Essentials of MIS, 11e

Laudon & Laudon

Lecture Notes

Chapter 5 IT Infrastructure: Hardware and Software

5.1 IT Infrastructure: Computer Hardware

Because information is becoming such a valuable resource of the digital firm, the infrastructure used to care for
the resource takes on added importance. With the proliferation of computing devices such as laptop computers,
smartphones, and tablet computers, people want the ability to access information wherever they are whenever
they want it. Data centers help give them those opportunities.

Let’s examine all of the components that comprise an IT infrastructure of today and tomorrow, and how best to
manage them.

Infrastructure Components

When you mention the phrase “information technology infrastructure,” most people immediately think of just
hardware and software. However, there is more to it than just those two. Five components must work in concert
together to give the firm a competitive advantage.

 Hardware: input, processing, output, storage, and delivery

 Software: system software, application software, and enterprise integration
 Data management technology: organize and deliver data
 Networking and telecommunications technology: data, voice, audio, and video
 Technology services: run and manage infrastructure and train users

Over the years, it’s become quite common to install different systems throughout various parts of a company’s
infrastructure. Throwing out all the old hardware and software in legacy systems and starting from scratch may
seem the easiest way to solve a problem. It’s just not practical or cost effective. Systems integration is the art
and science of tying old systems into newer ones to form a cohesive unit. Piecing together these information
systems into a seamless whole can be a daunting task. But it’s necessary for sharing information among all
departments and managers in a company.

Types of Computers

Classifying computers depends largely on the computing capacity of the processor and the peripheral devices.
Managers should determine what tasks the system will be used for, how many users will likely access it at any
one time, and how much data will be processed and stored. The categories are:

 Personal computer: includes desktops, laptops, personal digital assistants, and even cell phones.
 Workstation: has more computing capacity in its CPU than a typical personal computer. Scientists,
engineers, and those working with large graphics files are the main users.
 Server: used primarily in networks. Some servers contain communication software while others contain
the application software and data users need to process transactions.
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 Mainframe: has the necessary power and speed to process thousands and millions of transactions from
the Internet and networks and has the storage capacity needed for all the data captured and processed by
larger information systems.
 Supercomputers: are making a comeback in popularity because of the speed and storage capacity
required in networks.

Let’s take a moment and examine one more type of computing called grid computing. Think about how much
time you don’t use your personal computer. It’s actually quite a lot. In fact, most computers are idle more time
than not. What if you could combine all the idle time of hundreds or thousands of computers into a continuous,
connected computing capacity to capture, process, manage, store, and retrieve data? You wouldn’t have to
purchase mammoth, super computers to realize this capability and capacity. You just have to turn to grid
computing. It allows companies to save money on hardware and software, and increase computing and
processing speeds to make the company more agile.

Computer Networks and Client/ Server Computing

You need to understand the server/client computing structure because of the increasing popularity of networks
(see Figure 5.2).

Figure 5.2: Client/Server Computing

Think of an octopus, with the body representing the server and the tentacles representing the clients. At the
heart of every network is a server. It can be a mainframe, midrange, workstation, or a souped-up personal
computer. It’s where some of the data, applications software, and other instructions are stored that network
users need to communicate with and process transactions on the network. The client computer is the node on
the network that users need to access and process transactions and data through the network.

Rather than maintain all data and computing processing on a single computer as you would have in a
centralized processing structure, networks provide distributed processing capability necessary in today’s
business environment. Data and applications are available to users wherever they are whenever they need it.

Compare Figure 5.2 to Figure 5.3 and you’ll see that the N-tier client/server architecture merely takes the
same client/server structure we discussed and ramps it up in size to match the computing requirements in large
businesses. The “N” represents any number of servers a business needs with the workload distributed among
specialized servers.

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Figure 5.3: A Multitiered Client/Server Network (N-Tier)

If a business has a very large network, it may decide to isolate anything having to do with Web sites onto a
Web server. Requests for Web pages are processed faster than if the Web data were co-mingled with other
data. The same happens when a business decides to isolate applications operations to an application server. It’s
not that these servers are built any differently than other servers. It’s simply a matter of having the servers
perform just one function very quickly.

Storage, Input, and Output Technology

Input, storage, and output peripheral devices play a big role in how fast and efficiently the digital firm can turn
raw data into useful information.

Secondary Storage Technology

Besides the primary storage areas of ROM and RAM, other storage devices include the hard disk drives in
almost every computer, removable disks, and magnetic tape storage. These are referred to as secondary storage.
The kind of storage necessary is dictated by the computer’s size and how it’s used. As with most other
components, the cost is dropping significantly while the technology is improving all the time.

The most common form of secondary storage is the magnetic disk. Just about every personal computer has a
hard disk drive located in the box that sits beside the monitor. All the operating system software and application
program software resides on the hard disk drive for long-term storage. Data files are also saved to the hard disk.

Solid state drives (SSDs) are used in smaller PCs, smartphones, and tablets. They are smaller in physical size
while allowing storage of much more data.

USB flash drives are a convenient way to store data but more importantly, give you a way to take it with you
wherever you go. Flash drives come in a variety of storage sizes and you simply plug them into a USB port on
any computing device to access the contents.

Most personal computers use a single magnetic disk for the hard drive. Businesses that require more storage
space use RAID (Redundant Array of Inexpensive Disks) technology. Not only does RAID increase storage
space, but it provides an extra measure of reliability; if one disk fails, processing is moved to the other disks.
Typically, this storage technology is reserved for very large networks.

Optical disks have become one of the most preferred methods of storing data. Although CDs are still used,
DVDs are quickly replacing them.

We’ve probably all seen a compact disk read-only memory (CD-ROM) that holds music. Most software
programs are stored on compact disks (CD). The drawback to this type of disk is that it can usually be written
on only once because the data are stored on the disk by literally burning pits into its surface. To overcome this
problem, users can substitute CD-RWs (compact disk-ReWritable) instead. This type of CD can be used
multiple times.
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Digital video disks (DVD) store more data than CDs and can be used on computers, portable DVD players, or
with televisions. The disks hold about 4.7 gigabytes of data; that’s enough for two to four hours of video.
Recordable and rewritable DVDs are popular for storing audio, video, and graphic files.

Magnetic tape is still used on larger mainframe computers for data that don’t require fast access, such as
historical records maintained by credit card companies. Even though it’s slower than magnetic and optical
disks, many companies still use this technology because it’s cheap and can store massive amounts of data.

The next time you log on to the Internet and access your favorite portal such as Yahoo!, take a moment to think
about how your page preferences are stored. How did Yahoo!’s computer instantaneously know that you prefer
the latest hockey scores instead of stock quotes? When you go to your favorite shopping Web site, how is it that
the computer remembers your favorite color is blue instead of red? Remember, you’re not the only one using
the Web site; there are thousands and thousands of other people the computer must keep track of. Where are all
those bits and bytes stored?

Figure 5.4: A Storage Area Network (SAN)

All that data may very well be kept on a storage area network (SAN), as Figure 5.4 shows. As more and more
businesses move to the Internet, these networks will become more common. Online users want instant access to
data, and SANs help companies provide it.

Input and Output Devices

Data go in and information comes out of computer systems via peripheral devices. The speed, capacity, and
ease-of-use of these devices are constantly improving.

While Table 5.1 in the text provides a synopsis of common input and output devices, let’s take a moment to
discuss the devices you may not see very often.

Companies such as Federal Express and UPS use pen-based input devices, consisting of a wireless tablet and a
pen stylus. The data are then transferred directly to a mainframe computer, allowing packages to be
instantaneously tracked from sender to recipient.

Touch screens are also becoming more common and are used as computer monitors, television screens, or in
household appliances. Digital scanner technology extends far beyond the page scanners attached to personal
computers or used in offices. The scanners grocery stores use at the checkout counter are a great example of this
technology. Voice recognition technology allows you to input data using a combination of a microphone
headset and software that recognizes your voice.

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Contemporary Hardware Trends

The network is the computer. Louis Gertsner, former CEO of IBM, uttered this phrase as far back as the mid-
1990s. It’s even truer now than it was back then. We’re no longer content to view data in a plain-text format on
paper. We want to enhance our communications with graphics, video, and audio. We don’t want four or five
different computing devices but everything all rolled into one package. And, we want all of it accessible
wherever we are whenever we want it.

Let’s take a look at where we’re headed with hardware components.

The Mobile Digital Platform

One of the most dynamic hardware trends to appear for personal and business use is the increased use of
cellphones and smartphones for computing tasks. People are no longer tied to a desktop PC or laptop computer
to transmit data, surf the Web, send email and instant messages, or access data on corporate systems. Netbooks,
tablet computers, and digital e-book readers, such as the Amazon Kindle, are also taking on computing tasks
that used to require a full-size computer.

These devices present both opportunities and challenges to the digital firm. Users can access much more data
instantaneously wherever they are. On the flip side, they also create another node on a network that
unauthorized users can use to access business systems and wreak havoc.

Consumerization of IT and BYOD

In the past, computing devices and software were developed specifically for business applications. Very seldom
did the hardware and software spill over into the consumer market. On the flip side, hardware and software
created for consumer use saw very little application in the business world. That has changed in the last few
years as the two have merged and crossed over. Now, software platforms such as Facebook have found a cozy
home in the business world. As more and more people purchased smartphones and other technologies for their
personal use, they were not content to leave the handy devices at home when they went to work.

The consumerization of IT explains the technology along with BYOD, bring your own device. But, along with
bringing their own devices, employees are bringing a new set of problems to the doorstep of their organization’s
IT department. The most prevalent problem is securing the business’s core information systems from threats
posed by malware and data theft. Access to the corporate network must continue to be protected while still
giving employees fairly easy access to data, information, and applications.

It’s a delicate balance for the IT department that must manage and control these consumer technologies while
making sure they serve the needs of the business.

Nanotechnology and Quantum Computing

Some of the first computers were huge monstrosities that consumed incredible amounts of power for very little
computing capacity compared to today’s computers. Over the years, manufacturers have continually reduced
chip sizes while increasing capacity. But there’s only so much they can do with the older technology.

One way chip makers are overcoming size barriers is to use nanotechnology to create computer chips that are
thousands of times smaller than their predecessors. That enables manufacturers to make more powerful, smaller
chips for cell phones, iPod-like devices, and PDAs while increasing computing capacity.
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Quantum computing, based on the principles of quantum physics, increases computing power by operating in
many different states at once, performing different computations simultaneously, and solving scientific and
business problems millions of times faster than other computers available today.

Virtualization

Server computer hardware prices have fallen over the years to the point where they’re relatively cheap. Hence,
the problem. Rather than increase the efficiency and utilization of existing hardware, many companies just buy
more of it and stick it on the shelf. Not much thought is given to the total cost of ownership (TCO) of all the
hardware. As it turns out, the TCO is as much or more than the original purchase price. And, the hardware
utilization rates are extremely low. We’ll examine the concept of TCO more at the end of this chapter.

For example, let’s say you leave your kitchen light burning twenty four hours a day. You only spend about four
hours a day actually in the kitchen. You end up wasting twenty hours of electricity for those four hours of use.

Of course this is a simplified example but you get the idea of how computer usage is wasted running all those
servers for a fraction of the time they’re actually used. It’s not unusual for a company to have one server for this
application and another server for that application. The applications are stored on separate servers using
different operating systems. It’s a very wasteful configuration.

Enter virtualization. It’s the process of running multiple operating systems and application programs on one
machine and increasing the overall utilization rates of the device. Instead of having ten servers running ten
different applications, virtualization consolidates the programs onto one or two servers.

Cloud Computing

Most companies don’t build their own electrical generating plants or their own water treatment facilities. They
purchase only the utilities they need, even in peak demand times. Why not do that with computing capacity. If
JCPenneys.com needs 50 percent more capacity during the 30-day Christmas buying period, why should it have
to purchase that much infrastructure only to have it sit idle the other eleven months of the year.

Cloud computing is defined by five characteristics:

 On-demand self-service: users can access computing capabilities whenever and wherever they are
 Ubiquitous network access: no special devices are necessary for accessing data or services
 Location independent resource pooling: users don’t need to be concerned about where the data are
stored
 Rapid elasticity: computing resources expand and contract as necessary to serve users
 Measured service: users pay only for the computing capabilities actually used.

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Figure 5.6: Cloud Computing Platform

Almost any type of computing device can access data and applications from these clouds through three types of
services:

 Cloud infrastructure as a service: allows customers to process and store data, and use networking and
other resources available from the cloud.
 Cloud platform as a service: the service provider offers infrastructure and programming tools to
customers so they can develop and test applications.
 Cloud software as a service: the vendor provides software programs on a subscription fee basis.
Google apps is a great example of cloud software as a service because they provide easy access to
common business applications through Web browsers.

Cloud computing is becoming popular because customers only pay for the computing infrastructure that they
actually use. In many cases users experience lower IT costs than if they had to buy all the equipment, hire the
technical staff to run it and maintain it, and purchase software applications. This type of on-demand computing
is beneficial to small- and medium-size companies because they can easily scale up and down their IT
requirements as the pace of their business demands it. Larger organizations however, may not want their most
sensitive data stored on servers which they don’t control. System reliability is also a special concern to all
businesses. The unavailability of business data and applications for even a few hours may be unacceptable.

Amazon.com Inc.’s Internet-based computing services, used by thousands of business customers

to run their Web pages and store data, crashed this morning and knocked sites across the U.S.
offline.

Amazon Web Services servers in northern Virginia suffered outages beginning at about 5 a.m.
local time, affecting a portion of U.S. customers, the Seattle-based company said. Twelve hours
later, Amazon said all but one zone in the U.S. had been restored.

Amazon, the world’s largest online retailer, has billed its cloud-computing services as a cheap
and safe way for businesses to outsource their data centers. The outage is evidence that
companies can’t wholly rely on cloud services to handle important functions, said Vanessa
Alvarez, an analyst at Cambridge, Massachusetts-based Forrester Research Inc.

“Customers need to start asking tough questions and not assume everything will be taken care of
in the cloud, because it will not,” Alvarez said. “They shouldn’t be counting on a cloud service

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provider like Amazon to provide disaster recovery.” (BusinessWeek.com, “Amazon Web
Services Disruption Knocks Customer Sites Offline”, Galante, Joseph, April 21, 2011)

Two kinds of clouds are available:

 Public cloud: owned and operated by external service providers; accessed through the Internet;
available to anyone; generally used for non-sensitive data.
 Private cloud: proprietary system owned and operated by a specific company; based on virtualization;
available only to users inside the company; generally used for sensitive financial and personal data.

On-demand computing, another term for cloud computing, mirrors other utilities that provide necessary
infrastructure from centralized sources. It’s cheaper and helps companies reduce the total cost of ownership of
IT technology. They can also take advantage of newer technologies than what they are able to buy and maintain
on their own. Cloud computing also gives companies a chance to expand services that perhaps they wouldn’t be
able to provide if they had to buy all the hardware and software.

Green Computing

Virtualization that we discussed earlier makes the concept of green computing more of a reality. It allows
businesses to reduce their total cost of ownership of hardware through more efficient use of servers, printers,
storage devices, and networking equipment. In turn, that reduces the impact on the environment. Power
consumption alone raises the TCO of servers to very high levels—businesses spend as much running a server as
they did on purchasing it.

Interactive Session: Technology: The Greening of the Data Center (see p. 160 of the text) explains how
businesses are tackling the problems associated with the proliferation of data server centers and the
enormous energy costs associated with them.

High-Performance and Power-Saving Processors

As businesses require more and more computing capacity, hardware and chip manufacturers are answering the
need with multicore processors. Rather than a single chip on a single processing core, you purchase a machine
with two or more processors. It reduces the overall number of servers or processors, thus reducing the total cost
of ownership, including electricity costs. The motivation to reduce power consumption is migrating to netbooks,
smartphones, and mobile computing devices.

Autonomic Computing

As companies rely more and more on IT to meet the user demands, they can’t afford to have any system
downtime at all. Downtime costs money. Autonomic computing is a step toward creating an IT infrastructure
that is able to diagnose and fix problems with very little human intervention.

Autonomic computing features systems that can:

 Configure themselves
 Optimize and tune themselves
 Heal themselves when broken
 Protect themselves from intruders and self-destruction

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Although this type of computing is still rather new, it promises to relieve the burden many companies
experience in trying to maintain massive, complex IT infrastructures.

Bottom Line: Managers and users should first decide the tasks they want accomplished and then decide
the type of infrastructure components that will best fit. The most successful companies use the right
combinations of hardware, software, data management technology, networking and telecommunications
technology, and technology services that will help them meet their business objectives and create a
competitive advantage. Hardware is trending toward the mobile digital platform, cloud computing,
autonomic computing, green computing, and more efficient use of computing resources through
virtualization and multicore processors.

5.2 IT Infrastructure: Computer Software

What if you bought a beautiful new car with all the fanciest equipment inside, but when you tried to start the
engine nothing happened? How can that be, you ask? The car cost a lot of money and it’s brand new! However,
as soon as you put some gasoline in the tank, it starts right up and you’re moving down the road.

You can have all the computer hardware money can buy, but if you don’t have the right software, you can’t do
very much with the hardware and you’ve wasted a lot of money.

Figure 5.7: The Major Types of Software

Figure 5.7 show how software is divided into two categories: system software and application software. The
system software manages the basic operations of the computer and controls the equipment associated with it.
The applications software helps turn raw data into useful information.

Operating System Software

Operating systems tell computers what to do, when to do it, and how. Operations such as logging on, file
management, and network connectivity are controlled by the operating system.

The three basic system software functions are:

 Allocate and Assign: helps the computer decide what hardware resources will be used to accomplish
the task at hand.
 Schedule: helps the computer decide when to use the input and output devices.
 Monitor: keeps track of everything that is going on inside the computer.

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PC, Server, and Mobile Operating Systems

The small mobile computing devices we discussed earlier, cellphones, smartphones, and netbooks, don’t have
the computing capacity to handle a full-size operating system software program. And, many of the functions in
Windows 8, Linux, and Unix, aren’t necessary on these smaller computers. Users are opting instead for
lightweight operating systems such as Google Chrome and Android instead.

Google Chrome OS is arriving just in time to take advantage of the perfect storm of cloud
services, cheap hardware, and a new generation of platform-agnostic users. Unlike other Linux-
based OSs, Chrome has brand recognition that even the biggest neophyte could get comfortable
with. Chrome is also arriving just in time to take advantage of dirt-cheap hardware and super-
broke consumers. The future for Chrome based netbooks is in the $200 and under space. At this
price level, Microsoft would have to virtually give away Windows. Within a year or two,
netbooks could hit the magical price of $99. For this price, people will happily purchase a
computer that is nothing more than a simple and fast web-surfing device. While people might
expect $300-plus computers to have full-featured OSs they may be less critical when netbooks
fall into the impulse buy price range, especially when paired with lightning-fast performance.
(PC World, “Google Chrome OS Could Be Pivotal in the Cloud Revolution,” Michael Scalisi,
July 14, 2009)

The Google Chrome OS makes it easy for users to access cloud computing services through wireless
networking. Almost all the software and data are stored on servers and accessed through a Web browser.

The graphical user interface (GUI) available on most computing devices makes it easy for people to use them.
By far the most prolific operating system for personal computers is Microsoft Windows in various versions.

Many smartphones use multitouch technology that allows users to pinch the screen or swipe their fingers over
the screen to issue commands.

The first version of an operating system to offer multitouch technology on full-size desktop and laptop
computers was Windows 7. Windows 8 is the current version of the popular personal computer operating
systems and provides enhanced multitouch interfaces.

Apple’s iOS extends the same technology to full-size Mac desktop and laptop computers.

Windows is also the operating system used by some nontraditional computing devices such as hand-held PDAs
and cell phones whereas Windows Server 2008 is used in larger networks.

Windows is not the only operating system available for larger networks using high-end servers. UNIX was
created to make it easier to manage communications and networks that require a high degree of reliability and
scalability.

In the early 1990s, a graduate student at the University of Finland, Linus Torvald, built an operating system
called Linux that uses open-source software. Anyone can download it from the Internet. Experts predict its use
will expand rapidly, because its small size makes it ideal for information appliances. It’s also less crash-prone
than most other operating systems, a feature that makes it very attractive to companies running e-commerce
Internet businesses. Linux is becoming the operating system of choice for organizations looking to save money.
Businesses and governments across the globe are adopting the Linux platform as a way to reduce IT spending
and license costs.
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Application Software and Desktop Productivity Tools

We’ve come a long way, baby! Early versions of application software were difficult to use. It wasn’t easy to
move data from one file to another, if it was possible at all. When you finally learned how to use one
application program, you had to start from scratch if you moved to another. Improvements in application
software have erased most of these problems.

Programming Languages for Business

Even though you may never use some of the common business programming languages, as a manager and
computer user you should be familiar with them:

 C: used to create operating systems and application software for PCs

 C++: enhanced version of C that works better with software objects
 Visual programming language: uses graphics and iconic elements to create applications
 Visual Basic: visual programming tool for Microsoft Windows operating systems

Java fulfills the need for interactive programming over the Internet. What makes this language so enticing is
that it is platform-independent. This means that you don’t need to worry about compatibility between separate
operating systems such as Windows, MacIntosh, or UNIX. Regardless of the hardware or software you use, this
language will serve them all.

Java creates miniature programs called “applets,” which perform very small, specialized, one-at-a-time tasks.
When a user wants to perform the task, the coding is moved from the server where it’s permanently stored and
then executed on the client computer. When the task is completed, it’s deleted from the client. In essence, you
use an applet once and then literally throw it away. Using applets reduces storage needs on client computers and
PCs. Again, it doesn’t matter whether the client is a PC or a terminal attached to a network. In fact, Java applets
are being used on handheld computers, and on many other non-computer appliances.

Java also reduces the “bloatware” problem of huge software application programs with more functions than the
average person could ever hope to use. You don’t need a large application program to do a simple task. If you
want to calculate the monthly payments for a car loan, you simply use a Java applet instead of a huge
spreadsheet program.

Software Packages and Desktop Productivity Tools

In the past, most application programs were totally separate from one another. Moving data between them was
extremely difficult, if not impossible. With integrated software packages and software suites, it is much easier
to use data from one program in another without having to recreate it in every program. This concept eliminates
input redundancy and the natural human tendency to make errors.

PC software tools are targeted to the nontechnical end user and encompass:

 Word processing (MS Word, WordPerfect)

 Spreadsheets (Excel, Lotus 1-2-3)
 Data management (Access)
 Presentation graphics (PowerPoint, Presentations)
 Software suites (Office 2013, StarOffice)
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 Web browsers (Mozilla Firefox, Internet Explorer)

HTML and HTML5

It’s becoming quite common for the average computer user to create Web pages using the Hypertext markup
language (HTML). In fact, by using the PC software tools we discussed earlier (Word 2013, Lotus 1-2-3,
PowerPoint), you can as easily create a Web page as you can a letter, chart, or database. Combining HTML
language into everyday applications is one more step toward integrating the Internet into everything we do.

The original version of HTML was created when the Web was first borne. It never took into account that
eventually people would want to incorporate audio, video, and pictures within a Web page. More importantly,
the authors of basic HTML language never envisioned that people would want to access the Web through small
handheld devices, smartphones, tablets, and netbooks. As our computing hardware has evolved, so too must the
software that provides information to all those devices. The next evolution of HTML is HTML5.

The World Wide Web’s markup language has always been HTML. HTML was primarily
designed as a language for semantically describing scientific documents, although its general
design and adaptations over the years have enabled it to be used to describe a number of other
types of documents.

The main area that has not been adequately addressed by HTML is a vague subject referred to as
Web Applications. (Copied from http://dev.w3.org/html5/spec/Overview.html#background, Dec
2011)

Web Services

Web services use Internet technology to link application programs together without having to create custom
coding. And, as the name suggests, they are Web-based, making them more universally accepted within a
business or across traditional organizational boundaries extending to customers, suppliers, and business
partners.

The distinct advantage of building Web services is their reusability. That is, you can build one Web service that
can be used by many different businesses. This kind of functionality promises a whole slew of new Internet-
related development companies to spring up in the next few years as this idea takes hold.

In just the past couple of years, several developments have come together to make the Web more
of a real-time experience: ubiquitous high-speed Internet connections; a growing number of
mobile devices such as the iPhone with full Web browsers; and new Web technologies that
enable instant transmission of messages and data. That mix has made always-on, real-time
communications easy and addictive. (BusinessWeek, Robert D. Hof, “Betting on the Real-Time
Web,” Aug 6, 2009)

As we use the Web for more applications, computer languages are evolving to keep up with new and innovative
uses. HTML has worked well for displaying text and graphics. However, current computing environments
demand more.

XHTML (Extensible Hypertext Markup Language) combines HTML language with the XML language to
create a powerful tool for building more useful Web pages. It’s used to describe data in Web pages and
databases. It’s all part of the evolution of the Internet.
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Web service-oriented architecture consists of utilities that provide methods for applications such as secure,
third-party billing and payment systems or transporting messages and identifying available services.

Software Trends

We’re just not standing still when it comes to improving and improvising how we use the Internet and the Web.
Here are some promising trends.

Open Source Software

We mentioned Linux earlier and discussed how anyone can download the source code, improve upon it, and
post it back to the Web for others to see and use. That’s the idea behind open source software. Other examples
include OpenOffice from Sun Microsystems, Firefox Web browser, and Google’s Android, software written
primarily for mobile devices that includes an operating system, middleware, and key applications.

Cloud-Based Software Services and Tools

Small- and medium-size companies in need of sophisticated software can rent only what they need and can
afford through online software as a service (SaaS) providers. For instance, Right Now Technologies provides
applications services via the Internet for customer service and marketing programs. Businesses can outsource
their accounting needs to a Web-based service such as Intuit’s online payroll services.

Because these services are Web-based, data are accessible from virtually any computer connected to the
Internet. The road-warriors love having instant access to documents from wherever they are. Workers can
collaborate with others in distant offices through a Web-based SaaS, and no one has to worry about their files
being compatible with others—they are.

There is some danger to outsourcing your information resources to this kind of service. Remember, all your data
are stored on another company’s server computers and you have little control of it. What happens if the service
provider goes out of business? How secure are data stored on the servers? What kind of scalability and capacity
planning has the service completed? These are just some of the issues managers must address when they
consider using SaaS providers versus in-house technology support.

Mashups and Apps: You may be familiar with mapping services on the Web such as Mapquest.com or Google
maps. These applications provide an easy method to find your way around town. Separately, you may have used
a shopping site to locate stores that carry products you’re most interested in. What if you could combine these
two separate applications into one and make your Web browsing easier and faster—not to mention your offline
shopping excursion? That’s the idea behind mash-ups. Mash-ups combine two online applications—mapping
and shopping—into one new application. If you’d like to see an example of how convenient mash-ups are, visit
MotoMap.com to get consolidated information and maps of motor cross and dirt bike trails across the United
States.

Let’s say you’re shopping at Macy’s and see a blouse or shirt that you just love. The price seems a little high
but you’re not sure you can get it more cheaply somewhere else. All you have to do is pull out your smartphone,
download an app, scan the bar code or enter a few details about the blouse, and in seconds you’ll have
information about other places that carry the item, the price, and maybe how many they have in stock. Apps,
short for applications, are very small programs that perform one particular task. They can be loaded to your
hand-held computing device, including smartphones, e-book readers (in some cases), or tablet computers such
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as the iPad. Some are free and others range from $0.99 to $4.99. They generally are written by third-party
developers following a strict set of guidelines established by the device maker. As the excerpt below shows,
third-party companies are now helping small business owners develop their own apps.

Tom Johnson is no engineer. But that didn’t stop him from creating software that helps him
market his wedding-video business. Johnson crafted an application, downloadable to the Apple
(AAPL) iPhone, that plays a sample video, connects users to a blog, and lets would-be clients
call his company, Alliance Video Products, by pushing a single button. Best of all for a non-
engineer like Johnson, he did it in a single day, without writing a single line of code.

To create the app, Johnson relied on a company called Swebapps.com, one of a new crop of
services that help clients order up their own smartphone apps—often in less time and for less
money than it would take to develop an app from scratch. Like Alliance Video Products,
churches, museums, schools, and other small businesses of every stripe can now get into the app-
making game—creating downloadable games, travel guides, quizzes, and blog feeds—thanks to
sites like AppBreeder.com, GameSalad.com, and MyAppBuilder.com. Often all it takes is
plugging specs into online templates. (“Do-It-Yourself iPhone Apps,” Kharif, Olga,
BusinessWeek Technology Insider.com, Nov 1, 2009)

It’s worth noting that most apps are developed for a specific device or devices from a specific company. Apps
that are written for the Apple company will run on any Apple device. However, apps written for an Apple
device will generally not run on a device manufactured or sold by Samsung or a BlackBerry. More and more
apps are being created for the business user that lets her access server documents, call up sales data from the
corporate database, or schedule meetings with colleagues or customers.

Bottom Line: As software becomes easier and more powerful to use, managers and users are creating
more sophisticated processes that meet the needs and wants of employees, customers, suppliers, and
business partners. The most appropriate software is that which allows a business to meet its objectives
and gain competitive advantages.

5.3 Managing Hardware and Software Technology

Companies are rethinking their strategic models for IT infrastructures to meet the changing demands of
customers, suppliers, and business partners. If a company fails to do so they risk losing business and thousands
or millions of dollars. Because of easy Internet access and competition, customers can simply go elsewhere if
the company doesn’t adjust to the new world.

Capacity Planning and Scalability

To be sure, it’s extremely hard to figure out ahead of time how much computing capacity a company will need.
It’s like gazing into a crystal ball and trying to discern the future. Managers need to design scalability into their
systems so that they don’t under- or overbuild their systems. The idea is to initially build the system for what
the company thinks they need, but to design it in such a way that increasing capacity is a fairly easy thing to do.
If the system is more successful than originally thought, or as the number of users increases, capacity can be
increased without having to start over from scratch.

A few well-known corporations failed in their capacity planning and lost millions of dollars. Toys-R-Us is a
good example. They developed a very nice Web site to sell their products online but didn’t plan well for the

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thousands of customers that would try to access the site at the same time. The end result was frustrated users
who couldn’t make purchases in time for Christmas delivery and thus went to other Web sites.

Total Cost of Ownership (TCO) of Technology Assets

Cost issues are becoming more important to businesses and companies as the demand for computer technology
and networks grow. What’s most important to remember is that the Total Cost of Ownership (TCO) should
extend past the hard dollars spent on hardware and software. The cost should incorporate such items as
employee training, their ability to perform necessary functions given the network configuration, and lost
productivity when the network is down. The TCO should also include the amount of money spent on
communications wiring (telephone wires, fiber-optic cable, etc.) and security and access issues.

Table 5.5 consolidates all of the components managers should consider when determining the TCO of
technology.

Table 5.5: Total Cost of Ownership (TCO) Cost Components

Using Technology Service Providers

It’s not unusual for small- and medium-size businesses to rent office furniture, telephones, and even workers.
Small businesses often hire an outsourcing firm to do their accounting and bookkeeping rather than try to do it
themselves. They may contract with a shipping firm to move their products to the customer rather than buy the
18-wheeler and hire the driver themselves. And instead of building a huge warehouse, they may rent space in
someone else’s storage facility.

Most of the time companies choose to do business this way because it’s cheaper. Sometimes they do it because
they want to concentrate on their core business and “leave the driving” to someone else. Now they can make the
same type of decision regarding their information needs.

Outsourcing

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Companies are discovering that it’s cheaper and easier to hire third-party vendors for software-related tasks
such as system maintenance, data management, and program development. Much as they’ve outsourced
mundane and repetitive tasks to mainly overseas locations, many companies are outsourcing all kinds of
software-related work. The Internet has made this option more viable than it ever was.

A popular example of outsourcing is that of Web hosting services. Rather than purchase all of the hardware
necessary to support Web sites, intranets, and extranets, many small- and medium-size companies use Web
hosting services instead. It’s cheaper and easier to have these service providers take care of the hardware,
software, and security issues while the business concentrates on its core processes. IPowerWeb.com is an
example of a low-cost, easy-to-use Web hosting service available to businesses and individuals. You create
your own Web site, and they do all the rest.

Two types of outsourcing include domestic-based outsourcing to firms located within the United States.
Offshore software outsourcing describes moving the work to foreign countries. In spite of the fear many
people have about this type of outsourcing eliminating jobs within the United States, the opposite may be true.

But a more enlightened, strategic view of global sourcing is starting to emerge as managers get a
better fix on its potential. The new buzzword is “transformational outsourcing.” Many executives
are discovering offshoring is really about corporate growth, making better use of skilled United
States staff, and even job creation in the United States, not just cheap wages abroad. True, the
labor savings from global sourcing can still be substantial. But it’s peanuts compared to the
enormous gains in efficiency, productivity, quality, and revenues that can be achieved by fully
leveraging offshore talent. (BusinessWeek.com, Jan 30, 2006)

Regardless of the type of outsourcing a business uses, astute managers will make sure they get everything in
writing by using a service level agreement (SLA). It spells out exactly what the service provider is responsible
for and what the customer will do. Some of the items that should be covered are:

 Nature and level of services provided

 Criteria for performance measurement
 Support options
 Provisions for security and disaster recover
 Hardware and software ownership and upgrades
 Customer support
 Billing
 Conditions for terminating the agreement

Get it in writing!

Using Cloud Services

Cloud computing mirrors other utilities that provide necessary infrastructure from centralized sources. It’s
cheaper and helps companies reduce the total cost of ownership of IT technology. They can also take advantage
of newer technologies than what they are able to buy and maintain on their own. Utility computing, another term
for cloud computing, also gives companies a chance to expand services that perhaps they wouldn’t be able to
provide if they had to buy all the hardware and software.

Hybrid cloud services are generally used by large corporations that store the most essential core activities on
their own infrastructure and use the cloud for less-critical systems or additional processing capabilities.
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Managing Mobile Platforms

Most IT departments and functional managers find it hard enough to track traditional computer equipment such
as desktop PCs and laptops. Now they have to worry about dozens or hundreds of mobile devices such as
cellphones, smartphones, netbooks, tablets, and even e-book readers. Updating software, maintaining security,
developing usage policies, and controlling data and applications are just a few of the headaches these devices
present to an organization. And, the total cost of ownership is much higher for mobile devices than traditional
computers. However, the benefits and increased employee productivity make it necessary to assume these tasks.

One way to handle all the headaches with mobile devices is to use mobile device management (MDM)
software. It monitors, manages, and secures mobile devices across different operating systems and services
providers. Using this kind of software, your IT department can monitor usage, install or update software
programs or apps, back up data, and restore your device to previous versions if necessary. The software can also
disable devices that may be lost or stolen.

Interactive Session: People: The Pleasures and Pitfalls of BYOD (see p. 174 of the text), explores total
cost of ownership issues and other IT problems companies face when they allow employees to use their
personal smartphones and other digital devices on company-owned networks.

Managing Software Localization for Global Business

All of the issues we’ve discussed in this chapter are tough enough if you only have one language, one culture,
and one set of business processes to work with. Imagine magnifying all these issues if you are running a global
business in which you have multiple languages, multiple customs and cultures, multiple sets of government
rules and regulations, and multiple ways of doing business?

Bottom Line: Managing technology is more than simply purchasing hardware and software. Managers
must concentrate on the total cost of ownership for technology assets while keeping an eye on future
applications that may provide new opportunities for the organization. Sometimes it may be cheaper and
easier to outsource technology requirements to another company rather than do it yourself.

Discussion Questions

1. Determine the total cost of ownership associated with the technology in your workplace or classroom, even
if that’s your own home. Don’t forget to include cellphones or smartphones you may have. Use your hourly
wage or salary as a basis to figure the persware cost.

2. What personal responsibilities do you have if you are allowed to use your own personal devices to access
corporate or company networks, data, and software programs.

3. Discuss how cloud computing can provide value to a business.

4. What is Java and how is it changing the computing environment?

5. Discuss the business value of the following software trends: open-source software, mashups, and apps.

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Answers to Discussion Questions
1. Answers should include references to the hardware costs, including cabling, telephone line access charges,
and printer costs such as paper and ink cartridges; software costs, including programs, upgrades, and
program fixes; and persware costs, which should be calculated using the student’s actual or perceived hourly
wage or salary.

2. Using your own personal computing devices to access corporate or company networks requires you first of
all to make sure you don’t lose your device or let it be stolen because that may cause unauthorized access to
sensitive corporate data and applications. If you do lose your device or it’s stolen, you need to report it to
your IT department immediately so steps can be taken to protect the company network and data. You also
have a responsibility to not load unauthorized programs or apps to your devices, no matter how tempting it
may be, to ensure no malware or virus programs can be uploaded to the company network. Using your
personal computing devices on the corporate network requires even more diligence on your part.

3. Cloud computing provides Web-based applications that are stored and accessed via the “cloud” of the
Internet. The software and data can be accessed by anyone with an Internet connection and standard Web
browser. Cloud computing allows a company to purchase computing capacity from remote, large-scale data
processing centers during peak demand periods. A company can purchase only the capacity or service
necessary to provide scalability. The cloud computing service providers can also offer new technologies that
a business may not be able to provide for itself.

4. Java is a new programming language employing the use of applets. Applets are miniature programs that
perform very small, specialized, one-at-a-time tasks. Once the task is completed, the applet is “thrown
away.” By using Java, users don’t have to purchase and use huge software programs.

5. Open-source software provides business value by lowering the cost of purchasing software. The software is
based on the premise that it is superior to commercially produced proprietary software because thousands of
programmers around the world working for no pay can read, perfect, distribute, and modify the source code
much faster, and with more reliable results than small teams of programmers working for a single software
company. Mashups and apps help prevent “re-inventing the wheel” syndrome by providing applications that
have been previously developed and are easily available from the Web.

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