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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 l.jpg
Managing IT Operations

Dr. Merle P. Martin

MIS Department

CSU Sacramento


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Agenda

  • What is IT Operations?

  • IT Operation Trends

  • Data Center Operations

  • Improving Center Operations

  • Data Center Economics

  • Outsourcing

  • Managing Networks

  • Contingency Management


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Deloitte & Touche Study

  • US and Canadian firms

  • Late 1995

  • 431 CIOs

  • Abbreviated “DT”


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What is IT Operations?

  • Organization

  • Budget emphasis

  • Functions


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IT Department

CIO

Systems

Operations

Support

Development

Computer

Systems

Data

facilities

analysis and

administration

operations

design

Information

Data entry

Programming

center

Information

technology


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CIO Turnover

  • DT Study, 1995

  • 1991 14%

  • 1992 17.5%

  • 1993 18.8%

  • 1994 15.5%

  • 1995 17.0%


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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


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IT Operations Budget

  • 33% Systems and Programming

    • 85% maintenance

    • 15% new development

      • decreasing

  • 10% Administration / Training

  • 57% IT Operations


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Budget by Platform

  • DT Study, 1995

  • Mainframe 44%

  • Client / Server 36%

  • Other 20%


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IT Operations Functions

  • Systems operators

    • operate hardware

    • schedule application runs

    • input / output preparation

  • Data-entry operators

  • Maintenance technicians


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IT Operations Trends

  • Decreasing hardware costs

  • “Lights Out” computer rooms

  • Increasing PCs / workstations

  • Expert System (ES) technology

    • maintenance troubleshooting


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Trends

  • Increasing use of automated tools

    • Increase in complexity

    • Blaab’s Law:

      “Old technologies persist in

      the face of new technologies”


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Improving Data Centers

  • Application functional quality

    • how it meets user needs

  • Technical quality

    • how easy to maintain?

    • how efficient (MIPS)?

    • tension between these goals


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Improve Centers

  • Application age

    • legacy systems

    • NNC study (1987)

    • inefficient centers - 8.7 years

    • efficient centers - 4.2 years


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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


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Improve Centers

  • Portfolio coverage

    • what % potential applications are actually developed?

    • beware of “hidden backlog”

    • NNC study:

      • inefficient centers - 24%

      • efficient centers - 40%


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Improve Centers

  • Mix of Center staff:

    • NNC study:

      • inefficient centers - more employees

      • greater % of them were “hands on”

  • User feedback

  • Problem detection / correction


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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?


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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


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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


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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


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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


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Center Economics

  • Hardware

    • Total Group $31K / MIPS

    • Comparable Size 27K / MIPS

    • Govt. Industry 29K / MIPS

    • Teale Data Center 12K / MIPS


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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


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Center Economics

  • Teale Quality goals:

    • > 99.9% availability

    • 4 hour network Mean Time to Repair (MTTR)

    • Subsecond transaction response

    • Immediate Help Desk assistance


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Center Economics

  • Strategies

    • Upgrade to latest equipment / software

    • Consolidation

    • Outsourcing


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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


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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


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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)


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Outsourcing Types

  • Professional services (consulting)

  • Services (training / data entry)

  • Temporary employees

    • contract programmers

  • Transactions (credit reports)

  • Systems integrators


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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


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“Best-of-Breed”

Consolidate,Transfer Internally

Improve,Leverage

Quality

Redesign(Reengineer)

Outsource

NeedsImprove-ment

Non - Critical

Critical

Importance


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What NOT to Outsource

  • Strategy (IT Plan)

  • Architecture

    • tied to firm’s culture

  • Portfolio (What / When)

  • Vendor management


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Outsource Tendencies

  • DT Study, 1995

  • Disaster recovery 75%

  • Network management 50%

  • Application development 44%

  • Application maintenance 40%

  • Data center operations 30%

  • Data entry 26%


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Outsource Failures

  • DT Study, 1995

  • Vendor expertise and sophistication

  • Cost reduction

  • Improved delivery quality

  • Increased focus on core competencies

  • Balance sheet improvement


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Issue

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

  • Why?

  • What obstacles were there (or are there) to outsourcing?


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Network Mgmt Scope

  • Fault handling

  • Performance monitoring

  • Change (project) management

  • Tactical (future) planning

  • Cost control


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Network Mgmt Trends

  • Emerging standards

  • Integration as a goal:

    • different networks (LAN / WAN)

    • different vendors

  • Combine with management of computers

    • “finger pointing”


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Network (Cont.)

  • Distributed applications

    • client / server

    • Oracle’s Lotus Notes

  • Increased automation

  • Increased outsourcing


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Contingency Mgmt

  • NOT disaster recovery

    • reactive, not proactive

  • Worst case scenario

    • all our eggs in one basket

    • natural disaster

    • human error / sabotage


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Contingency Mgmt. Methods

  • Disaster Recovery firm

    • outsource strategic function?

  • Off-line storage

  • Data redundancy

    • replicated databases

    • fragmented databases


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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


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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


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Transactions

Record contents

Entry

End of day

Backup records

Off-linelog file

Onlinelog files

File recovery

Recoveredrecord contents


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Contingency Methods

  • Parallel systems

  • Processing backup facility

    • Foundation Health

  • Contingency Management Plan

    How will IT outages affect your firm?


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Issue

Tell us a Contingency Management war story

  • What happened?

  • How did the firm recover?

  • How could the situation have been

    • averted?

    • mitigated?


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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!