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Chapter 7

Chapter 7. Managing IT Service Delivery. Before the Internet companies used proprietary networks. For several reasons this was unsatisfactory because:. Expensive Unreliable Incompatible Vendor lock-in. The emergence of accessible and affordable public Internet based on open standards have:.

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Chapter 7

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  1. Chapter 7 Managing IT Service Delivery

  2. Before the Internet companies used proprietary networks. For several reasons this was unsatisfactory because: Expensive Unreliable Incompatible Vendor lock-in

  3. The emergence of accessible and affordable public Internet based on open standards have: Removed earlier problems plus: • Reduced cost of doing business • Lowered barriers to entry • Reduced inverse relationship between information reach and information richness

  4. New Service Models With the advent of reliable, high-capacity, cost effective networks, local software execution and data storage is no longer the only alternative or the best alternative from a business standpoint.

  5. New Service Models Software is designed to operate in geographically distant facilities that belong to service providers who deliver services to many customers. Even when software execution remains inside a company, it may happen in faraway places. Such service delivery models offer flexibility, efficiency and cost effectiveness.

  6. Purchase vs Subscribe

  7. Over-the-Net Service Delivery The ‘Web services’ model allows for highly dynamic provision of IT services. Rather than establishing a long-term relationship with specific providers, firms using web services negotiate and procure services in real time from an ever-changing market composed of companies offering those services.

  8. ‘Renting’ Rationale Many IT services do not provide competitive advantage. However, these services are necessary. There may be no reason why these services may be different from competitors’.

  9. On-DemandSoftware-as-a-ServiceUtility computing Metered computingGrid computing • Definitions vary widely with grey areas • Defined based on use and specific angle • Still evolving

  10. The critical enablers of the New approaches to managing the IT resources reside deep below the “Floorboards” of IT infrastructure, in middleware layers that most businesses never see.

  11. Under the Floor

  12. Middleware services • Provisioning: Providing access to new services or additional capacity in an automated and ‘on-the-fly’ manner. • Resource virtualization: which allows server or storage capacity to be accessed independent of its physical characteristics or location. • Change management • Performance Monitoring and Analytics

  13. Incremental Outsourcing Benefits: • Managing shortage of specialized IT staff • Reducing time to market • The shift to 24x7 operations • Cost reduction in IT service chains • Making applications globally accessible • Favorable cash flow profiles

  14. Managing Risks through Incremental Outsourcing Out sourcing decision making

  15. Incremental Outsourcing • Economic stakes are low. • Potential consequences of mismanagement are not far-reaching. • Mistakes are more reversible and less painful. • More experimentation is feasible. Yet incremental outsourcing decisions can not be taken lightly.

  16. Incremental Outsourcing: Hosting Hosting models categorized along service level lines as: • Collocation hosting : These companiesprovides no- frills access to a facility and its infrastructure. Customers rent floor space, connectivity and power. Customer owns and retains responsibility for all equipment. Customers must have the expertise to design, maintain and operate the equipment.

  17. Colocation

  18. A Colocation Company

  19. Incremental Outsourcing: Hosting • Shared hosting: Servers are owned & operated by the hosting provider & customers purchase space on servers. Multiple customers share a single physical server. Its best suited to non-mission-critical hosting for small companies when low cost is an important requirement. Some customer are also skeptical about the sharing and security.

  20. Incremental Outsourcing: Hosting • Dedicated hosting : Servers are owned & operated by the hosting providers. There are dedicated to individual customers. Network storage & some other service are shared by customers. There are completely managed packages with required level of security and availability: • Simple dedicated hosting • Complex dedicated hosting • Custom dedicated hosting

  21. Incremental Outsourcing: Hosting • Simple dedicated hosting:In this narrow menu of highly standardized functions are provided. Server appliances are provided on 1-to -1 basis. Although it’s inexpensive, with limited range of functionality due to non- complex configurations. • Complex dedicated hosting : Uses 2 or more servers with different functions to meet one customer needs. Wide range of functions but standardized hardware & software configuration. Facilitates reliable & economical operation of larger companies. • Custom dedicated hosting : Support custom functionality. Custom configured architecture involve multiple servers. Hosting company often collaborate with system integrators and other service providers. A completely customized service offering.

  22. Managing Relationships with Service Providers • No (level of) expertise in relationship management can overcome choosing an unreliable service provider. • Service providers differ greatly in terms: • Service level increments offered • Charging mechanisms • Guarantees made etc

  23. Managing Relationships with Service Providers An outsourcing deal that is too one-sided, too favorable to one party at the expense of other, usually ends up as a bad deal for both sides.

  24. RFPs • Most common process of selecting service providers is writing a RFP. • No single/standard RFP format. • Typically information requested in areas: • Descriptive information • Financial information • Proposed plan for meeting service requirements • Mitigation of critical risks • Service guarantees • pricing

  25. Relationship Management - SLAs • Relationships with service provider partners require ongoing attention. • Most formidable obstacles to good relations are not technical but ‘Political’. • When avoiding responsibility intrudes into problem solving process, relationship becomes less effective. • SLAs offer possibility for mature relations

  26. Large-scale Out sourcing Why • Cost Savings • Dissatisfaction with existing IT services • Desire to focus on core areas • Forcing major organizational changes • Access to skills and talents • Liquidate firms IT assets / strengthen balance sheet • Turning fixed costs into variable costs

  27. Large-scale Out sourcing Designing Alliances • Contract flexibility • Addressing ‘control’ & ‘privacy’ concerns • Timings of benefits to parties • Rate of technology renewal Managing Alliances Relationship Interfaces

  28. Managing Legacies Difficulties arising from legacy systems: • Technology incompatibilities • Residual process complexity • Local Adaptation • Nonstandard data definitions

  29. Managing IT Infrastructure Assets • Total Cost of Ownership

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