Information Technology - Essay Example

Analyze what Cloud and utility computing is in an IS context, and critically assess How they might lead to the IS department becoming both a means toempower employees and a value generator. Students ID no: Portsmouth, July 19, 2010 Table of Contents 1.0 Introduction Information systems (IS) are integral part of organisations for managing functions and processes of business units in dynamically evolving global competition. Technology architecture addresses the modus operandi of department handling the operation of Accounting and Financial, Human Resource Management, Sales and Order Management, Logistics and Supply Chain, Manufacturing, Inventory management, and Customer Relationship management (Luftman, Papp & Brier, 1999). Gray & Larson (2006) explains the major Benefits of the Information System are described in following bullet points to understand the importance of Information System and why this is essential in today's corporate infrastructure: Efficient execution and integration in introducing new business processes. IS provides automated template for introducing new business process with affecting legacy system. It helps system in smooth change by adopting change and configuration management process (Gray & Larson, 2006). Better Quality and reduced time in IT service IS provides balance scorecard to check the measurement of each service' productivity which helps employee in taking the ownership of the function to show their effectiveness by converting repeating task into automated system (Gray & Larson, 2006). The quality of service is improved by defining roles and responsibilities of employee and checking their productivity (Gray & Larson, 2006). Improved customer satisfaction and service. Better change management process helps in resolution time of application and system issues which results in happy customer (Gray & Larson, 2006). Reduced asset expenses. Track history of purchased software packages helps in negotiating license in up gradation and purchasing new package in lower price (Gray & Larson, 2006). Enable IT - Business alliance. Aligning business strategies with IT service helps in reaching customer's need through user and senior management participation and support (Gray & Larson, 2006). Hence, IS reduces major gaps in business unit and customer's requirement by providing check and solution for smooth functioning of each process (Gray & Larson, 2006). Hypercompetitive nature of business requires flexibility as an important aspect of IS to respond quickly to explore the opportunities and combat the challenges of business arising from globalisation in agile manner (Starkey, 2009). Flexibility needs the control of computing power in lightening fashion along with integration of system to escalate the performance (Starkey, 2009). Portability is essential characteristics of IS to move the operations across the globe applying network system for accomplishing the business requirement in effective and cost-efficient way. Economic recession further validates the importance of flexibility as CEO can apply changes in business model for beneficial impact. Cloud and utility computing enables company to move through four phases of flexibility from isolation, standardisation, consolidation, and modularisation using new infrastructure elements and implementing IT Governance (Starkey, 2009). The purpose of this paper is to explore how information systems infrastructure elements can form part of a strategy to improve the flexibility of a company from an IT standpoint along with how they might lead to the IS department becoming both a means to empower employees and a value generator. 2.0 IT Governance De Haes and Van Grembergen (2004) suggest that IT Governance can be implemented through a framework of structures, processes, and relational mechanisms which is presented in Table 1, can be used guidelines for applying the IT governance process in organization. Structures Processes Relational Mechanisms Tactics IT executives and accounts Committees and councils Strategic IT decision making Strategic IT monitoring Stakeholder participation Business/IT partnerships Strategic dialog Shared learning Mechanisms Roles and responsibilities IT organization structure CIO on board IT strategy committee IT steering committee(s) Strategic information systems planning Balanced IT scorecards Information economics Service level agreements (SLA) COBIT and ITIL IT alignment/ governance maturity models Active participation by principal stakeholders Collaboration between principal stakeholders Partnership rewards and incentives Business/IT co-location Shared understanding of business/IT objectives Active conflict resolution (nonavoidance) Cross-functional business/IT training Cross-functional business/IT job rotation Table 1: A framework of structures, processes and relational mechanisms for implementing IT governance (Source: De Haes & Van Grembergen 2004) IT governance framework gives the environment to solve problems related with technology, people, processes, systems which can be summarized in following ways (Kerzner, 2006):- (1)Proposal - Propose an objective and step-by-step approach to impact of IT investments in Business strategy on a global scale (Kerzner, 2006). (2)Initial Investigation - Customer needs website to be always available. IT team reviews the company technological requirement to standardize it (Kerzner, 2006). (3)Detailed investigation - Organization plans to synch IT with the corporate strategy at operational level by analyzing business process and technical expertise (Kerzner, 2006). (4)Development and testing - Plan for the cloud and utility computing architecture has following principle streams: 1. Business Model and Strategy - The key parameters has been identified for defining the business strategies and investment priorities which is crucial in designing the workflow for business processes (Kerzner, 2006). 2. Business Intelligence - Data profiling provides information for strategic and operational business decisions (Kerzner, 2006). 3. Business Information - Data model addresses issues about data security and relationships (Kerzner, 2006). 4. Business Process - Business workflows captures business rules to handle the daily business operations (Kerzner, 2006). 5. Business Application - Data sharing, management and insertion happens through using inbuilt packages in cloud and utility computing to automate the business processes (Kerzner, 2006). 6. Enterprise Integration - It helps seamless flow of information (Kerzner, 2006). 7. Cloud and Utility Computing Infrastructure. The operating system, software capability, and networks are pre-requisite for running cloud and utility computing applications (Kynetix Technology Group, 2009). (5)Operation and closure -IT team develop a multichannel enterprise-wide architecture using Microsoft Azure or IBM cloud computing Management Framework (Tesco.com, 2008). 3.0 Cloud Computing Aberdeen Group (2009) reports the finding of September, 2009 to reflect reduction of 18% in IT expenses through application of cloud computing and reduction of 16% in the expenses of data centre. IBM provides cloud computing architecture support to assist companies in deploying new process for driving business changes (IBM, 2009). Deployment of cloud computing in the Tesco supports the business objective as well as customer satisfaction (Lansley, 2009). The collaboration of Tesco IT team with Microsoft Corporation in implementing Azure leverages the scalability of retail giant with new API services (Lansley, 2009). The adoption of best practices to run cloud computing ensures the optimal usage. The cost saving makes cloud computing better option in comparison to enterprise implementation framework (EIF) and software as a service (SAAS) (Kynetix Technology Group, 2009). The service layer agreement with Microsoft Azure helps in assessment of technological innovation serving in accomplishing the goal of the business strategy (Kynetix Technology Group, 2009). Tesco provides access to the API from online shopping applications to apply the changes in the existing functionalities. The IT director of Tesco, McNamara finds the positive result from the bringing the applications on cloud (Sharma, 2010). 3.1 Scalability The elasticity of the cloud computing platform to adjust according to the need of capacity provides an edge over other hosts in the scalability aspect (Kynetix Technology Group, 2009). The on-demand adjustment for servers, data storage, and networking complies with flexibility of implementing the complete lifecycle of the applications without constraints of capacity at faster pace in seamless manner (Kynetix Technology Group, 2009). 3.2 Cost-Saving Forrester report supports the cost effective implementation in cloud computing environment in comparison to traditional approaches (Kynetix Technology Group, 2009). Although companies find cloud computing expensive if they consider the charges of internal server but the inclusion of cost related to technical experts for running the data centre, resource required for purchase of internal server, bills and investment of power system, research expense for assessing the hardware, procurement of hardware, facilities management, resource for designing data centres, and expenses of account maintenance for licenses in internal server weighs the decision in favour of adopting the cloud computing platform (Lansley, 2009). The rate of cloud computing applies the consumption on hourly or gigabytes basis to make it economical option in the long run (Kynetix Technology Group, 2009). 3.3 Business Agility Business agility to respond the changing nature of demands in faster manner is definitely as edge in the case of cloud computing as new applications can easily be deployed as well as additional storage takes place rapidly (Kynetix Technology Group, 2009). The application of innovation in business process can easily be checked without extra burden on the system and resources (Lansley, 2009). Tesco applies the multi-environment approach for production, development, and testing on demand as it would not have been possible in the traditional cases. 3.4 Inbuilt Disaster Recovery and Back-Up Sites The cloud computing environment provides the inbuilt disaster recovery plan and back-up sites. The cloud computing model reduces the chance of significant impact from the loss of data centres as the back-up sites prevent the cases of data loss (Lansley, 2009). The provision of high level of duplicate system in the cloud computing is significantly better than traditional approaches at cost issues (Kynetix Technology Group, 2009). 3.5 Device and Location Independence The independence of application form the device and location further adds the applicability of cloud computing in handling the voluminous data in portable manner. The usage of iPhones, SmartPhones, GPS facilities will be lot easier through cloud computing platform (Lansley, 2009). This will open the platform for innovation in cloud based applications. 4.0 Utility Computing According to Starkey (2009), utility computing applies the organising capability of firms to run applications handling business processes using service components over the network. Starkey (2009) reflects on the issues in computing power before application of utility computing and resolution through application of utility computing. 4.1 Issues before application of utility computing: The era of IT system faces numerous challenges of computing before application of utility computing. Isolated Islands of computing power were not in synch with business demand of global market (Starkey, 2009). The limited capacity of Physical servers in terms of physical power, storage and cooling facilities restricted the seamless integration of computing system (Starkey, 2009). Data connectivity was primary concern for business process as standalone applications were not enough to design comprehensive solution (Starkey, 2009). Enterprise integration of computing system was difficult for seamless flow of data between systems (Starkey, 2009). 4.2 Empowerment of Business after Application of Utility Computing Utility Computing empowers business through Central management of horizontal pool of resources is possible through application of virtualisation (Starkey, 2009).Innovative Service oriented architecture (SOA) allows the management of software and hardware services to handle operations of different business modules (Starkey, 2009). Web services along with SOA assists in delivering solution through creation of application based on similar kind of Workloads, data, resources and client identities clubbed together (Starkey, 2009). Corporate policies can define the provisioning, optimisation and availability of computing services to meet the needs of each processing job (Starkey, 2009). These features of utility computing increases the agility of IT system to respond quickly to changing business demands of organization (Starkey, 2009). 5.0 Four phases to flexibility Starkey (2009) emphasizes on the flexibility of IT system to deliver the computing services capable of responding in agile fashion to changing demands of business to increase the revenue. Scalability, cost saving, business agility, inbuilt disaster recovery and backup plans, device and location independence along with promotion of greener centres increases the suitability of cloud computing and utility computing for contemporary business (Kynetix Technology Group, 2009). 5.1 Isolation Cloud and utility computing provides the opportunity of concentrating on operational expenses rather than dealing with woes of capital investment. Interoperability features of cloud and utility computing forces organization to leave a perimeter of isolation for maintaining cost-effective processes (Kynetix Technology Group, 2009). 5.2 Consolidation Starkey (2009) summarises the advantages of second phase of flexibility consolidation as process of reducing redundant operations of system administration, simplifying data management complications, and optimizing infrastructure utilization. He further explains the financial benefits of consolidation in terms of cost-effectiveness related to overheads minimization, resource expenses, automation of maintenance, licensing fees, and data center operation. The risk factors involved in the traditional system considering the huge percentage of failure in IT projects compels the company to think before investing the huge cash into infrastructure. Consolidation of projects through application of cloud and utility computing provides source of income, with the reduction on the total cost to be used as an investment in new developments (Kynetix Technology Group, 2009). 5.3 Standardization Gantz and Turner (2002) reflects on the importance of standardization as it assists in reducing costs of transaction through defining standard protocols of communications and empowering customers to raise their request and concern which in turn optimizes cost of production to reduce total cost of operation. Tesco is one company currently applying standardization. ITAP (IT Architecture and Planning) advisor consultant Roy Sharples along with Patrick Cooney, head of architecture at Tesco.com works on the development of IT strategic management framework and technology environment to manage IT as an integrated portfolio of business strategy (Tesco.com, 2009). AS mentioned in published article of Microsoft Support and help site that the Tesco applies the Enterprise Implementation Framework for IT governance (Saran & Cliff, 2005). Standardization reduces complexity of communication between IT systems to complete business process. 5.4 Modularization Persson & Ahlstrom ( 2006) reflects on fourth phase of flexibility to modularise process of creating different sub-components as independent that can be clubbed together to manufacture the complete product. Cloud computing and utility computing provides methodologies to increase the speed of return on investment through cost of reduction by eliminating redundant process (Kynetix Technology Group, 2009). Leese (2009) observes the need of managing relationships to concentrate on business activities rather than resolving technical issues for redundant operations. Leese (2009) summarises the importance of cloud computing in reducing the cost of infrastructure set-up required for customer relationship management (CRM), document management, and communications. 6.0 Conclusion The increasing horizon of IT system to access the application of key stakeholders in the business such as customers, suppliers, and partners applying the services of cloud and utility computing platforms increases the utility to further boost the revenue figure of the companies (Starkey, 2009). Strategic IT investments must also be pursued to create future revenue growth and to further improve sustainable financial performance for all stakeholders. If we focus on all the major areas of cloud and utility computing system management, IT governance helps in better alignment of IT and Business strategy by discovering major risk issues to take care of as well as highlighting the improvement in existing business model (De Haes & Van Grembergen, 2005). IT governance leverages the overall functioning of system or structure by improving the cross-unit interaction, automating the repeating task and reducing the redundant operations (De Haes & Van Grembergen, 2005). The energy saving from cloud computing provides extra reason of applying the cloud computing in organisations to comply with eco-friendly policies included in corporate social responsibilities (Kynetix Technology Group, 2009). It is benefitted by creating special unit like ITAP which monitors balance scorecard to check the performance of each department in terms of cost, effectiveness and efficiency (Tesco.com, 2008). If demand occurs, new project can be started to enhance the performance of unit. References Aberdeen Group, (2009). Business Adoption of Cloud Computing. Retrieved July 12, 2010 from http://www.aberdeen.com/summary/report/benchmark/6220-RA-cloud-computing-sustainability.asp De Haes, S. and Van Grembergen, W. (2004). IT Governance and its Mechanisms. Information Systems Control Journal, 1. De Haes, S. D. and Van Grembergen, W. (2005). IT Governance Structures, Processes and Relational Mechanisms: Achieving IT/Business Alignment in a Major Belgian Financial Group in Proceedings of the 38th Hawaii International Conference on System Sciences, 1-10. Gantz. J., Turner, V. (2002). Standardization: the secret to IT leverage. Retrieved July 15, 2010 from http//www. www.dell.com/downloads/global/solutions/idc_standard.pdf Gray, C. F. & Larson, E. W. (2006). Project management: the managerial process. New York, USA: McGraw-Hill/Irwin IBM (2009). IBM smart business. Retrieved July 12, 2010, from http://www.ibm.com/ibm/cloud/ibm_cloud/ Kerzner, H. (2006) Project Management Best Practices: Achieving Global Excellence, Hoboken, N.J.: Wiley. Kynetix Technology Group (2009). Cloud Computing. Retrieved from download.microsoft.com/.../KynetixCloudComputingStrategyGuide.pdf Lansley, Nick, 2009. Tesco API Now Running in Microsoft Azure 'Cloud'. Retrieved July 17, 2010 from http://techfortesco.blogspot.com/2009_03_01_archive.html Leese, J. (2009). The Financial Benefits of Cloud Computing. Retrieved July 11, 2010 from http://www.the-financedirector.com/features/feature61743/ Luftman, J.N., Papp, R. and Brier, T. (1999).Enablers and Inhibitors of Business-IT Alignment. Communications of the Association for Information Systems, vol. 11, no. 3es, pp. 1-33. Persson , M.,hlstrm, P., (2006). Managerial issues in modularising complex products. Technovation, 26: (11) 2201-1209 Saran & Cliff (2005). Tesco uses CA for standardization, Computer Weekly, 00104787 Sharma, Manu (2010). Tesco HSC Banks on Cloud and Green Technologies. Retrieved July 19, 2010 from http://www.cxotoday.com/India/News/Tesco_HSC_Banks_on_Cloud_and_Green_Technologies/551-108947-912.html Starkey, D. (2009). Lecture on flexibility. I.S. for managers. Masters level course 2009/2010. Portsmouth: University of Portsmouth Starkey, D. (2009). Lecture on overview of information system for managers and flexibility. Information system for managers module. Postgraduate course 2009/2010. Portsmouth: University of Portsmouth. Starkey, D. (2009). Lecture on grid computing, cloud and utility computing. Information system for manager's module. Postgraduate course 2009/2010. Portsmouth: University of Portsmouth. Tesco.com (2008). Microsoft IT Architecture and Planning (ITAP) Advisor Helps Shape Future of Online Retailing. Retrieved from http://www.microsoft.com/emea/partnersolutionmarketplace/CaseStudyDetail.aspxcasestudyid=4000001861 Read More