Managing the Digital Firm, Seventh Canadian Edition
CHAPTER 5
IT Infrastructure and Emerging
Technologies
LEARNING OBJECTIVES
After reading this chapter, you will be able to answer the following questions:
1. What is IT infrastructure, and what are its components?
2. What are the stages and technology drivers of IT infrastructure evolution?
Teaching Suggestions
Your students’ knowledge and comfort level with technology is likely to vary, making
this chapter difficult to teach and test. The technically-adept know most of this material,
and some of the nontechnical types may not find the chapter’s contents particularly
interesting. You may want to approach the chapter from a business standpoint—the role
of technology in the success of an organization.
One way to begin the chapter discussion is to present several horror stories. (Your
students may even be able to provide stories of their own.) For example, many firms have
Opening Case: Desktop Virtualization Pays Off
VocaLink is a world leader in automated payment and ATM systems, but its systems
development efforts were hampered by the challenges of systems integration. VocaLink’s
Managing the Digital Firm, Seventh Canadian Edition
IT management felt the best solution was to invest in desktop virtualization to permit its
outsourced developers more efficiently and effectively to develop and test code directly on
its systems. This has resulted in more cost efficiency, effectiveness, and energy savings.
The chapter-opening diagram calls attention to important points raised by this case and
this chapter. Management realized that in order to improve its software development
processes, it had to solve the problem of integration. The IT infrastructure investments it
made in desktop virtualization had to support VocaLink’s business goals and contribute
Section 5.1 “IT Infrastructure
Introduces students to essential computer hardware terminology and concepts. The trek
through the five evolutionary stages in computing platforms provides a backdrop for
explaining how we got to the current phase of computing. Moore’s Law, usually
Section 5.2 “Infrastructure Components
Explains seven major components that make up an IT infrastructure. These include:
Computer hardware platforms, operating systems platforms, enterprise software
applications, networking and telecommunications technology, consultants and system
integrators, data management and storage, and Internet platforms (see Fig 5-8). Each
Managing the Digital Firm, Seventh Canadian Edition
Section 5.3 “Contemporary Hardware Platform Trends”
Consider spending most of your time on the newest hardware trends: Net books, grid
computing, cloud computing, autonomic computing, virtualization, and multicore
processors. That’s where many businesses are headed and students are likely to bump into
these trends when they enter the workforce. All of these technologies are designed to help
WINDOW ON MANAGEMENT: SHOULD YOU USE YOUR
IPHONE FOR WORK?
Case Study Questions
1. What are the advantages and disadvantages of allowing employees to use their
personal smartphones for work?
Advantages: Employees using their own smartphones would allow companies to enjoy
all of the same benefits of a mobile workforce without spending company funds on the
devices. Mobility experts can help a company leverage mobility more effectively.
Disadvantages: IT departments need to overcome several logistical hurdles before
2. What management, organization, and technology factors should be addressed when
deciding whether to allow employees to use their personal smartphones for work?
Managing the Digital Firm, Seventh Canadian Edition
Management: When employees make changes to their personal phone, such as
Organization: A significant portion of corporate IT resources is dedicated to
managing and maintaining a large number of devices within an organization. In the
3. Allowing employees to use their own smartphones for work will save the
company money. Do you agree? Why or why not?
Allowing employees to use their own smartphones, won’t necessarily save money
when you consider the TCO and the extra efforts required on the part of the IT staff,
WINDOW ON TECHNOLOGY: GREEN DATA CENTRES: GOOD
FOR BUSINESS?
Case Study Questions
1. What business and social problems are caused by data centre power consumption?
Excessive power consumption uses vast amount of electricity that must be generated
through hydroelectric plants or coal-fired power plants. While hydroelectric
2. What solutions are available for these problems? Are they management,
organizational, or technology solutions? Explain your answer.
Some of the solutions to cut power consumption discussed in the case study are a
good beginning.
Management: Employee telecommuting; users understanding and abiding by
3. What are the business benefits and costs of these solutions?
Even though it may cost a business up-front money to install hardware and software
4. Should all firms move toward green computing? Why or why not?
All firms should make some effort to reduce their power requirements and promote
Section 5.4, “Contemporary Software Platform Trends”
Introduces students to emerging software platforms that they probably are not familiar
with. Most of these software programs focus on Internet and Web applications.
Managing the Digital Firm, Seventh Canadian Edition
Open-source software is a good discussion point. Most students may think because an
open community of programmers develops it that it’s not “safe or secure.” You should try
Section 5.5 “Management Issues”
This section helps students understand that there is more to managing IT infrastructure
than just deciding which hardware and software components to purchase and use. Ask
students how difficult it is for them to keep up with all the new options coming out. Then
Review Summary
1. What is IT infrastructure and what are its components?
2. What are the stages and technology drivers of IT infrastructure evolution?
3. What are the current trends in computer hardware platforms?
4. What are the current trends in software platforms?
5. What are the challenges of managing IT infrastructure and management solutions?
Managing the Digital Firm, Seventh Canadian Edition
Key Terms
The following alphabetical list identifies the key terms discussed in this chapter. The
page number for each key term is provided.
Android 147
Application server 140
Apps 162
Green computing (green IT) 155
Grid computing 150
HTML (Hypertext Markup
Language) 158
HTML5 158
Hybrid cloud 154
Nanotechnology 143
On-demand computing 154
Open-source soft ware 157
(SOA) 159
Soft ware as a service (SaaS) 161
Soft ware package 160
Storage area network (SAN) 148
Tablet computer 149
Technology standards 144
Review Questions
1. What is IT infrastructure and what are its components?
Define IT infrastructure from both a technology and a services perspective.
• Technical perspective is defined as the shared technology resources that provide the platform
for the firm’s specific information system applications. It consists of a set of physical
devices and software applications that are required to operate the entire enterprise.
Managing the Digital Firm, Seventh Canadian Edition
List and describe the components of IT infrastructure that firms need to manage.
IT infrastructure includes hardware, software, and services:
• Computing platforms: Includes mainframes, midrange computers, desktop and
laptop computers, and mobile handheld devices – anything that connect
employees, customers, and suppliers into a coherent digital environment.
2. What are the stages and technology drivers of IT infrastructure evolution?
List each of the eras in IT infrastructure evolution and describe its
distinguishing characteristics.
Five stages of IT infrastructure evolution include:
• General-purpose mainframe and minicomputer era (1959 to present): Consists of
a mainframe performing centralized processing that could be networked to
Managing the Digital Firm, Seventh Canadian Edition
Define and describe the following: Web server, application server, multitiered
client/server architecture.
• Web server: Software that manages requests for Web pages on the computer
Describe Moore’s Law and the Law of Mass Digital Storage
• Moore’s Law: The number of components on a chip with the smallest
manufacturing costs per component (generally transistors) had doubled each year.
Moore later reduced the rate of growth to a doubling every two years.
Describe how network economics, declining communication costs, and technology
standards affect IT infrastructure.
Network economics: Metcalfe’s Law helps explain the mushrooming use of
computers by showing that a network’s value to participants grows exponentially as
the network takes on more members. As the number of members in a network grows
linearly, the value of the entire system grows exponentially and theoretically
3. What are the current trends in computer hardware platforms?
Describe the evolving mobile platform, grid computing, and cloud computing.
Mobile platform: More and more business computing is moving from PCs and
desktop machines to mobile devices like cell phones and smart phones. Data
Explain how businesses can benefit from autonomic computing, virtualization,
green computing, and multicore processors.
Autonomic computing
Benefits of autonomic computing include systems that automatically do the following:
• Configure themselves
• Optimize and tune themselves
Virtualization
Benefits of server virtualization include:
• Run more than one operating system at the same time on a single machine.
• Increase server utilization rates to 70 percent or higher.
Managing the Digital Firm, Seventh Canadian Edition
Green computing
Businesses can minimize their impact on the environment by adopting better practices
and technologies for designing, manufacturing, using, and disposing of computers,
Multicore processors
Benefits of multi-core processors:
• Cost savings by reducing power requirements and hardware sprawl
• Less costly to maintain as fewer systems need to be monitored.
4. What are the current trends in software platforms?
Define and describe open source software and Linux and explain their business
benefits.
Open-source software provides all computer users with free access to the program
code so they can modify the code, fix errors in it, or to make improvements. Open-
source software is not owned by any company or individual. A global network of
Managing the Digital Firm, Seventh Canadian Edition
Define Java and Ajax and explain why they are important.
Java: Java is a programming language that delivers only the software functionality
needed for a particular task. With Java, the programmer writes small programs called
Define and describe Web services and the role played by XML.
Web services offer a standardized alternative for dealing with integration across various
computer platforms. Web services are loosely coupled software components based on
XML and open Web standards that are not product specific and can work with any
application software and operating system. They can be used as components of Web-
Name and describe the three external sources for software.
Software packages and enterprise software: Prewritten commercially available set
of software programs that eliminates the need for a firm to write its own software
Managing the Digital Firm, Seventh Canadian Edition
Cloud-based software services and tools: A business that delivers and manages
applications and computer services from remote computer centres to multiple users
using the Internet or a private network. Instead of buying and installing software
programs, subscribing companies can rent the same functions from these services.
Outsourcing custom application development: An organization contracts its
custom software development or maintenance of existing legacy programs to outside
Define and describe software mashups and apps.
Mashups are new software applications and services based on combining different
online software applications. Users create new software applications and services by
combining different online software applications into a new application. The idea is
Apps are small pieces of software programs that are downloaded to computers or cell
phones. Apps turn mobile handheld devices into general-purpose computing tools.
They cost much less than full-fledged software programs and perform one particular
task. They tie customers to a specific hardware platform like the Apple iPhone or
5. What are the challenges of managing IT infrastructure and management
solutions?
Name and describe the management challenges posed by IT infrastructure.
Creating and maintaining a coherent IT infrastructure raises multiple challenges
including:
Dealing with platform and infrastructure change: As firms grow, they can quickly
outgrow their infrastructure. As firms shrink, they can get stuck with excessive
Management and governance: Involves who will control and manage the firm’s IT
infrastructure. Will the IT infrastructure be centrally controlled and managed or
divided among departments and divisions? How will infrastructure costs be allocated
among business units?
Making wise infrastructure investments: IT infrastructure is a major capital
investment for the firm. If too much is spent on infrastructure, it lies idle and
Coordinating infrastructure components: Firms create IT infrastructures by
choosing combinations of vendors, people, and technology services and fitting them
together so they function as a coherent whole.
Explain how using a competitive forces model and calculating the TCO of
technology assets help firms make infrastructure investments
The competitive forces model can be used to determine how much to spend on IT
infrastructure and where to make strategic infrastructure investments. What is the
market demand for the organization’s services? What is the organization’s business
Managing the Digital Firm, Seventh Canadian Edition
Hands-On MIS Projects
Management Decision Problems
1. University of Guelph Medical Centre: demand for additional servers and storage
technology was growing by 20 percent each year. UGMC was setting up a separate
server for every application; servers and other computers were running different
operating systems; it was using technologies from many different vendors.
This case provides an excellent example of how a business can inadvertently create a
2. Quantas Airways: needs to keep costs low while providing a high level of customer
service. Management had to decide whether to replace its 30-year-old IT
infrastructure with newer technology or outsource it. What factors should be
considered in the outsourcing decision? List and describe points that should be
addressed in an outsourcing service level agreement.
Quantas should use the competitive forces model to help determine how much it should
spend on its IT infrastructure. Then it should determine its total cost of ownership of
Improving Decision Making: Using a Spreadsheet to Evaluate Hardware and
Software Options
Software skills: Spreadsheet formulas
Business skills: Technology pricing
Managing the Digital Firm, Seventh Canadian Edition
This project requires students to use their Web research skills to obtain hardware and
Improving Decision Making: Using Web Research to Budget for a Sales Conference
Software skills: Internet-based software
Business skills: Researching transportation and lodging costs
The students will likely find hotels that interest them personally. The template that has been
provided has a checklist for all of the hotel requirements to help keep them on track. You
CASE STUDY: SHOULD BUSINESSES MOVE TO THE CLOUD?
1. What business benefits do cloud computing services provide? What problems do
they solve?
• Eliminates need for large up-front capital investments in systems.
• Eliminates lengthy implementations on corporate computers.
2. What are the disadvantages of cloud computing?
The disadvantages include:
• Responsibility for data storage and control is transferred away from the
Managing the Digital Firm, Seventh Canadian Edition
3. How do the concepts of capacity planning, scalability, and TCO apply to this
case? Apply these concepts both to Amazon and to subscribers of its services.
Businesses should assess the costs and benefits of the service, weighing all people,
organization, and technology issues. Does the software-as-a-service applications
integrate well with the existing systems? Does it deliver a level of service and
performance that’s acceptable for the business? Does the SaaS fit with the business’s
overall competitive strategy and allow the company to focus on core business issues
instead of technology challenges?
Capacity planning predicts when a computer hardware system becomes saturated and
how that affects performance measures such as minimum response time for
4. What kinds of businesses are most likely to benefit from using cloud computing?
Why?
Small to medium-size businesses are probably the most likely ones to switch to cloud
computing because of cost factors and the lack of having in-house resources to