • IT Benefits • Data Center Economics

  25. Discussion Questions • What will happen in your organization if the IT is outage? • Does your organization measure its IT • Productivity? • Benefits?

  26. Assignment • Review chapters 8-13 & technology 3 • Read chapter 14 • Group assignment • Research paper

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