What are the challenges of managing IT infrastructure and management solutions?

Creating and managing a coherent IT infrastructure raises multiple challenges: dealing with platform and technology change (including cloud and mobile computing), management and governance, and making wise infrastructure investments.

1. Dealing with Platform and Infrastructure Change

As firms grow, they often quickly outgrow their infrastructure. As firms shrink, they can get stuck with excessive infrastructure purchased in better times. How can a firm remain flexible if investments in IT infrastructure are fixed-cost pur­chases and licenses? How well does the infrastructure scale? Scalability refers to the ability of a computer, product, or system to expand to serve a large num­ber of users without breaking down. New applications, mergers and acquisi­tions, and changes in business volume all affect computer workload and must be considered when planning hardware capacity.

Firms using mobile computing and cloud computing platforms will require new policies, procedures, and tools for managing these platforms. They will need to inventory all of their mobile devices in business use and develop poli­cies and tools for tracking, updating, and securing them, and for controlling the data and applications that run on them. Firms often turn to mobile device management (MDM) software, which monitors, manages, and secures mobile devices that are deployed across multiple mobile service providers and across multiple mobile operating systems being used in the organization. MDM tools enable the IT department to monitor mobile usage, install or update mobile software, back up and restore mobile devices, and remove software and data from devices that are stolen or lost.

Firms using cloud computing and SaaS will need to fashion new contractual arrangements with remote vendors to make sure that the hardware and soft­ware for critical applications are always available when needed and that they meet corporate standards for information security. It is up to business manage­ment to determine acceptable levels of computer response time and availability for the firm’s mission-critical systems to maintain the level of business perfor­mance that is expected.

2. Management and Governance

A long-standing issue among information system managers and CEOs has been the question of who will control and manage the firm’s IT infrastructure.

Chapter 2 introduced the concept of IT governance and described some issues it addresses. Other important questions about IT governance are: Should de­partments and divisions have the responsibility of making their own informa­tion technology decisions, or should IT infrastructure be centrally controlled and managed? What is the relationship between central information systems management and business unit information systems management? How will infrastructure costs be allocated among business units? Each organization will need to arrive at answers based on its own needs.

3. Making Wise Infrastructure Investments

IT infrastructure is a major investment for the firm. If too much is spent on infrastructure, it lies idle and constitutes a drag on the firm’s financial perfor­mance. If too little is spent, important business services cannot be delivered and the firm’s competitors (who spent the right amount) will outperform the under-investing firm. How much should the firm spend on infrastructure? This question is not easy to answer.

A related question is whether a firm should purchase and maintain its own IT infrastructure components or rent them from external suppliers, includ­ing those offering cloud services. The decision either to purchase your own IT assets or to rent them from external providers is typically called the rent- versus-buy decision.

Cloud computing is a low-cost way to increase scalability and flexibility, but firms should evaluate this option carefully in light of security requirements and impact on business processes and workflows. In some instances, the cost of renting software adds up to more than purchasing and maintaining an applica­tion in-house, or firms can overspend on cloud services (Loten, 2018). Yet there are many benefits to using cloud services including significant reductions in hardware, software, human resources, and maintenance costs. Moving to cloud computing allows firms to focus on their core businesses rather than technol­ogy issues.

3.1. Total Cost of Ownership of Technology Assets

The actual cost of owning technology resources includes the original cost of acquiring and installing hardware and software as well as ongoing administra­tion costs for hardware and software upgrades, maintenance, technical sup­port, training, and even utility and real estate costs for running and housing the technology. The total cost of ownership (TCO) model can be used to analyze these direct and indirect costs to help firms determine the actual cost of specific technology implementations. Table 5.4 describes the most important components to consider in a TCO analysis.

When all these cost components are considered, the TCO for a PC might run up to three times the original purchase price of the equipment. Gains in pro­ductivity and efficiency from equipping employees with mobile computing de­vices must be balanced against increased costs from integrating these devices into the firm’s IT infrastructure and from providing technical support. Other cost components include fees for wireless airtime, end-user training, help desk support, and software for special applications. Costs are higher if the mobile devices run many different applications or need to be integrated into back-end systems such as enterprise applications.

Hardware and software acquisition costs account for only about 20 percent of TCO, so managers must pay close attention to administration costs to under­stand the full cost of the firm’s hardware and software. It is possible to reduce some of these administration costs through better management. Many large firms are saddled with redundant, incompatible hardware and software because their departments and divisions have been allowed to make their own technol­ogy purchases.

In addition to switching to cloud services, these firms could reduce their TCO through greater centralization and standardization of their hardware and soft­ware resources. Companies could reduce the size of the information systems staff required to support their infrastructure if the firm minimizes the number of different computer models and pieces of software that employees are al­lowed to use. In a centralized infrastructure, systems can be administered from a central location and troubleshooting can be performed from that location.

3.2. Competitive Forces Model for IT Infrastructure Investment

Figure 5.13 illustrates a competitive forces model you can use to address the question of how much your firm should spend on IT infrastructure.

Market demand for your firm’s services. Make an inventory of the ser­vices you currently provide to customers, suppliers, and employees. Survey each group, or hold focus groups to find out if the services you currently offer are meeting the needs of each group. For example, are customers com­plaining of slow responses to their queries about price and availability? Are employees complaining about the difficulty of finding the right information for their jobs? Are suppliers complaining about the difficulties of discovering your production requirements?

Your firm’s business strategy. Analyze your firm’s five-year business strat­egy and try to assess what new services and capabilities will be required to achieve strategic goals.

Your firm’s IT strategy, infrastructure, and cost. Examine your firm’s information technology plans for the next five years and assess its alignment with the firm’s business plans. Determine the total IT infrastructure costs. You will want to perform a TCO analysis. If your firm has no IT strategy, you will need to devise one that takes into account the firm’s five-year strategic plan.

Information technology assessment. Is your firm behind the technology curve or at the bleeding edge of information technology? Both situations are to be avoided. It is usually not desirable to spend resources on advanced technologies that are still experimental, often expensive, and sometimes unreliable. You want to spend on technologies for which standards have been established; IT vendors are competing on cost, not design; and where there are multiple suppliers. However, you do not want to put off investment in new technologies or allow competitors to develop new business models and capabilities based on the new technologies.

Competitor firm services. Ty to assess what technology services competi­tors offer to customers, suppliers, and employees. Establish quantitative and qualitative measures to compare them to those of your firm. If your firm’s service levels fall short, your company is at a competitive disadvantage. Look for ways your firm can excel at service levels.

Competitor firm IT infrastructure investments. Benchmark your expen­ditures for IT infrastructure against your competitors. Many companies are quite public about their innovative expenditures on IT. If competing firms try to keep IT expenditures secret, you may be able to find IT investment in­formation in public companies’ SEC Form 10-K annual reports to the federal government when those expenditures affect a firm’s financial results.

Your firm does not necessarily need to spend as much as or more than your competitors. Perhaps it has discovered much less expensive ways of providing services, and this can lead to a cost advantage. Alternatively, your firm may be spending far less than competitors, and experiencing commensurate poor per­formance and losing market share.

Source: Laudon Kenneth C., Laudon Jane Price (2020), Management Information Systems: Managing the Digital Firm, Pearson; 16th edition.

4 thoughts on “What are the challenges of managing IT infrastructure and management solutions?

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