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Managing IT Operations

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

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  1. Managing IT Operations Dr. Merle P. Martin MIS Department CSU Sacramento

  2. Agenda • What is IT Operations? • IT Operation Trends • Data Center Operations • Improving Center Operations • Data Center Economics • Outsourcing • Managing Networks • Contingency Management

  3. Deloitte & Touche Study • US and Canadian firms • Late 1995 • 431 CIOs • Abbreviated “DT”

  4. What is IT Operations? • Organization • Budget emphasis • Functions

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

  6. CIO Turnover • DT Study, 1995 • 1991 14% • 1992 17.5% • 1993 18.8% • 1994 15.5% • 1995 17.0%

  7. 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

  8. IT Operations Budget • 33% Systems and Programming • 85% maintenance • 15% new development • decreasing • 10% Administration / Training • 57% IT Operations

  9. Budget by Platform • DT Study, 1995 • Mainframe 44% • Client / Server 36% • Other 20%

  10. IT Operations Functions • Systems operators • operate hardware • schedule application runs • input / output preparation • Data-entry operators • Maintenance technicians

  11. IT Operations Trends • Decreasing hardware costs • “Lights Out” computer rooms • Increasing PCs / workstations • Expert System (ES) technology • maintenance troubleshooting

  12. Trends • Increasing use of automated tools • Increase in complexity • Blaab’s Law: “Old technologies persist in the face of new technologies”

  13. Improving Data Centers • Application functional quality • how it meets user needs • Technical quality • how easy to maintain? • how efficient (MIPS)? • tension between these goals

  14. Improve Centers • Application age • legacy systems • NNC study (1987) • inefficient centers - 8.7 years • efficient centers - 4.2 years

  15. 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

  16. Improve Centers • Portfolio coverage • what % potential applications are actually developed? • beware of “hidden backlog” • NNC study: • inefficient centers - 24% • efficient centers - 40%

  17. Improve Centers • Mix of Center staff: • NNC study: • inefficient centers - more employees • greater % of them were “hands on” • User feedback • Problem detection / correction

  18. 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?

  19. 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

  20. 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

  21. 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

  22. 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

  23. Center Economics • Hardware • Total Group $31K / MIPS • Comparable Size 27K / MIPS • Govt. Industry 29K / MIPS • Teale Data Center 12K / MIPS

  24. 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

  25. Center Economics • Teale Quality goals: • > 99.9% availability • 4 hour network Mean Time to Repair (MTTR) • Subsecond transaction response • Immediate Help Desk assistance

  26. Center Economics • Strategies • Upgrade to latest equipment / software • Consolidation • Outsourcing

  27. 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

  28. 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

  29. 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)

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

  31. 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

  32. “Best-of-Breed” Consolidate,Transfer Internally Improve,Leverage Quality Redesign(Reengineer) Outsource NeedsImprove-ment Non - Critical Critical Importance

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

  34. Outsource Tendencies • DT Study, 1995 • Disaster recovery 75% • Network management 50% • Application development 44% • Application maintenance 40% • Data center operations 30% • Data entry 26%

  35. Outsource Failures • DT Study, 1995 • Vendor expertise and sophistication • Cost reduction • Improved delivery quality • Increased focus on core competencies • Balance sheet improvement

  36. Issue What IT functions in your company have been or should be outsourced? • Why? • What obstacles were there (or are there) to outsourcing?

  37. Network Mgmt Scope • Fault handling • Performance monitoring • Change (project) management • Tactical (future) planning • Cost control

  38. Network Mgmt Trends • Emerging standards • Integration as a goal: • different networks (LAN / WAN) • different vendors • Combine with management of computers • “finger pointing”

  39. Network (Cont.) • Distributed applications • client / server • Oracle’s Lotus Notes • Increased automation • Increased outsourcing

  40. Contingency Mgmt • NOT disaster recovery • reactive, not proactive • Worst case scenario • all our eggs in one basket • natural disaster • human error / sabotage

  41. Contingency Mgmt. Methods • Disaster Recovery firm • outsource strategic function? • Off-line storage • Data redundancy • replicated databases • fragmented databases

  42. 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

  43. 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

  44. Transactions Record contents Entry End of day Backup records Off-linelog file Onlinelog files File recovery Recoveredrecord contents

  45. Contingency Methods • Parallel systems • Processing backup facility • Foundation Health • Contingency Management Plan How will IT outages affect your firm?

  46. Issue Tell us a Contingency Management war story • What happened? • How did the firm recover? • How could the situation have been • averted? • mitigated?

  47. 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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