Managing IT Operations

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
• Blaabs 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!
• Gorchs 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

• Gorchs 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 firms 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
• Oracles 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!