Managing Managing IT OperationsIT Operations

Dr. Merle P. MartinDr. Merle P. MartinMIS DepartmentMIS DepartmentCSU SacramentoCSU Sacramento

AgendaAgenda What is IT Operations?What is IT Operations? IT Operation TrendsIT Operation Trends Data Center OperationsData Center Operations Improving Center OperationsImproving Center Operations Data Center EconomicsData Center Economics OutsourcingOutsourcing Managing NetworksManaging Networks Contingency ManagementContingency Management

Deloitte & Touche StudyDeloitte & Touche Study US and Canadian firmsUS and Canadian firms Late 1995Late 1995 431 CIOs431 CIOs Abbreviated “Abbreviated “DTDT””

What is IT Operations?What is IT Operations? OrganizationOrganization Budget emphasisBudget emphasis FunctionsFunctions

IT DepartmentIT DepartmentCIO

OperationsSystems

Development Support

Computer Computer facilities facilities operationsoperationsData entryData entry

Systems Systems analysis and analysis and designdesignProgrammingProgramming

Data Data administrationadministrationInformation Information centercenterInformation Information technologytechnology

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

Why CIOs LeftWhy CIOs Left Why predecessors leftWhy predecessors left Dismissed / demoted 34%Dismissed / demoted 34% New position 23%New position 23% Left voluntarily 18%Left voluntarily 18% Lateral move 10%Lateral move 10% Retired 19%Retired 19% Promoted Promoted 5%5% 44% dismissed from old position44% dismissed from old position

IT Operations BudgetIT Operations Budget 33% Systems and 33% Systems and

ProgrammingProgramming 85% maintenance85% maintenance 15% new development15% new development

decreasingdecreasing 10% Administration / Training10% Administration / Training 57% IT Operations57% IT Operations

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

IT Operations IT Operations FunctionsFunctions Systems operatorsSystems operators

operate hardwareoperate hardware schedule application runsschedule application runs input / output preparationinput / output preparation

Data-entry operatorsData-entry operators Maintenance techniciansMaintenance technicians

IT Operations TrendsIT Operations Trends Decreasing Decreasing

hardware costshardware costs ““Lights Out” computer Lights Out” computer

roomsrooms Increasing PCs / workstationsIncreasing PCs / workstations Expert System (Expert System (ESES) technology) technology

maintenance troubleshootingmaintenance troubleshooting

Trends Trends Increasing use of Increasing use of

automated toolsautomated tools Increase in complexityIncrease in complexity Blaab’s Law:Blaab’s Law: ““Old technologies persist inOld technologies persist in the face of new technologies”the face of new technologies”

Improving Data CentersImproving Data Centers Application functional Application functional

qualityquality how it meets user needshow it meets user needs

Technical qualityTechnical quality how easy to maintain?how easy to maintain? how efficient (how efficient (MIPSMIPS))?? tension between these goalstension between these goals

Improve Centers Improve Centers Application ageApplication age

legacy systemslegacy systems NNC study (1987)NNC study (1987) inefficient centers - 8.7 yearsinefficient centers - 8.7 years efficient centers - 4.2 yearsefficient centers - 4.2 years

Legacy SystemsLegacy Systems DT Study, 1995DT Study, 1995 65% legacy systems 65% legacy systems

slated for replacement slated for replacement were to be replaced over were to be replaced over next 2 yearsnext 2 years

Legacy systems still a problem, Legacy systems still a problem, but not as significantbut not as significant

Improve Centers Improve Centers Portfolio coveragePortfolio coverage

what % potential what % potential applications are applications are actually developed?actually developed?

beware of “hidden backlog”beware of “hidden backlog” NNC study:NNC study:

inefficient centers - 24%inefficient centers - 24% efficient centers - 40%efficient centers - 40%

Improve Centers Improve Centers Mix of Center staff:Mix of Center staff:

NNC study:NNC study: inefficient centers - inefficient centers -

more employeesmore employees greater % of them were greater % of them were

“hands on”“hands on” User feedbackUser feedback Problem detection / correctionProblem detection / correction

IssueIssue17% CIO turnover rate 17% CIO turnover rate

per year per year ANDAND 44% were 44% were dismissed or demoted.dismissed or demoted. Why would you want Why would you want

to be a CIO?to be a CIO? How can you be a How can you be a

“CIO Survivor”?“CIO Survivor”?What do you think?What do you think?

Center EconomicsCenter Economics ““CCharge-backharge-back” mode” mode

no operating budgetno operating budget charge clients for servicescharge clients for services clients can shop elsewhereclients can shop elsewhere centers can spend centers can spend

what they collect - what they collect - NO MORENO MORE!! Increasing quality Increasing quality

at decreasing costat decreasing cost

Center EconomicsCenter Economics Economies of scale Economies of scale

BIG IS BETTER!BIG IS BETTER! Gorch’s LawGorch’s Law

IP = IC ** 2IP = IC ** 2where:where: IP = increase in computer powerIP = increase in computer power IC = increase in computer costsIC = increase in computer costs

Used as barrier to PCs in 1980sUsed as barrier to PCs in 1980s

Center EconomicsCenter Economics Gorch’s Law works with Gorch’s Law works with

Data Centers because:Data Centers because: Mainframes more efficient Mainframes more efficient

than PCs for large volumesthan PCs for large volumes 3GL more efficient than 4GL3GL more efficient than 4GL Telecommunications value =Telecommunications value =

n (n - 1) where n = # nodesn (n - 1) where n = # nodes Larger network more effectiveLarger network more effective

Center EconomicsCenter Economics Typical efficiency measuresTypical efficiency measures Use Millions of Instructions Use Millions of Instructions

per Second per Second (MIPS)(MIPS) Hardware Costs per MIPSHardware Costs per MIPS Storage Costs per MIPSStorage Costs per MIPS Software Costs per MIPSSoftware Costs per MIPS Teale Data Center “Real Decisions” Teale Data Center “Real Decisions”

study - large IBMstudy - large IBM

Center EconomicsCenter Economics HardwareHardware

Total Group $31K / MIPSTotal Group $31K / MIPS Comparable Size 27K / MIPSComparable Size 27K / MIPS Govt. Industry 29K / MIPSGovt. Industry 29K / MIPS Teale Data Center 12K / MIPSTeale Data Center 12K / MIPS

Center EconomicsCenter Economics Storage costs - Teale 76% Storage costs - Teale 76%

of Comparable Size groupof Comparable Size group Software costsSoftware costs

Total Group 10.0K /MIPS Total Group 10.0K /MIPS Comparable Size 9.3K /MIPS Comparable Size 9.3K /MIPS Govt. Industry 11.4K /MIPSGovt. Industry 11.4K /MIPS Teale 8.7K /MIPSTeale 8.7K /MIPS

Center EconomicsCenter Economics Teale Quality goals:Teale Quality goals:

> 99.9% availability> 99.9% availability 4 hour network Mean 4 hour network Mean

Time to Repair Time to Repair (MTTR)(MTTR) Subsecond transaction responseSubsecond transaction response Immediate Help Desk assistanceImmediate Help Desk assistance

Center EconomicsCenter Economics StrategiesStrategies

Upgrade to latest Upgrade to latest equipment / softwareequipment / software

ConsolidationConsolidation OutsourcingOutsourcing

Center ConsolidationCenter Consolidation Chase Manhattan BankChase Manhattan Bank

100 data centers into 58100 data centers into 58 Saved $58 million in 2 yearsSaved $58 million in 2 years

First Interstate BankFirst Interstate Bank 13 data centers into 213 data centers into 2 reduced staff 2300 to 700reduced staff 2300 to 700 lowered overall budget by lowered overall budget by

$93 million$93 million

Center ConsolidationCenter Consolidation JC PennyJC Penny

20 data centers to 420 data centers to 4 Save $11 million a yearSave $11 million a year

State of WisconsinState of Wisconsin 12 data centers into one12 data centers into one Goal: save $1 to $3 million a yearGoal: save $1 to $3 million a year exempted from state exempted from state

procurement lawsprocurement laws

Outsourcing IT Outsourcing IT FunctionsFunctions WHY?WHY?

overall business trendoverall business trend global competitionglobal competition value-added criterionvalue-added criterion

Would customer pay for thisWould customer pay for this?? need for technical specialistneed for technical specialist employee costs (employee costs (fringe benefitsfringe benefits))

Outsourcing TypesOutsourcing Types Professional services Professional services

((consulting)consulting) Services (Services (training / data entrytraining / data entry)) Temporary employeesTemporary employees

contract programmerscontract programmers Transactions (Transactions (credit reportscredit reports)) Systems integratorsSystems integrators

When to Outsource When to Outsource Activity not strategicActivity not strategic Save at least 15%Save at least 15% Need technology specialistsNeed technology specialists Increase financial flexibilityIncrease financial flexibility

capital to operating expensescapital to operating expenses free personnel for developmentfree personnel for development acquire new technologies quickeracquire new technologies quicker

Consolidate,Consolidate,Transfer Transfer InternallyInternally

Consolidate,Consolidate,Transfer Transfer InternallyInternally

Improve,Improve,LeverageLeverageImprove,Improve,LeverageLeverage

OutsourceOutsourceOutsourceOutsource RedesignRedesign(Reengineer)(Reengineer)

RedesignRedesign(Reengineer)(Reengineer)

Non - CriticalNon - CriticalNon - CriticalNon - Critical CriticalCriticalCriticalCritical

““Best-Best-of-of-

Breed”Breed”

““Best-Best-of-of-

Breed”Breed”

NeedsNeedsImprove-Improve-

mentment

NeedsNeedsImprove-Improve-

mentment

QualityQualityQualityQuality

ImportanceImportanceImportanceImportance

What What NOTNOT to to OutsourceOutsource Strategy (Strategy (IT PlanIT Plan)) ArchitectureArchitecture

tied to firm’s culturetied to firm’s culture Portfolio (Portfolio (What / WhenWhat / When)) Vendor managementVendor management

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

Outsource FailuresOutsource Failures DT Study, 1995DT Study, 1995 Vendor expertise and Vendor expertise and

sophisticationsophistication Cost reductionCost reduction Improved delivery qualityImproved delivery quality Increased focus on Increased focus on

core competenciescore competencies Balance sheet improvementBalance sheet improvement

IssueIssueWhat IT functions in your What IT functions in your

company company havehave been been or or should beshould be outsourced? outsourced? Why?Why? What obstacles were there What obstacles were there

(or are there) to outsourcing? (or are there) to outsourcing?

Network Mgmt ScopeNetwork Mgmt Scope Fault handlingFault handling Performance monitoringPerformance monitoring Change (Change (project)project) management management Tactical (Tactical (futurefuture) planning) planning Cost controlCost control

Network Mgmt TrendsNetwork Mgmt Trends Emerging standardsEmerging standards Integration as a goal:Integration as a goal:

different networks (different networks (LAN / WANLAN / WAN)) different vendorsdifferent vendors

Combine with management of Combine with management of computerscomputers ““finger pointingfinger pointing””

Network (Network (Cont.)Cont.) Distributed applicationsDistributed applications

client / serverclient / server Oracle’s Lotus NotesOracle’s Lotus Notes

Increased automationIncreased automation Increased outsourcingIncreased outsourcing

Contingency MgmtContingency Mgmt NOTNOT disaster recovery disaster recovery

reactive, not proactivereactive, not proactive Worst case scenarioWorst case scenario

all our eggs in one basketall our eggs in one basket natural disasternatural disaster human error / sabotagehuman error / sabotage

Contingency Mgmt. Contingency Mgmt. Methods Methods Disaster Recovery firmDisaster Recovery firm

outsource strategic function?outsource strategic function? Off-line storageOff-line storage Data redundancyData redundancy

replicated databasesreplicated databases fragmented databasesfragmented databases

Off-line StorageOff-line Storage Teale Data CenterTeale Data Center

Airfreight data twice a Airfreight data twice a year to Florida (Colorado)year to Florida (Colorado)

Send an operator alongSend an operator along Electronic switchingElectronic switching Simulate switchover in OaklandSimulate switchover in Oakland

State of AlaskaState of Alaska At least 10 miles from siteAt least 10 miles from site

Contingency Methods Contingency Methods Back-up power generators Back-up power generators ““What ifWhat if” scenarios” scenarios

military war gamesmilitary war games EDSEDS

Scaled-down manual systemScaled-down manual system Back-up / recovery proceduresBack-up / recovery procedures Martin, figure 15-12Martin, figure 15-12

TransactionsTransactionsTransactionsTransactions

EntryEntryEntryEntry

OnlineOnlinelog fileslog filesOnlineOnline

log fileslog files

End End of of dayday

End End of of dayday Off-lineOff-line

log filelog fileOff-lineOff-linelog filelog file

Record Record contentscontentsRecord Record contentscontents

Backup Backup recordsrecordsBackup Backup recordsrecords

File File recoveryrecovery

File File recoveryrecoveryRecoveredRecovered

record record contentscontents

RecoveredRecoveredrecord record

contentscontents

Contingency Methods Contingency Methods Parallel systemsParallel systems Processing backup facilityProcessing backup facility

Foundation HealthFoundation Health Contingency Management PlanContingency Management Plan

How will IT outages affect your firm?How will IT outages affect your firm?

IssueIssueTell us a Contingency Tell us a Contingency

Management war storyManagement war story What happened?What happened? How did the firm recover?How did the firm recover? How could the situation have beenHow could the situation have been

averted?averted? mitigated?mitigated?

Points to RememberPoints to Remember What is “IT Operations”?What is “IT Operations”? IT Operation trendsIT Operation trends Improving Data Center operationsImproving Data Center operations Data Center economicsData Center economics Outsourcing IT functionsOutsourcing IT functions Managing networksManaging networks Contingency managementContingency managementThese are management issues!These are management issues!