Strategic Information Systems Planning (SISP)
June 28, 2008
This is the process through which one enterprise conceptualize or formulates ideas for the development of strategic information systems i.e systems that affect the very fabric of the enterprise – the goals, the strategic processes and external relationships.
Importance of SISP
Planning also ensures that whenever new systems are build they can communicate or interface properly with pre-existing systems, thus avoiding the problem of “
SISP ensures that the IS/IT infrastructure is consistent with the strategic vision (business goals) of the enterprise. This is the modern view of SISP.
Who should be Responsible for SISP:
There are a number of ways in which the SISP role could be handled.
By an IT Director
The IT director knows a lot about current technology and technological trends and is very well placed to put that technology into business use. However the IT Director may not be very good in the area of business, and strategic planning. At worst, he might recommend systems with no strategic relevance from a business standpoint.
However these days we have people called Hybrid IT Managers who have formal training both in IT and business. Such managers might produce better planning results than the traditional IT Managers.
Except in firms that are small and use the full time services of hybrid IT Directors the SISP role is likely to be vested elsewhere.
Top management is especially aware of the strategic vision of the enterprise. Such management would also not find it difficult to identify the information needs to support the business goals.
On formulation of a strategic information system plan, the top management can leave the implementation work to the IT Director and his team. The IT Director can subsequently formulate an IT plan to set up the appropriate IT infrastructure.
However top management who are not technology aware i.e. do not understand the available technology and its potential applications may still be conservative in their planning.
Top management who are not technology aware also tends to be reluctant to participate in strategic information planning. There may be a temptation to delegate such planning to the IT Director who is more knowledgeable on matters of IT.
Use of IS Steering Committee
This is ideally a multi-disciplinary team bring together people with a variety of skills and experiences. The team would usually have representatives of top management, IT management and key departments. Use of committees is often an attractive option but there are several challenges involved:
The several challenges involved are:
- Setting up such a committee and keeping it running calls for a higher level of discipline and commitment.
- Planning through committees may be time consuming.
- The biggest mark to the use of information systems steering committee is that they reach decisions through consensus – basic democratic principle.
Use of outside planning consultants (outsourcing)
Outside consultancy may bring in a wealth of planning experience. Outsiders may also be more objective in that they have no pre-conceptions about the organization. However use of consultancy may be expensive and hence unaffordable.
The consultants may not have a proper awareness of the organization’s goals, culture and aspirations and may therefore recommend systems that are not sustainable in the enterprise. There is a temptation to recommend systems that have been observed to work well elsewhere, which does not mean they will work well in this particular organization. The organization’s own personnel e.g. IT manager, might detest the idea of using outsiders to plan the organization’s IS/IT affairs.
Firewall
March 31, 2008
In the era of the Internet being necessary for business, companies have found out that they need to think long and hard about the security implications of an internet connection. One needs to find a form of security policy that includes the number of machines and systems with Internet connection.A firewall is a set of tools (firmware i.e. hardware and software) designed to prevent unauthorized access to a network. A typical firewall is based on 2 architectures i.e. the “choke router” and the “bastion host”CHOKE ROUTER
This involves using a router to limit access i.e. using access control list to control which IP packets are routed and to where. You can use it to deny access to your network for specific types or to make sure that specific packets are delivered to specific machines.BASTION HOST
This is a computer that is used for only one purpose and that is to pass packets between your network and the Internet. It is a dedicated machine with two separate NICS, It acts as an active router linking the private network to the Internet, monitoring the state of the connection and blocking packets that do not meet the rules defined. This machine should not be used for anything else e.g. checking e-mails. The Bastion host must be configured to prevent any packets from being routed directly between its networks interfaces.
THE DMZ
The DMZ lies between the choke router and the bastion hosts. It is a partially protected area where one can install public services. Machines in the DMZ should be used for only one purpose and should not be fully trusted e.g. web server, FTP Server. Any extra service should be disabled and user accounts kept to a minimum. Some DMZ are mode secure by hosting a third NIC to host-public services and using a firewall to protect them rather than a choke router.
CHOOSING A FIREWALL
There are two technologies that are used to build a firewall i.e. packet filters and application gateways.
One can use packet filtering technologies which can allow or prevent access to specific services from specific machines. It can be done on the sites access routers (high level) or in a specific firewall. A router alone cannot effectively monitor all incoming and outgoing IP packets thus protocols like FTP that use more than one data stream present a problem. It gets worse when using connectionless protocol like UDP.
Circuit level or application gateway are used to act as routers that pass only specific packets onto specific machines (e.g HTTP requests to a web server or SMTP to mail server). Circuit level gateways open a virtual circuit on receiving a valid handshake but don’t analyze packet traffic.
Once a firewall has been built you can add extra features like virus checker between an email gateway and your SMTP mailer so all encapsulated files are virus checked before entry to the system.
NB: A proxy server is not a firewall, they make it easy to connect to the Internet but don’t protect it from intrusion.
RUNNING A FIREWALL:
Once a firewall is chosen, one then defines the rules of procedure you will use to defend your system. Test your firewall regularly by using scanning tools.
Routers
March 31, 2008
Routers
A router is a device that connects multiple networks and routes packets from one network to another. A router may be used to inter network similar or dissimilar networks (e.g. Ethernet, or token ring). An inter-network is composed of subnets (sub-networks). The main feature of a router include:
- Routers work at the network layer. They are able to identify source and destination network addresses within packets.
- Routers are able to keep track of multiple active paths between any given source and destination network.
- Routers provide excellent traffic management using sophisticated path selection, they select the best routes based on traffic loads, line speeds, number of hops or administrator preset cost. The parameters used for determining routes for packets is generally known as metrics.
- Routers can share status and routing information with other routers, and can listen to the network and identify which connections are busiest or not working. They rate network traffic avoiding slow or malfunctioning connections.
- Routers do not forward any information that does not have a correct network address. They do not forward bad data, they also filter broadcast traffic by not routing broadcast pockets.
Note:
A router may be a dedicated box with a port to each of the networks, or it may be a NOs server with multiple interface cards. (This is known as multi-timed).
Routers often support multiple protocols (e.g. TCP/IP, IPX/SPX), but not all protocols are routable e.g. NetBeul and DLC.
Routable protocols differ from non-routable protocols in that they contain information in each packet relating to the network address of the source and destination routes.
Choosing a routing Path:
A routing algorithm is used to build a routing table for forwarding packets. There are 2 types of algorithms used.
(a) Non Adaptive:
The choice of route is normally configured into the router. This is run as static routing.
b) Adaptive:
Routing decisions are based on traffic levels, connection speeds and a number of hops, or administrator preset costs. Routing information is obtained from other routers. This is known as dynamic routing.
The routing table contains the following information.
- Address of all known networks
- Interface of the router used to forward packets to the network.
- Next router in the path to the network.
- Metric or cost of using this path. If multiple paths exist, use the path with the lowest metric.
Static and Dynamic Routers:Static Routers:
Static routers require the administrator to manually configure routes through each network (The routers do not communicate amongst themselves).
This configuration is only possible with a small number of routers and does not provide the flexibility of dynamic routing. Its advantage is that complete control remains with the network administrator.
Dynamic Routers:
These routers automatically discover routes by communicating with each other. They require minimal configuration since their routing table are built and modified through these communications. It’s high flexible and can reach to changes in the internetwork e.g. route
Dynamic routers use routing protocols to manage information.
- Open shortest path first (OSPF) uses a link state algorithm to calculate routes based on the number of hops, line speed, traffic and cost.
- Network link state protocol (NLSP): This is the equivalent of OSPF for network environment.
- Routing Information Protocol (RIP): This method uses distance vector algorithm to determine routes. This is less efficient than link state algorithm because
The entire routing table is broadcasted instead of just the changes which result in large and often multiple packets (there is a maximum of 25 entries per R.P. packet).
The entire routing table is broadcasted at regular interval (every 30 seconds) resulting in considerable network traffic.
The routing table are slow to stabilize when a change in the internetwork occurs.
Brouters
These are routers that can also bridge. A router routes any routable protocol – supported, but bridges any other frames. These devices combines the best of both a bridge and a router.
Network topologies
March 31, 2008
Physical and Logical Topologies:
A network topology is the shape or structure of a network. Physical topology describes the actual appearance or layout of the network. Logical topology describes the flow of data through the network. There are various types of network topologies:
a) Star
Each node is connected to a central device using a point to point link. Central devices are usually known as hubs or concentrators. The hub receives signals from a node and repeats the signal to other nodes.
When more than one hub is required, they are inter-linked using a single cable known as a backbone. The performance of the network is maintained by using a backbone cable that is capable of higher data speeds than the rest of the network e.g. using fiber optic cable to link hubs, while UTP cable is used to link workstations.
Cascaded hubs are also commonly used. The hubs may be linked together using twisted pair crossover cables or in some cases, a button on the hub is used to effect the crossover at a particular point.
Advantages:
- They are easy to configure and reconfigure
- They are easy to troubleshoot because all data goes to a central point.
- Easy to manage and monitor the network.
- Fault in the media, network card or node (device) are automatically isolated.
Disadvantages:
- A hub failure results in failure of all entire section of the network. It provides for a single point of failure.
- Its time consuming to install because there is a separate segment per route.
- It requires more cable relative to other topologies.
b) BUS:
This is a linear topology with all nodes attached directly to the main cable (backbone). The bus is terminated at both ends of the cable to absorb the signal from the cable.
Advantages:
- It is easy to install and use established standards.
- They require little cable compared with other topologies
Disadvantages:
- They are difficult to reconfigure
- They are difficult to troubleshoot
- All devices are affected by media faults
c) RING
Computers are connected in a circle. The ring comprises a series of point to point links between each device. Computers are either attached directly to the ring or indirectly via an intermediary device such as Multi-station Access Unit (MSAU).
Twisted pair cable connects the computer to the MAU. Signals pass from device to device in a single direction. The common implementations of a ring topology are: IBM’s token ring and Fiber Distributed Data Interface (FDDI) or Copper Distributed Data Interface(CDDI).
Advantages:
- Ring networks use a relatively small amount of cable.
- They are simple to install.
- Two ring systems (using dual counter-rotating rings) can be used to provide fault tolerance.
Disadvantages:
- Difficult to reconfigure
- Troubleshooting can be difficult
- Media or device failure can affect all devices.
d) Hybrid
This is combining two different topologies within the same network to benefit from the advantage of both topologies. There can be star bus or star ring.
e) Mesh:
Mesh is commonly used in WAN. It is often found in public networks like the Internet. It require every device has a point to point connection to every other device on the network.
Structured Walkthrough
January 17, 2008
The structured Walk-through:
The structured walk through or formal technical review (FTR) is an inspection intended to expose defects in the product. It helps in discovering defects at the earliest possible stage. In addition a walkthrough helps uncover places where standards have been ignored where inefficient algorithms have been used or where a technically correct program might nonetheless present future maintenance problems.
A structured walkthrough is usually a group effort with several people serving different functions on the team. The following are some of the members who participate in a structured walkthrough:
- Presenter
- Coordinator
- Scribe
- Maintenance Critic
- Standard Critic
- One or more user representative.
Roles of each member
The presenter usually the creator of the product leads the team through an examination of the product.
The Coordinator organizes all activities that occur prior to the walkthrough such as seeing that each team member receives copy of the product being examined and also serves as a moderator during the actual review.
The scribe records the proceedings and forwards to management the report summarizing the team findings.
The maintenance critic ascertains that the product performs as requested.
The team members may be analysts and or programmers depending on the type of product being reviewed.
A member may serve several roles e.g. serving as both maintenance and standard critic in order to reduce the size of the team.
The responsibility of the team is to give an accurate appraisal, good or bad of the product being reviewed leading to production of quality system.
The participants should identify defects, but they should not attempt to correct them since the correction is the responsibility of the author.
The outcome of the walkthrough is the walkthrough report prepared by the scribe. On the first page i.e the summary, all participants must sign a report to show that they are in agreement with it. This reinforces the idea of shared responsibility for the quality of the final product.
Data link layer
January 17, 2008
Standards & Protocols
Industry of Electronic and Electrical Engineers (IEEE) split the function of the data link layer into 2 sublayer. They are:
- Media Access Control (MAC)
- Logical Link Control (LLC)
Media Access Control (MAC)
This sublayer defines the way in which multiple NICs share a single transmission medium. It covers:
- Logical topology e.g. bus, ring e.t.c.
- Media Access Method of contention, token passing e.t.c.
- Addressing i.e. the hardware address of the NIC also known as MAC address.
Media Access
This is the methodology used for determining when devices are allowed to communicate using the network. A network has to share the available communications capacity between the various devices that use it. It has to deal with problems such as two devices wanting to communicate simultaneously. This can be done through:
1) Contention
Using this method each network device competes with other connected devices for use of the transmission media. This method brings about collisions, when two devices transmit simultaneously, their signals collide and none is able to transmit.
To reduce collisions, protocols are used to ensure that devices listen to the media before transmitting and only transmit if media is clear. These protocols are called carrier sense multiple access protocols (CSMA). There are two types of CSMA protocols.
Carrier Sense Multiple Access with collision detection (CSMA/CD)
CSMA/CD protocols are capable of detecting a collision and retransmitting the data. They recognize a collision by the excessively high voltage or current when two signals combine. After collision both devices wait for a random period of time before retransmitting e.g. DEC Ethernet Version II and IEEE 802.3
Carrier Sense Multiple Access with collision Avoidance (CSMA/CA)
This protocol uses schemes such as time slices accessing or requests to send data to gain access to the media. e.g. Apples’ Local Talk. Machines wait for the network to be free of traffic before announcing their intention to transmit. If the machine does not receive a negative response, it proceeds to transmit.
Advantages of Contention based:
- Simple low-overhead software.
- Immediate and full control of the media.
Disadvantage of Contention
- Access times are unpredictable
- No prioritizing of devices.
- Collisions increase geometrically as each new device is connected.
Note:
Contention based media access systems provide network access on a first come first serve basis, thus network cards using fast expansion buses such as PCI can place data on the network faster than older ISA type cards and therefore these fast cards can better utilize the network.
The fastest, widest network card available should be put in the servers as these devices are involved in many of the network dialogs between machines.
Some network operating system support multiple network cards per system (multi-homed systems) thus allows the system to access the media faster. This is also known as network load balancing.
2) Token Passing
This method uses a small data frame called token, which is passed from device to device. The first device to join the network creates the token. Any device holding the token has control over the transmission media, and can remove the token and place a data frame on to the media.
The frame passes from device to device until it reaches the destination.The device copies the data and flags the data as read. The token and data continue to pass from device to device until arriving back at the source device.The data is removed and the token is placed back on to the media, which moves onto the next device.
Passing the token around evenly distributes network access among the connected devices. Protocols limit the length of time the token remains with a single device.
Note: Protocols using this system of access control are:
- IEEE 802.5 token ring.
- Future distributed data interface (FODI)
Advantages of Token Passing
- Access times are predictable.
- Data can be prioritized (useful for time-sensitive traffic such as voice or video)
- Collisions can’t occur which allows a higher through put of data under high load conditions.
- One network device is often used as a controller for fault detection and recovery.
Disadvantages of Token Passing
- The software required is more complete and has a higher overhead.
- Some software reconfiguration is required when devices are added or removed.
3) Demand PriorityThis method provides a contention based access method without the risk of collisions. The system requires demand priority switches. These are intelligent switches that control network access and allow only one node to transmit information at a time.
Data can be prioritized depending on the type of data e.g. time sensitive data such as voice and video can be given a high priority which means the switches process it before low priority data. Protocol using these method are IEEE 802.12 known as 100 VG-Any LAN.
Advantage of Demand Priority
- Data can be prioritized – high or low.
- There are no collisions giving a higher throughput of data under high load conditions.
- It supports both Ethernet and token ring type frame, this allows a 100 VG-Any LAN network to be easily connected to another LAN e.g. using a bridge.
Disadvantages of Demand priority
- More complex hardware is required.
- NIC and switches must be purchased.
DOWNSIZING
November 24, 2007
DOWNSIZING
Downsizing is the name given to the practice of placing business application systems on smaller machines than the ones they have been running on previously.
Rightsizing:
Merits of Downsizing
- Downsizing also brings about distribution and greater user involvement.
- We can take advantage of pre-packaged applications. Pre-packaged software is cheaper and more reliable and they reduce workload thus applications can be implemented sooner.
- It becomes possible to account for IT costs at departmental level.
Demerits:
- Risk of undersizing the system
- Headaches associated with dealing with multiple vendors and different products
- Increased demand for end user skills transfer an on-going
- End user workload is likely to increase
- High initial capital outlay
- High technical complexity, this is more likely if there is a total migration to a new multivendor hardware, software infrastructure = high risk.
- Dilution of central control and management of IT resources.
Essential consideration in downsizing/right sizing:
- Consider the culture of the personnel to undertake the project
- Consider the cost implications in detail and capital investment, recurrent costs, any hidden costs
- Volume of data : current and expected future volumes
- Level of security of data desired
- Organizational culture
- Decide on the fate of old hardware platform.
- Examine the staff issues: IT staff issues; end-user staff issues
- Do not always belief/vendors who claim that their systems are open
- Always seek independent consultations from other users, consultants etc
- Ensure proper alignment of the project with the information systems place and the business goals.
- Make a budget provision for the for the unforeseen adaptation costs
- Prefer to be risk-averse. Experiment with the smaller/less important projects first.
Suitability of Outsourcing
November 9, 2007
Are all Applications Equally Suitable for Outsourcing?
Those organizations that view IT outsourcing unfavorably are usually those that regard IT services a standard commodity with low strategic value. On the other hand, companies that believe in the strategic value of IT (that IT gives them special leverage) don’t generally like to outsource.
Applications that are more suitable for outsourcing will usually have the following properties
a) They are of a commodity type i.e. they are of transaction type and have low strategic relevance.
b) They have relatively low uncertainty i.e. Their workings are well understood and the success of the outsourcing contract is not subject to high risk.
c) The application exhibits low system inter-connectedness within other business applications. i.e
an application that has few interfaces with other applications systems can easily be operated on a stand alone basis and can therefore be outsourced easily.
d) Internal skills and capacity: If an organization doesn’t have adequate technical skills and operating capacity to handle a particular Information System application then outsourcing may be the foremost option.
Applications that are more frequently outsourced have the following:
- Payroll
- Downsizing project
- Network management
Outsourcing Contract and Negotiations:
A carefully structured outsourcing contract is the only way to ensure that the anticipated benefits are achieved. The common problems cited in setting up such a contract revolves around:
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Defining service levels
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Managing the contract and its details
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Staffing of the contract (what to do with the IS staff)
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Cost control within the contract (cost criteria)
In drawing up a contract the following guidelines may be useful.
a) Always discard the vendors standard contract and insist on negotiating your own.
b) Do not sign incomplete contracts
c) Seek the advise of outsourcing experts
d) Develop service level measures and insist on service level reports
e) Specify evaluation procedures
f) Include penalties for non performers
g) Select an account manager to be in charge of the outsourcing contract
h) Include early termination process
i) Take care of your IS staff within the contract.
General Lessons on Outsourcing
1. Public information services (the media) tend to portray an over-optimistic view of IS outsourcing
2. Outsourcing appears to be a symptom of the problem of demonstrating the value of IS to management.
3. Organizational members may initiate outsourcing for reasons other than cost efficiency.
4. Outsourcing vendor may not inherently be more efficient than an internal IS department.
5. The internal IS department may be able to achieve similar results without vendor assistance.
6. If a company decides to outsource, a contract is the only mechanism to ensure that expectations are realized.
7. The metaphor (assumption) that Information System is merely a utility is misguided.
Facilities Management (FM)
The terms outsourcing and facilities management are commonly used interchangeably, the term outsourcing is of British origin while FM is American. Closer examination indicates that the term facilities management has a more restricted meaning – the management of a computer installation entails the subcontracting of a firm’s traditional data processing activities to the market place (facilities management vendors).
The primary impetus for FM seems to be cost control and certainty of service. In addition facilities management contracts provide for management expertise as well as technical skills. FM deals are legally binding equivalent of an internal service level agreement. For most organizations, it is this certainty of service that makes FM attractive.
Facilities management occasions issues to do with the organization and management of data center. The vendor will usually appoint a data centre manager (account Manager) with the overall responsibility of managing the activities of the centre. The persons duties will include planning, organization, staffing, control, innovation representation and communication.
Organization of work will usually cover data preparation, job scheduling, output dispatch procedures, data communication support, setting and overseeing operation shifts etc. One critical aspect of operations is computer centre security, its access controls, backup procedures or disaster recovery planning. The data center manager has the special responsibility of ensuring that the standards of operations work are in line with the clients expectations as expressed in the service level agreement.
This calls for well trained highly productive staff with a clear focus on results. The recruitment and training aspects of such staff will therefore need to be addressed very carefully. Such staff will normally be expected to meet world class standards. Most of the other roles of the data centre manager are similar to the roles of a conventional IS/IT manager.
When an FM contract is in place, this leaves the in-house IS unit with ample time to deal with strategy and policy issues in addition to managing a vendor. Facility management may be more involving than it seems mainly because quality in the provision of service is often difficult to agree upon. The IS unit should also guard against becoming closer to the service vendor than the service consumer.
IS Outsourcing
November 9, 2007
Definition and Scope
The management and operation of part of an organization IT services by an external service at the agreed service levels to an agreed cost formula over an agreed period.
Variants of outsourcing
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Body shop: Use of contract/temporary staff to assist with specific tasks e.g computer programmer or data entry clerks.
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Project Management: Use of outsiders e.g. management consultants to assist in the management of a specific project.
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Full scale outsourcing: A significant part of the IS/IT function is given/taken over by outsiders. This is the current view of outsourcing.
Typical scenarios: those which tend to be outsourced.
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Management of telecommunications/Network infrastructure
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Management/operation of the computer center, this covers the custody of hardware and running of the application systems.
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System development.
The deal may also entail shifting of physical resources from one location to another, it can also involve taking over/inheriting the clients IT staff. Most outsourcing deals tend to take a fairly lengthy period, usually 4-10 years.
Origins/motives of outsourcing
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The general philosophy behind outsourcing usually is “let us outsource that which we are not good at and concentrate on our core business”. This is the core competency argument which has been popularized by management experts (gurus) in the last decade.
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Reaction to efficiency Imperative i.e. desire to be more efficient, both in terms of cost and service delivery. Outsourcers on the other hand promise the client guaranteed service levels cost containment.
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The need to acquire resources, the third reason often cited for outsourcing is to acquire new resources such as machine upgrades, additional personnel or even money. An outsourcing deal may enable a client to acquire such resources in 2 ways;
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The outsourcer may promise to provide the additional resources at a lower cost.
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The outsourcer may acquire these resources for the 1st time.
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Declining values of IT in the eyes of management, with increased expenditure on information system and technology, some managers have come to feel that such expenditure does not generate adequate returns. Its’ value to the enterprise appears questionable and hence the inclination to hand it over to an outsourcer. IT seems to have no strategic value to such managers.
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A reaction to the bandwagon; the early cases of outsourcing were highly publicized perhaps because there were large sums of money involved and the concept of outsourcing was still relatively new. In addition the benefits appeared to be so obvious and hence other companies were tempted to join the bandwagon.
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The desire to get rid of a troublesome function; in some enterprises the IT function acquires the unfortunate image of being a constant source of headache. There are perpetual calls for more money, Infrastructure seems to break down so often, unresponsive IT staff e.t.c. in such cases it becomes sensible to consider outsourcing the IT function.
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Enhance credibility:-In some cases outsourcing evaluations have been used to enhance personnel or departmental credibility. Since senior managers don’t fully value the services of the IS department, they may not value the contribution of the people who run the function. Studies have shown that some people make the outsourcing decision to enhance
their credibility by showing they are willing to outsource their “kingdom” for the good of the company, they prove to the management that they are corporate team players.
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Avoidance of building in-house skills, this is more common with small and low technology organizations.
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Strategic Alliance Argument: Finding a strong partner to compliment an area of weakness gives an organization an island of stability in a turbulent world. Strategic alliances can allow a firm to leverage a key part of the value chain by bringing in a partner that compliments its skills. Such a partner may create an opportunity to innovate synergistic- ally in which the whole is greater than the sum of the parts.
Benefits
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Cost savings : The outsourcer may be able to deliver such cost savings for the following reasons.
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Tighter overhead control of fringe benefits; the outsourcer tends to run much leaner overhead structures than many of their customers.
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More aggressive use of low cost labour pools through creative use of geography. Frequently the outsourcer moves data centers to low cost areas. Modern telecommunications makes this possible.
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Tough world class standards applied to the organization’s existing staff all of whom have to re-qualify for appointments at the time of outsourcing. Frequently employees may have become lazy or are unskilled in leading edge IT management practices.
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More effective bulk purchasing and leasing agreements for all aspects of hardware and software configuration, through discounts and better use of capacity.
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Better management of excess hardware capacity, the outsourcer can sell or utilize underused hardware that would otherwise be idle by combining many firms work in the same operation center.
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The ability to run a leaner management structure, because of increased competence and critical mass volumes of work.
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Reduced risk and uncertainty.
This arises through guaranteed service levels, reduced worry about hardware lock in by suppliers, or reduced risk about technology going obsolete.
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Reduced headache over IT staff issue
The outsourcer takes over the firms IT staff, then the firm does not have to bother with all the Human Resource issues pertaining to such staff.
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It offloads the system maintenance burden to the supplier, this has cost implications in addition to simplifying management agenda.
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The client gets the opportunity to experiment with or apply new technologies safely. The client can take advantage of the suppliers superior skills and technology to experiment with new ideas.
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Improved quality of service, an outsourcing contract normally guarantees certain service levels, which would translate to more efficient operations better customer service e.t.c.
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If only part of the IT function is outsourced, then the arrangement provides competition for the IS Department. This may enable the firm’s own staff to become more productive.
Drawbacks
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Draining cost efficiency.
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The organization’s own IT staff may feel unappreciated by the management.
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Organization secrets may leak out.
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The IT staff may become less competent
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Limited flexibility, an outsourcing contract like any other contract imposes certain limitations on the client e.g. the client may use the opportunity to use radically different approaches to IS.
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Unacceptable quality of service, even though the outsourcer may promise to deliver specified quality of service, there are many reasons why this may not always hold true. Even though the client may have the liberty to terminate the contract on the basis of poor quality service a lot of frustration may need to be endured along the way.
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Predicament of the internal IT staff; A number of staff related problems may arise e.g.
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The IT staff may pass a vote of no confidence with their management.
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The outsourcer may dismiss the clients former IT staff on the basis of redundancy
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The firm uses IT expertise which may constrain its future flexibility.
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Increased vulnerability and risk; this may arise due to an outsourcing deal gone bad, leading to loss of control to a single supplier, security and confidentiality of information being under outside control, lock in to a single supplier who may dictate future price rises/increases
Macro- economic changes
November 5, 2007
Liberalization
Liberalization is the opposite of restriction or control. When an economy is controlled the market forces cannot operate freely. A liberalized economy on the other hand is one which the market forces of supply and demand are left to interact freely to determine the prices of a commodity.
Liberalization of the economy has included the following changes:
- Removal of price controls.
- Deregulation of foreign exchange controls e.g. Access to foreign currency and the exchange rate.
- Deregulation of bank lending rates: so that banks are free to charge any interest rate on loans.
- Reduced administrative restriction on investments by the government.
When an economy is liberalized, investors find it easier to start new business or to move from one sector of the economy to another. This implies that a liberalized market is more competitive because a sector that is attractive will get new Entrants.
Globalisation:
The success of business firms today, and in the future depends on their ability to operate globally. By setting up camp in different countries and continents an enterprise increases its potential market, it also reduces risk for future survival because if operations are not going very well in one region other regions may be doing well.
Globalisation implies increased competition for local companies, whereas it means increased choice for consumers.
Globalisation of the worlds industrial economics greatly enhances the value of information to the firm and offers new opportunities to businesses. Today, information systems provide the communication and analytic power that firms needs for conducting and managing businesses on a global scale.
Controlling the far-flung Global Corporation in different National Environments is a major business challenge that requires powerful information systems resources.
The emergence of Globalisation heightens competition and forces firms to operate in open unprotected Global Markets. To become an effective and profitable participant in international markets, an enterprise needs powerful information and communication Systems.
Change from Industrial to Post-Industrial Operations
Today, many people no longer work in farms or factories, but instead are found in sales, Education, Health care, banks, insurance firms, law firms etc.
These jobs primarily involve working with, distributing or creating new knowledge and information. New kinds of knowledge and information based organizations have emerged that are devoted entirely to the production, processing and distribution of information.
In a knowledge and information economy, IT and related systems take on greater importance . knowledge based products and services of great economic value such as credit cards and world wide reservation systems are based on new information technology.
IT constitutes a large proportion of the invested capital in some industries like finance and insurance. Across all industries information and the technologies that delivers it have become critical assets for business firms and their managers. Information systems are needed to optimize the flow of the information and knowledge within the organization. Because the productivity of employees will depend on the quality of the systems serving them, management decisions about IT are critically important to the property and survival of the firm.
Structural Charges in the Enterprise:
There has been a transformation in the possibilities for organizing and managing an enterprise. The traditional business firm was and still is a hierarchical, centralized, structured arrangement of specialists that typically relies on standard operating procedures for mass production.
The new style of business firm is a flattened (less hierarchical), decentralized and flexible arrangement of generalists who rely on instant information to deliver customized products and services.
The traditional management group relied on formal plans, rigid division of labour, formal rules and appeals to loyalty to ensure the proper operation of a firm.
The New Manager relies on informal commitment and networks to establish goals, a flexible arrangement of teams and individuals working in task forces, a customer orientation to achieve coordination among employees and appeals to professionalism and knowledge to ensure proper operation of the firm.
These structural changes in the enterprise are usually greatly IT, so is this new system of management.
