Flexibility in Information Systems Context - Coursework Example

Introduction Utility Computing is concerned with providing of computational resources to businesses on a per-need basis. The computational resources include computing-power, data storage, network bandwidth and so on. Utility Computing offers corporate businesses the opportunity to maximize the efficacy and efficiency of their in-house information technology (IT) service provision as well as what they offer to their customers (HP, 2001). This means that utility computing allows businesses to out-source large areas of their IT service provision to specialist third party companies who then provide the computational resources as packaged services to them. Cloud computing and its components are a further development of utility computing and in our discussion we shall often use cloud computing to encompass both concepts. The idea behind cloud computing if it could be simplified is that businesses will no longer have to focus on initial investment in IT hardware, upgrades, software licenses and fixed maintenance fees, but on the variable investment on IT resources based on consumption under pay-as-you-use models (Siemens IT Solutions and Services, 2009). The recent credit crunch has created a number of significant challenges especially with regards to capital availability. This has implied that businesses are increasingly finding it difficult to maintain operations and grow in the short term. Also, we cannot neglect the impact of globalisation for example the effects of the credit crunch are not uniform around the world. The emerging markets such as China and India have experienced less significant slowdowns compared to the developed countries yet globalization has meant that businesses must remain competitive regardless of their location (Verizon Business, 2009) because the world has become a single market. This necessitates that businesses have to be redefined if they are to survive today or in the future. Utility computing offers business the option to shift their IT investments and costs from fixed to variable costs. However, more importantly, according to Gliedman, Erickson and Brown (2004) utility computing offers businesses the much needed flexibility, scalability and adaptability to confidently face rapid business changes and future business uncertainties. The isolated phase The first phase towards flexibility for a business is where the organisation is referred to as the isolated enterprise. Here the enterprise is characterised by undefined assets, IT silos, incompatibility and lack of processes (Starkey, 2009). Silos occur naturally within many organizations due to location, technology, capability, language, and many other means (Marquis, 2006). The drive behind silos was not bad per se; on the contrary they have proven to be very effective and useful.  According to Marquis (2006) the silo problem lies not with the silo concept at all, but rather with the lack of communication between silos, and lack of control over silos. For example, IT security risk management becomes a challenge where the IT departments do not have a cross-functional commitment to analyzing the impact of change on a system-wide security posture (Mayer, 2008). That is why silo-centric approaches can be wasteful and less effective. To overcome the demerits of IT silos concepts such as inter-silo communications, cross-training, cross-silo activities and sensitization efforts towards team building have been proposed. To harness the power of silos the organization requires planning, establishing of internal processes, process controls and strong leadership (Marquis, 2006).  Once this is done the organization moves on to the second phase of flexibility, which is standardization. Cloud computing offers the isolated enterprise several avenues through which it can tackle the problem of IT silos, incompatibility and lack of processes. For one cloud computing removes the burden of procurement and investment in changing IT infrastructure from the organization. As such the isolated enterprise having relinquished this role to specialist service providers it is able to have more time to focus on building and improving its internal processes, procedures and competencies. The enterprise has more time and resources to focus on the more productive issues of IT compliance and governance (Siemens IT Solutions and Services, 2009). The standardization phase According to Starkey (2009) at the standardization phase the organization is characterized by the following features: interoperability, common standards, process definition, industry standards, and vendor rationalization and so on. We have seen that to move away from the isolated enterprise the firm has to seek ways to work around the IT silos through establishment of processes that encourage cross-training, cross-silo activities and team building. According to Whitman, Santanu and Panetto (2006) the word interoperability refers to the ability of two or more systems or components to exchange information and to use the information that has been exchanged. Interoperability focuses on communication between applications. Interoperability helps in improving an organization’s focus in achieving its mission and vision in an effective and efficient manner (Molina, Chen, Panetto, Vernadat & Whitman, 2004). Interoperability caters for systems agreeing on the format for data exchange so that transportation of messages from one application to another is made possible within an organization and/or between different organizations without the need for additional tailoring (Whitman, Santanu & Panetto, 2006). IT standardization enhances interoperability by keeping hardware and software as consistent as possible (Peters, 2008). Having standard IT infrastructure components also aid firms in building processes that make it fast and easy to produce new products and services. Standardized enterprise-wide data definitions and processes minimize coordination costs which drives an organisation towards operational excellence (Van Wessel, 2008). Moreover, Van Wessel (2008) says that an organization could make the process of arriving at its technical choices more efficient by condensing its experience and knowledge into comprehensive standards. However for the best results, Kayworth and Sambamurthy (2000) postulate that standards be implemented using a moderate degree of comprehensiveness and high levels of restrictiveness and enforcement. Brunsson and Jacobson (2000) highlight some common objections to standards and standardization that include hindering organisational innovation and impeding individualism. The trick is to use standardisation to create an enterprise architecture that facilitates flexibility to anticipate continuously changing business requirements. Standardisation also implies that the organisation is able to deal with fewer hardware and software vendors (Peters, 2008). This reduces the associated cost of invoices processing, it increases the spending with the fewer remaining suppliers as well as enhancing vendor intimacy. Greater relationship with one’s suppliers allows for extra negotiation of terms and prices (Zaino, 2007) which further minimises the business’ costs. Utility computing is about purchasing of IT resources (HP, 2001): infrastructure and software on an on-demand basis. For this to occur the organisation would need to have already put structures in place that will ensure that upon demand computing can be easily increased and decreased vice versa (Chakraborty, 2008). However, through utility computing the organization will not have to fret too much about, say how compatible its IT infrastructure is with its customers, all that is catered for by the utility computing service provider. This in effect implies that the enterprise has fewer vendors to deal with and thus focuses more on innovation and building operational excellence (Verizon, 2009). Consolidation A firm that falls within the consolidation phase typically is characterised by centralisation, data integration, common platforms, process improvement and network convergence (Starkey, 2009). According to Peters (2008) standardisation and centralisation go hand in hand. He cites an example of the case where standardisation gives the IT department more control over IT purchases and more control over what users are allowed to do with their office computers. Centralisation also enables the firm to make technology inventories and track its IT assets more cost-effectively. Centralised purchasing on the other hand prevents the likelihood of making purchases that lead to cases of hardware and software incompatibility. Once incompatibility issues have been prevented the organization is empowered to have an enterprise-wide uniform view of data from a combination of different sources, internal and external. Lenzerini (2002) refers to this ability as data integration and states that in our current age of information explosion the need to share existing volumes of data is of strategic importance to any organization. However, with the diverse IT infrastructure available and the high costs of IT investments, inter- and intra-organizational standardization is not enough. There is a great need for the presence of common platforms which many organizations may not be willing to foot the costs to develop or own. Cloud computing relieves most businesses from this worry. With cloud computing the organization does not bother about procuring the software application, platform and/or the underlying infrastructure. Instead, the organization leases the cloud computing services depending on its variable need. IT costs incurred shift from being a capital-intensive barrier to controllable variable cost (Siemens IT Solutions and Services, 2009). The basis for this paradigm shift is the Internet as an IT platform that is now available everywhere. With distributed data storage facilities, telecommuting, increased software and hardware vendors, the modern enterprise continues to seek the most affordable combination of IT infrastructure and services to give it a competitive parity or edge over its competitors. This means that for an organization to fully benefit from cloud computing, which is accessible and affordable to its competitors, the organization will need to improve its own processes (Zaino, 2007). Communication like cost has increased in importance, therefore a greater need for convergence of network applications. A firm at this consolidation phase therefore relies heavily on the presence of network architectures that support both voice and data protocols while offering high security. Multi-function security and networking devices have become the norm (Ashley, 2007) as they are combined into a single product. The benefit of cloud computing is that all this can easily and competently be handled by the service provider for an enterprise. Modularisation At this phase the organization gets into contact with modern terminologies such as modularization, and virtual corporations. Van Wessel (2008) defines modularization as the concept where a firm is able to design its products or processes from the independent building blocks based on customer requirements which are then assembled inexpensively into the desired forms. Modularization has been the force behind what we refer to as mass customization. This is done by creating modular components that can be configured into a wide variety of end products and services to offer economies of scale and economies of scope (Van Wessel, 2008). Wolters (2002) adds that processes also can be made to be modular through use of loosely coupled process components that have standardized interfaces. These interfaces could be operating procedures, transaction protocols and / or input/output agreements. We realize that for the organization to profit from modularity, it requires high customer intimacy because individual customer input is required for product or process development (Wolters, 2002). It is obvious that this requires IT infrastructure that may prove to be a barrier to many small organizations in terms of affordability or sophistication. With utility computing, however, small organizations are able to lease these IT infrastructure based on the demand, thus they are able to avoid the business barrier of having their limited capital outlay being tied down (HP, 2001). In utility computing investment in IT infrastructure is almost always only required by the service provider (Siemens IT Solutions and Services, 2009). Another characteristic of an organization in the modular phase is virtualization of assets. According to Singh (2004) virtualization is a framework that allows a firm to isolate and abstract its underlying hardware from its lower-level functionalities. This enables the organization to be able to divide the resources of a computer into multiple execution environments through techniques such as time-sharing. Singh (2004) cites some of the motivations behind virtualization as being consolidation of workloads of several under-utilized servers to fewer machines and creation of execution environments with resource limits. Virtualization is what enables grid computing to be possible. A simple definition of grid computing is the co-ordinated use of disparate IT resources across a network that allows those IT resources to function as a unit (Educause, 2006). Through grid computing, an organisation can be able to aggregate its computing power from accessing remote IT resources without the need for investing heavily in IT. The organisation through utility computing will simply pay the service provider for extra computing power on-demand. Conclusion In conclusion we see that utility computing offers an enterprise more time and resources to focus on the more productive issues such as innovation, operational excellence and IT governance. The organization is forced to improve its processes which in turn foster team building. Employees are empowered through access to an enterprise-wide uniform view of data due to the increased data integration capacity. Another major benefit of utility computing is the freeing of organisational resources from investment in IT infrastructure to controllable variable cost and the possibility of enjoying high computing power at a low cost through grid computing. We cannot forget the importance of modularity with regards to enhancing customer intimacy and thus ensuring that an organization is constantly giving value because it is perpetually in contact with its customers. References Ashley, M. (2007). Network convergence: the unified network platform. [Technical White Paper]. Still Secure. Brunsson, N & Jacobson, B. (2000). A World of standards. Oxford University Press: New York Chakraborty, A. (2008, December 23). Ten key reasons enterprise cloud computing is going places. Web 2.0 Journal. Retrieved on July 14, 2010, from http://web2.sys-con.com/node/782055 Educause (2006). 7 things you should know about grid computing. Educause Learning Initiative. Retrieved on July 14, 2010 from, http://net.educause.edu/ir/library/pdf/ELI7010.pdf Gliedman, C., Erickson, J. & Brown, A. (2004, June 8). Valuing IT flexibility. Forrester Research. Hewlett-Packard. (2001, October). HP Utility Data Centre [Technical White Paper]. IEEE (1990). IEEE Standard Computer Dictionary: A Compilation of IEEE Standard Computer Glossaries. Kayworth, T. & Sambamurthy, V. (2000). Facilitating localized exploitation and enterprise wide integration in the use of IT infrastructures: The role of PC/LAN infrastructure standard. Database for Advances in Information Systems, 31, (4), 54 – 81. Lenzerini, M. (2002). Data Integration: A Theoretical Perspective. PODS 2002.  233–246. Marquis, H. (2006). Don’t tear down those silos, build them up! DITY, 2 (38), 1-5. Mayer, A. (2008, September). Security risk and overcoming IT silos. ISSA Journal. Molina, A., Chen, D., Panetto, H., Vernadat, F. & Whitman, L. (2004). Enterprise integration and networking: issues, trends and vision. In Proc. of the IFIP International Conference on Enterprise Integration and Modeling Technology, 183, Toronto, Canada, October 9-11. Peters, C. (2008, July 7). Tips for standardizing your IT infrastructure. Maintain IT Project. Retrieved on July 14, 2010 from http://www.connectingup.org/ict-recourses/strategy/tips-standardising-your-it-infrastructure Siemens IT Solutions and Services. (2009). Cloud Computing – Business Models, Value Creation Dynamics and Advantages for Customers [Technical White Paper]. Singh, A. (2004, January). An Introduction to Virtualization. Retrieved on July 14, 2010 from, http://www.kernelthread.com/publications/virtualization/ Starkey, D. (2009, December 2009) Lecture on flexibility. IS for managers. Masters level course 2009/2010. Portsmouth: University of Portsmouth Van Wessel, R. M. (2008). Business Benefits from Company IT Standardization. [Thesis]. Tilburg University. Verizon Business. (2009). Creating IT Flexibility: How Network-Led Sourcing Can Help IT Better Support Business in a Changing World. [Technical White Paper]. Retrieved on July 14, 2010 from http://www.verizonbusiness.com/resources/whitepapers/wp_creating-it-flexibility_en_xg.pdf Whitman, L., Santanu, D & Panetto, H. (2006). An enterprise model of interoperability. IFAC. Retrieved on July 14, 2010 from http://hal.archives-ouvertes.fr/docs/00/08/20/37/PDF/366a.pdf Wolters, M.J.J. (2002). The Business of Modularity and the Modularity of Business. [Doctoral Dissertation] Erasmus University Rotterdam, ERIM Ph.D. Series in Management no.11, The Netherlands TRAIL Research School. Zaino, J. (2007, October 25). IT Flexibility Key to Alignment with Business Goals. InformationWeek. Read More