The Power of IT

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The Power of IT

Survival Guide for the CIO







Jan De Sutter

The Power of IT


Survival Guide for the CIO

_______________________________________________________________________________
______________________

ii

Cover Design


Don Weigand

Cartoons


Ted Goff

Web site



http://www.the
-
power
-
of
-
it.com




Copyright © 2003
-
2004 by Jan De Sutter


All rights reserved







No part of this
work shall be reproduced, stored in a retrieval system, or transmitted by any means, electronic,
mechanical, photocopying, recording or otherwise, without permission from the author. No patent liability is
assumed with respect to the use of the information

contained herein. Every reasonable effort has been made to
respect the copyrights of other persons or entities. Anybody who believes that his or her copyrights have been
infringed is invited to contact the author so that the necessary arrangements can be
taken.


All terms mentioned in this work that are known to be trademarks have been appropriately capitalized. The
author cannot attest the accuracy of this information. Use of a term in this work should not be regarded as
affecting the validity of any tra
demark.


Although every precaution has been taken in the preparation of this work, the author assumes no responsibility
for errors or omissions. Every effort has been made to make this work as complete and as accurate as possible,
but no warranty of fitnes
s is implied. The information provided is on an “as is” basis. The author shall have
neither liability nor responsibility to any person or entity with respect to any loss or damages arising from the
information contained in this work. This work reflects th
e personal opinions of the author and does in no way
engage his current or previous employers.




















Library of Congress Control Number: 2004113733

Publisher: BookSurge, LLC

North Charleston, South Carolina



ISBN:
1
-
59457
-
867
-
2


The Power of IT


Survival Guide for the CIO

_____________________________________________________________________________________________________

iii

Acknowledge
ments

First Edition


I would like to thank Professor Carlos De Backer (University of Antwerp) and
Professor Eddy Van Dijck (University of Brussels) for their thorough editing, helpful
suggestions and thoughtful comments.


Also, a project of this magnitude

requires the support of colleagues and friends. I
address a special word of gratefulness for Dirk Dons and Niall O’Higgins, who gave
useful advice on the purely technical matters.


Finally, this work could not be possible without the love and inspirati
on of my wife Lut
and my children Marieke and Jacob. Thank you for being there!


Second Edition


I received many spontaneous reactions from my online readers and wish to thank them
for that. All their remarks have been taken into account.


I also had the o
ccasion to present this book in various international conferences and am
very grateful to the organizations that allowed me to do so. During these conferences I
had many exchanges with my public who gave some very useful feedback on the book
and its conten
t.













The Power of IT


Survival Guide for the CIO

_______________________________________________________________________________
______________________

iv






















To my mother. May she rest in peace.


The Power of IT


Survival Guide for the CIO

_____________________________________________________________________________________________________

v

Table of Contents









INTRODUCTION

................................
................................
................................
..

1

Information Technol
ogy

................................
................................
................................
.....................

2

The changing role of IT

................................
................................
................................
......................

3

Evolution of the IT Industry

................................
................................
................................
................

5

About t
his book
................................
................................
................................
................................
.

6

Online Resources

................................
................................
................................
..............................

9

IT management magazines and newsletters

................................
................................
......................

9

IT Business Analysts

................................
................................
................................
......................

9

IT News sites

................................
................................
................................
................................

9

Further Reading

................................
................................
................................
..............................

10

INFRASTRUC
TURE

................................
................................
............................

11

Introduction

................................
................................
................................
................................
...

12

Computing Hardware

................................
................................
................................
.......................

14

Computers

................................
................................
................................
................................
..

14

Digital technology

................................
................................
................................
........................

18

The von Neumann Architecture

................................
................................
................................
.....

19

Central Processing Unit

................................
................................
................................
................

20

Main Memory

................................
................................
................................
..............................

21

Internal buses

................................
................................
................................
.............................

22

Input/Output

................................
................................
................................
...............................

23

Operating Systems

................................
................................
................................
..........................

30

Operating Systems

................................
................................
................................
..........................

30

Purpose of an Operating System

................................
................................
................................
....

30

Structure of an Operating System

................................
................................
................................
..

30

Characteristics of Operating Systems

................................
................................
.............................

31

Autonomic

Computing

................................
................................
................................
..................

32

Security

................................
................................
................................
................................
.....

32

Local Services

................................
................................
................................
................................
.

34

Storing Data

................................
................................
................................
...............................

34

File Systems

................................
................................
................................
...............................

34

Relational Database Management Systems (RDBMSs)

................................
................................
......

35

Object
-
Orient
ed Database Management Systems (OODBMS)

................................
.............................

40

Object
-
Relational Database Management Systems (ORDBMS)

................................
...........................

41

Benchmarking of DBMSs

................................
................................
................................
...............

43

Networking Services

................................
................................
................................
........................

45

The OSI Reference Model
................................
................................
................................
..............

45

The Internet protocols

................................
................................
................................
..................

46

Physical Layer

................................
................................
................................
.............................

47

Data link layer

................................
................................
................................
.............................

48

Network layer

................................
................................
................................
.............................

57

Transport layer

................................
................................
................................
............................

62

Application layer

................................
................................
................................
..........................

63

Security

................................
................................
................................
................................
.....

65

Middleware

................................
................................
................................
................................
.....

69

The Power of IT


Survival Guide for the CIO

_______________________________________________________________________________
______________________

vi

Basic Middleware Services

................................
................................
................................
............

69

Advanced Middleware Services

................................
................................
................................
......

70

Middleware Technologies

................................
................................
................................
..............

73

Application Frameworks

................................
................................
................................
................

74

Application Servers

................................
................................
................................
......................

75

Best Practices

................................
................................
................................
................................
.

77

Automate your asset management

................................
................................
................................

77

Automate your systems management

................................
................................
............................

77

Avoid Single Points of Failure

................................
................................
................................
........

78

Centralise your client management

................................
................................
................................

79

Cons
olidate and rationalize continuously

................................
................................
.........................

79

Keep control over your architecture

................................
................................
...............................

80

Keep your infrastructure scalable

................................
................................
................................
...

80

Printing also deserves a strategy

................................
................................
................................
...

82

Reconsider your storage strategy

................................
................................
................................
..

83

Rely on open
standards, but don’t be stubborn

................................
................................
................

84

Standardize as much as you can

................................
................................
................................
....

85

Use the right tools

................................
................................
................................
.......................

85

Online Resources

................................
................................
................................
............................

87

Further Reading

................................
................................
................................
..............................

89

INFORMATION SYSTEMS

................................
................................
..................

9
1

Information Systems

................................
................................
................................
.......................

92

Operational and Informational Systems

................................
................................
..........................

94

Production

................................
................................
................................
................................
......

95

Word Processors

................................
................................
................................
..........................

95

Spreadsheets

................................
................................
................................
..............................

97

Drawing tools

................................
................................
................................
..............................

97

Computer Aided Design and Manufacturing (CAD/CAM)

................................
................................
....

98

Viewers and Players

................................
................................
................................
.....................

98

Characteristics of Production Information Systems

................................
................................
...........

99

Potential benefits of Production Information Systems

................................
................................
.......

99

Collaboration

................................
................................
................................
................................
.

100

Collocated


Asynchronous groupware systems

................................
................................
..............

101

Non
-
collocated


Asynchronous groupware systems

................................
................................
........

102

Collocated


Synchronous g
roupware systems
................................
................................
................

117

Non
-
collocated


Synchronous Groupware systems

................................
................................
.........

117

Characteristics of Groupware Systems

................................
................................
...........................

119

Benefits of Groupware Systems

................................
................................
................................
....

120

Potential risks of Groupware Systems

................................
................................
............................

120

Business Proce
ss Support

................................
................................
................................
................

121

Enterprise Application Integration (EAI)

................................
................................
.........................

123

Exchanging information with other organizations

................................
................................
............

127

E
-
commerce

................................
................................
................................
..............................

130

Characteristics of Business Process Support Systems

................................
................................
......

134

Benefits of Busines
s Process Support Systems

................................
................................
...............

134

Risks Business Process Support Systems

................................
................................
.......................

134

Tactics

................................
................................
................................
................................
..........

135

Metrics

................................
................................
................................
................................
......

135

Benchmarking

................................
................................
................................
............................

136

Activity Based Costing

................................
................................
................................
.................

137

Data warehousing

................................
................................
................................
.......................

137

Characteristics of Tactical Information Systems

................................
................................
..............

142

Benefits of Tactical Information Systems

................................
................................
.......................

143

Risks of Tactical Information Systems

................................
................................
...........................

143

Strategy

................................
................................
................................
................................
.......

144

Balanced Scorecards

................................
................................
................................
...................

144

Data mining

................................
................................
................................
...............................

146

Web Farming

................................
................................
................................
.............................

147

Characteristics of Strategic Information S
ystems

................................
................................
............

148

Benefits of Strategic Information Systems

................................
................................
.....................

148

Best Practices

................................
................................
................................
................................

149

The Power of IT


Survival Guide for the CIO

_____________________________________________________________________________________________________

vii

Also read the small print

................................
................................
................................
..............

149

Apply a layered approach where possible

................................
................................
.......................

149

Beware of biased advice

................................
................................
................................
..............

149

Build loosely coupled systems

................................
................................
................................
......

150

Build, buy or borrow?

................................
................................
................................
..................

150

Choose for standards

................................
................................
................................
..................

151

Do not reinvent the wheel

................................
................................
................................
............

151

Educate the users

................................
................................
................................
.......................

151

Integrate the Business Proc
esses

................................
................................
................................
..

152

Know the real needs of the users

................................
................................
................................
..

152

Make agility a primary goal

................................
................................
................................
..........

153

Rationalize the application portfolio

................................
................................
...............................

153

Online Resources

................................
................................
................................
...........................

154

Further Reading

................................
................................
................................
.............................

156

HUMAN RESOURCES

................................
................................
.......................

159

Introduction

................................
................................
................................
................................
..

160

Getting the Best Employees

................................
................................
................................
.............

162

Specifying Jobs and Roles

................................
................................
................................
............

162

Recruitment

................................
................................
................................
...............................

163

The Selection Interview

................................
................................
................................
...............

165

Outsourcing

................................
................................
................................
...............................

167

Getting the Best of Employees

................................
................................
................................
.........

172

Theories on Human Nature

................................
................................
................................
..........

172

Motivating Employees

................................
................................
................................
.................

175

Teleworking

................................
................................
................................
................................
...

185

A new way of working

................................
................................
................................
.................

185

Technological Considerations

................................
................................
................................
........

186

Work Force Planning

................................
................................
................................
.......................

188

Planning techniques

................................
................................
................................
....................

188

Human Resources Management Systems (HRMSs)

................................
................................
..........

189

Best Practices

................................
................................
................................
................................

192

Apply an open privacy poli
cy

................................
................................
................................
........

192

Avoid Strategic Outsourcing

................................
................................
................................
.........

193

Be fair and treat everyone equally and on merit.

................................
................................
............

193

Behave as a leader, not as a boss

................................
................................
................................
.

193

Build a "win
-
win" relationship when you outsource

................................
................................
..........

194

Concentrate on the

Core Employees

................................
................................
..............................

194

Get legal advice when you outsource

................................
................................
............................

195

Hire for Attitude, Train for Skill

................................
................................
................................
.....

195

Know the real costs

................................
................................
................................
....................

196

Praise loudly, blame softly

................................
................................
................................
...........

196

Train your people

................................
................................
................................
.......................

196

Use Job Enrichment

................................
................................
................................
....................

197

Online Resources

................................
................................
................................
...........................

198

Further Reading

................................
................................
................................
.............................

199

FINANCIAL RESOURCES
................................
................................
..................

201

Introduction

................................
................................
................................
................................
..

202

Costing

................................
................................
................................
................................
.........

205

Cost elements

................................
................................
................................
............................

2
05

Total Cost of Ownership (TCO)

................................
................................
................................
.....

206

Activity Based Costing (ABC)

................................
................................
................................
........

208

Charging

................................
................................
................................
................................
.......

211

Responsibility Centre
................................
................................
................................
...................

212

Budgeting

................................
................................
................................
................................
.....

214

Budgeting Processes

................................
................................
................................
...................

215

Budgeting Methods

................................
................................
................................
.....................

218

The Operations Budget

................................
................................
................................
................

220

The Capital Budget

................................
................................
................................
.....................

220

Other value factors

................................
................................
................................
.....................

227

Best Practices

................................
................................
................................
................................

232

The Power of IT


Survival Guide for the CIO

_______________________________________________________________________________
______________________

viii

Budget for hardware every year

................................
................................
................................
...

232

Buy your systems “just in time”
................................
................................
................................
....

233

Good enough can be best

................................
................................
................................
............

234

Invest to reduce TCO

................................
................................
................................
..................

234

Link the project expenses to the objectives

................................
................................
....................

235

Manage your software

assets carefully

................................
................................
..........................

235

Only go for win
-
win situations

................................
................................
................................
......

236

Push for equal treatment of the IT budget

................................
................................
.....................

236

Retire your old IT systems in time

................................
................................
................................

236

Set up pre
-

and post
-
implementation metrics

................................
................................
.................

237

Start from t
he benefits, not the costs

................................
................................
............................

237

Online Resources

................................
................................
................................
...........................

238

Further Reading

................................
................................
................................
.............................

239

PROCESSES
................................
................................
................................
.....

241

Introduction

................................
................................
................................
................................
..

242

Business Processes

................................
................................
................................
.........................

244

Typology

................................
................................
................................
................................
...

244

Quality and Quality Management

................................
................................
................................
..

249

Business Process Reengineering

................................
................................
................................
.......

253

H
ow to succeed a change project

................................
................................
................................
..

255

The relationship between Business Change and IT

................................
................................
..........

255

IT Processes

................................
................................
................................
................................
..

256

IT Service Management (ITSM)

................................
................................
................................
....

256

Best Practices

................................
................................
................................
................................

263

Apply the self
-
service concept where possible

................................
................................
................

263

Build generic solutions

................................
................................
................................
................

263

Create a unified view of the business objects

................................
................................
.................

264

Make lightweight Information Systems

................................
................................
..........................

264

Online Resources

................................
................................
................................
...........................

266

Further Reading

................................
................................
................................
.............................

267

PROJECTS

................................
................................
................................
.......

269

Introduction

................................
................................
................................
................................
..

270

Software Life Cycle

................................
................................
................................
.........................

273

Life Cycle Modelling

................................
................................
................................
........................

274

Code and Fix

................................
................................
................................
..............................

274

Waterfall Model

................................
................................
................................
..........................

274

The Incremental Model

................................
................................
................................
................

276

The Spiral Model

................................
................................
................................
.........................

277

Time boxing

................................
................................
................................
...............................

277

Agile S
oftware Development

................................
................................
................................
........

279

Other models

................................
................................
................................
.............................

281

Concept Exploration

................................
................................
................................
.......................

282

Requi
rements

................................
................................
................................
................................

283

Project Initiation

................................
................................
................................
............................

285

Project Estimation
................................
................................
................................
.......................

285

Design

................................
................................
................................
................................
..........

294

Process oriented modelling

................................
................................
................................
..........

294

Data oriented modelling

................................
................................
................................
..............

295

Object Orien
ted Modelling

................................
................................
................................
............

298

Implementation

................................
................................
................................
.............................

302

Programming languages

................................
................................
................................
..............

302

Softwar
e reuse

................................
................................
................................
...........................

309

Computer Aided Software Engineering (CASE) tools

................................
................................
........

310

Integrated Development Environments (IDEs)

................................
................................
................

311

Project Monitoring and Control

................................
................................
................................
.........

313

Gantt Charts

................................
................................
................................
..............................

313

Project Evaluation and Review Techniqu
e/Critical Path Method (PERT/CPM)

................................
.......

314

Critical Chain Scheduling and Buffer management

................................
................................
..........

316

Verification and Validation

................................
................................
................................
...............

319

White Box testing

................................
................................
................................
.......................

319

The Power of IT


Survival Guide for the CIO

_____________________________________________________________________________________________________

ix

Unit Testing

................................
................................
................................
...............................

321

Black Box testing

................................
................................
................................
........................

321

Integration Testing

................................
................................
................................
.....................

322

System Testing

................................
................................
................................
..........................

322

Regression testing

................................
................................
................................
......................

322

Alpha and Beta Testing

................................
................................
................................
................

323

Automated testing

................................
................................
................................
......................

323

Test Plan

................................
................................
................................
................................
...

323

Test Results

................................
................................
................................
...............................

324

Software Quality Management

................................
................................
................................
.........

325

Capability Maturity Model (CMM)

................................
................................
................................
..

325

ISO
-
9001

................................
................................
................................
................................
..

326

TickIT
................................
................................
................................
................................
........

327

Software Process Improvement and Capability dEtermination (SP
ICE)

................................
...............

32
7

Software Configuration Management

................................
................................
................................

329

Documentation Development

................................
................................
................................
...........

331

Training

................................
................................
................................
................................
........

332

Installation

................................
................................
................................
................................
....

333

Maintenance

................................
................................
................................
................................
..

335

Typology

................................
................................
................................
................................
...

335

Problems associated with maintenance

................................
................................
..........................

335

Metrics

................................
................................
................................
................................
......

337

Application Mining

................................
................................
................................
.......................

338

Retirement

................................
................................
................................
................................
....

339

Legal considerations

................................
................................
................................
.......................

340

Intellectual Property
................................
................................
................................
....................

340

Best Practices

................................
................................
................................
................................

345

Aim for Conceptual Integrity

................................
................................
................................
........

345

Design Twice, Code O
nce

................................
................................
................................
.............

346

Do not be afraid of risks

................................
................................
................................
..............

346

Do not re
-
invent the wheel

................................
................................
................................
..........

346

E
xpect the unexpected

................................
................................
................................
................

347

Fit the methodology to the project, not the other way around

................................
..........................

347

Have an Open Source strategy

................................
................................
................................
.....

348

Involve the users

................................
................................
................................
........................

348

Limit the size of the project teams

................................
................................
................................

349

Manage the requir
ements

................................
................................
................................
............

350

Not all developers are created equal

................................
................................
.............................

350

Organize the refactoring process

................................
................................
................................
..

351

Rank project elements up front

................................
................................
................................
....

351

Remember Brook’s Law

................................
................................
................................
...............

351

Separate concerns

................................
................................
................................
......................

352

Separate stable and unstable elements

................................
................................
.........................

352

Separate Transaction Processing and Analytical Processing

................................
..............................

353

Take care of the installation process

................................
................................
.............................

353

Think Big, develop small

................................
................................
................................
..............

353

Use the right tool for the job

................................
................................
................................
........

354

Online Resources

................................
................................
................................
...........................

355

Further Reading

................................
................................
................................
.............................

356

ORGANIZATION

................................
................................
..............................

363

Introduction

................................
................................
................................
................................
..

364

Organization

................................
................................
................................
..............................

364

Objects in the organizational model

................................
................................
..............................

365

Management

................................
................................
................................
................................
.

368

Mapping Managers to Organizational Units

................................
................................
.....................

368

Managerial activities and roles

................................
................................
................................
......

368

Organizational Forms

................................
................................
................................
......................

371

Organizational subunits

................................
................................
................................
...............

371

Coordination mechanism
s

................................
................................
................................
............

372

Organizational forms

................................
................................
................................
...................

374

Organizational Culture

................................
................................
................................
.................

376

The Power of IT


Survival Guide for the CIO

_______________________________________________________________________________
______________________

x

Work Teams
................................
................................
................................
...............................

377

Organizational Structures

................................
................................
................................
................

379

Mechanistic and Organic Structures

................................
................................
..............................

379

Functional organization

................................
................................
................................
...............

379

Process
-
oriented organization

................................
................................
................................
......

380

Product
-
oriented organization

................................
................................
................................
......

380

Geographical organization
................................
................................
................................
............

381

Mixed structures

................................
................................
................................
.........................

382

Organization of projects

................................
................................
................................
..............

383

Organization of IT

................................
................................
................................
..........................

387

Types of activities of an IT organization

................................
................................
.........................

387

Structure of the IT depar
tment

................................
................................
................................
.....

387

Centralization and decentralization of IT

................................
................................
........................

388

IT Staffing

................................
................................
................................
................................
.

390

The CIO/IT manager

................................
................................
................................
...................

392

Links between IT and the rest of the organization

................................
................................
...........

393

Best Practices

................................
................................
................................
................................

395

Act normal

................................
................................
................................
................................
.

395

Create high
-
performance teams

................................
................................
................................
...

395

Eliminate redundant administration

................................
................................
...............................

395

Every department its own responsibility

................................
................................
........................

396

Flat or tall?

................................
................................
................................
................................

396

Harmonize, don’t central
ize

................................
................................
................................
..........

397

Integrate in the Organizational Culture

................................
................................
..........................

399

Know and use the informal organization

................................
................................
........................

399

Participate in networks

................................
................................
................................
................

399

Separate development and maintenance

................................
................................
.......................

400

Online Resources

................................
................................
................................
...........................

401

Further Reading

................................
................................
................................
.............................

402

STRATEGY AND BUSINES
S ALIGNMENT

................................
..........................

405

Introduction

................................
................................
................................
................................
..

406

Business Strategy

................................
................................
................................
..........................

407

Integration of business and IT

................................
................................
................................
.........

409

The Strategic Alignment Mod
el

................................
................................
................................
.........

411

Functional Integration

................................
................................
................................
.................

412

Strategic Fit

................................
................................
................................
...............................

414

Zachman's Framewor
k

................................
................................
................................
....................

418

Business Continuity and Disaster Recovery

................................
................................
........................

420

Contingency Planning Policy Statement

................................
................................
.........................

421

Business Impact Analysis (BIA)

................................
................................
................................
....

422

Identify Preventive Controls

................................
................................
................................
.........

423

Develop Recovery Strategy

................................
................................
................................
..........

425

Develop an IT Contingency Plan

................................
................................
................................
...

426

Plan testing, training, and exercises

................................
................................
..............................

427

Pla
n maintenance.

................................
................................
................................
......................

427

Best Practices

................................
................................
................................
................................

428

Apply the right procurement process

................................
................................
.............................

428

Build a balanced portfolio of IT projects

................................
................................
.........................

429

Create an “IT
-
friendly” environment

................................
................................
..............................

429

Concentrate on the core business

................................
................................
................................
.

430

Do not confuse hypes with trends

................................
................................
................................
.

430

Have a written policy concerning the use of IT in your organization
................................
...................

432

Know your Business

................................
................................
................................
....................

433

Protect Your Customers’ Privacy.

................................
................................
................................
..

434

Reduce complexity

................................
................................
................................
......................

434

Select your suppliers carefully

................................
................................
................................
......

435

Set up a knowledge management strategy

................................
................................
....................

437

Sta
te the alignment with strategies and objectives

................................
................................
.........

438

Support the internal communication processes

................................
................................
...............

438

Online Resources

................................
................................
................................
...........................

440

Further Reading

................................
................................
................................
.............................

441

The Power of IT


Survival Guide for the CIO

_____________________________________________________________________________________________________

xi

BEYOND THE HYPE

................................
................................
.........................

443

The future and IT

................................
................................
................................
...........................

444

Online Resources

................................
................................
................................
...........................

447

Further Reading

................................
................................
................................
.............................

448

GLOSSARY

................................
................................
................................
......

449

Online Glossaries

................................
................................
................................
...........................

483

INDEX

................................
................................
................................
.............

485

The Power of IT


Survival Guide for the CIO

_______________________________________________________________________________
______________________

xii

The Power of IT


Survival Guide for the CIO

_____________________________________________________________________________________________________

xiii

List of Illustrations






Fig. 1.1



Domains of IT

Fig. 2.1



Position of Infrastructure in the IT s
tack

Fig. 2.2



Layers within the IT infrastructure

Fig. 2.3



Extract of UNICODE Greek code chart

Fig. 2.4



Components of a Von Neumann computer

Fig. 2.5



USB connectors

Fig. 2.6



NAS vs. SAN

Fig. 2.7



Storage systems

Fig. 2.8



XML as a hierarchical
structure

Fig. 2.9



The OSI model

Fig. 2.10



OSI vs. TCP/IP

Fig. 2.11
-

ADSL

Fig. 2.12



Routing

Fig. 3.1


Position of Information Systems in the IT stack

Fig. 3.2


Layers of Information Systems

Fig. 3.3


Email protocols

Fig. 3.4


Hierarchical data s
tructure

Fig. 3.5


XSL transformations

Fig. 3.6


Workflow vs. paper documents

Fig. 3.7


Client/Server architectures

Fig. 3.8


Three
-
tier model

Fig. 3.9


Integration scenarios

Fig. 3.10


Integration at the presentation layer

Fig. 3.11


Integration at

the database layer

Fig. 3.12


Common database

Fig. 3.13


Integration at the business logic layer

Fig. 4.1


Position of Human Resources in the IT stack

Fig. 4.2



Maslow’s Hierarchy of Needs

Fig. 5.1



Position of Financial Resources in the IT stack

Fig
. 5.2



Financial processes

Fig. 5.3



Evolution of real costs

Fig. 5.4



Traditional vs. Activity Based Costing

Fig. 5.5


Functionality vs. Costs

Fig. 6.1



Position of Processes in the IT stack

Fig. 6.2



Process Decomposition

Fig. 6.3



Business Proces
s Typology

Fig. 6.4



Process Quality

The Power of IT


Survival Guide for the CIO

_______________________________________________________________________________
______________________

xiv

Fig. 6.5
-

ITIL

Fig. 7.1



Position of Projects in the IT stack

Fig. 7.2



Waterfall Model

Fig. 7.3



Incremental Model

Fig. 7.4



Project estimation

Fig. 7.5



SA/SD

Fig. 7.6



Entity Relationship Diagram

Fig. 7.7



C
lass diagram

Fig. 7.8



Sequence diagram

Fig. 7.9



State diagram

Fig. 7.10



4GL+ programming

Fig. 7.11



Gantt chart

Fig. 7.12



PERT/CPM

Fig. 7.13



Integration of tasks

Fig. 7.14



Cyclomatic complexity

Fig. 7.15



Bathtub diagram

Fig. 7.16



Compariso
n of methodologies

Fig. 7.17



Communication problems

Fig. 8.1



Position of organization in the IT stack

Fig. 8.2



Activities, Processes, Functions and Projects

Fig. 8.3



Organizational subunits

Fig. 8.4



Coordination mechanisms

Fig. 8.5



Organization
al forms

Fig. 8.6



Functional Organization

Fig. 8.7



Process
-
Oriented Organization

Fig. 8.8



Product
-
oriented Organization

Fig. 8.9



Geographical Organization

Fig. 8.10



Mixed Organization

Fig. 8.11



Coordination of Project by the Functional Managers

Fig. 8.12



Coordination of Project by a Project Manager

Fig. 8.13



Weak Matrix Organization

Fig. 8.14



Balanced Matrix Organization

Fig. 8.15



Strong Matrix Organization

Fig. 8.16



Coexistence of centralized and decentralized IT

Fig. 9.1



Position o
f Strategy in the IT stack

Fig. 9.2



Strategic Alignment Model

Fig. 9.3



Functional Integration

Fig. 9.4



Balanced Scorecard

Fig. 9.5



Zachmann's Framework

Fig. 9.6

-

Cost Optimization

Fig. 9.7



Gartner Group Hype Curve

Fig. 9.8



Boston/IT model

Fig
.

9.9



Complexity


Fig 9
.
10

-

Gartner’s Magic Quadrant

The Power of IT


Survival Guide for the CIO

_____________________________________________________________________________________________________

xv

List of Tables






Table 2.1

-

Storage Architecture strengths and weaknesses

Table 2.2


IEEE 802.3 standards


Table 3.1


Categorization of Groupware

Table 3.2
-

JSP and ASP

Table 3.3


HTML and XML

Table 4.1


Benefits of Teleworking

Table 5.1


Cost types and cost elements

Table 5.2

Costing vs. Budgeting

Table 5.3


Depreciation

Table 5.4



Payback period

Table 5.5


Net Present Value

Table 5.6



Decision Criteria

Table 6.1


Improvement vs. Innova
tion

Table 7.1


Life cycle modeling

Table 7.2


Function points to Lines of code conversion

Table 7.3


Cost drivers

Table 7.4


The PERS Cost Driver

Table 7.5


Comparison of programming languages generations

Table 7.6


Cyclomatic Complexity and Risk

Ta
ble 7.7


Benefits of CMM

Table 8.1



Managerial Activities and Roles

Table 8.2


Knowledge of IT Staff per profile

Table 8.3


Skills and personality of IT staff per profile

Table 9.1



Balanced IT scorecard
















1


Introduction














“Co
mputer Science is no more about computers than astronomy is about telescopes.


(E. W. Dijkstra)


Introduction

_____________________________________________
________________________________________________________

2

Information Technology


"In 1880, about nine out of 10 workers made and moved things; today, that is down to one out of five.
The other four are knowledge pe
ople or service workers."


(Peter Drucker)


According to Professor Russell Ackoff [1], the content of the human mind can be
classified into five categories:




Data



symbols. Data is raw; it simply exists and has no significance beyond its
existence. It can

exist in any form, usable or not. It does not have meaning of
itself. For example, a spreadsheet generally starts out by holding data.



Information

-

data that is processed to be useful. Answers to "who", "what",
"where", and "when" questions. Information
is data that has been given meaning
by way of relational connection. This "meaning" can be useful, but does not
have to be. For example, a relational database makes for information from the
data stored within it.



Knowledge

-

application of data and informa
tion. Answers the "how" question;
Knowledge is the appropriate collection of information; such that it's intent is to
be useful. Most of the Information systems we use exercise some type of stored
knowledge (the business rules).



Understanding

-

appreciatio
n of "why". For example, elementary school
children memorize knowledge of the "times table". They can tell you that "2 x 2
= 4" because they have amassed that knowledge (being included in the times
table). But when asked what is "123 x 456", they can not r
espond correctly
because that entry is not in their times table. To correctly answer such a question
requires understanding.



Wisdom

-

evaluated understanding. Unlike the previous categories, wisdom
deals with the future because it incorporates vision and
design.


Technology

is the combination of skills, knowledge, materials, machines, and tools used
by people to convert or change raw materials into valuable goods and services.


Information Technology

(IT)

is technology that is used to store, communicate, and
manipulate data, information, knowledge, understanding and


ultimately
-

wisdom.


Organizations use technology in general and IT in particular to become more efficient,
more effective, and to innovate
.


Introduction

_____________________________________________________________________________________________________

3

The changing role of IT


Early computers


mainframes
-

were too large and expensive to have broad application
in business. In the 1960s, they became cost
-
effective and widely adopted and standards
and languages were developed specifically for business

use. Initially, though, the
mainframe

had a purely supporting role, mostly in the accounting department. This was
the era of
Electronic Data Processing (EDP).


In the beginning of the 1980s IBM introduced the first
Personal Computer

(
PC
) and
published the technical details of this machine. This opened the possibility for other
companies to make
IBM

compatible

computers and cheap clones. Individuals used
these machines in their home environment but soon

they infiltrated in the offices and on
the production floors. At first, the EDP

professionals did not know how to cope with
this event. Some thought it was just hype that would disappear as fast as it came, others
simply ignored it and some be
gan a war against these intruders. After a while, it became
clear that the PC was there to stay. It had conquered its place in the organization; first
as a stand
-
alone workstation
, but rapidly the need to act as a terminal for the mainf
rame
arose.


A few years later, two other evolutions took place:
departmental computers

and
Local
Area Networks

(LANs)
. These technologies allowed people to share information and
work together in small workgroups or company wid
e. These evolutions had another
effect: where the good old EDP

department only had one "client" within the
organization, the newly born IT department suddenly had to cope with the whole
organization. Almost every white
-
collar or blue
-
collar emp
loyee had a PC connected to
the network. Where the users of traditional EDP were specialists in their branch and
were therefore well trained to work with these systems, the newcomers only had a
limited knowledge of computers. Specialized services like trai
ning classes and help
desks had to be organized by the IT department.


Because of the improved productivity of the employees and because of the new ways to
communicate and work together, the traditional hierarchies within the organizations
began to fall a
part. Terms like
flat organizations

and
horizontal departments

became
common. Also, and this is an important issue, the dependency of IT increased
dramatically. Information Technology supported almost every part of the business
. As
IT covered more and more facets of the business, it was more and more used to get a
better insight in the business.
Management Information Systems
,
Business Intelligence
,
Data War
ehousing

and
Data Mining

became part of the normal vocabulary of the
business managers.


Meanwhile, another technological evolution took place: the

digitalization

of
telecommunications. People and their comput
ers started to join forces over networks
and the analog communication technology was digitized. Because of this technological
Introduction

_____________________________________________
________________________________________________________

4

convergence many organizations took the decision to put communications under the
same person who was in charge of the data process
ing business.


Today, IT is close to or even part of the
core business
in many organizations.
This is the case in service organizations
(banking, insurance, publishing,
government...) whose nonmaterial
products cannot exist without IT. Think
of a simple
bank account: this is a
purely imaginary object without any
physical manifestation; it only exists on
the disks and in the memories of the
bank's computers. The modern stock
exchange is another example; all the
transactions are merely bits and bytes
floati
ng around in the networks of the
stockbrokers and again no physical
exchanges take place. In many
organizations, this is reflected by the
presence of a representative in the senior management team: the
Chief Information
Officer

(CIO
)
. The CIO is in charge of both technology managers and business
managers and is the link between these two. In other organizations, where IT is merely
a support function, the
IT Manager

plays his role as the line m
anager of a
technologically oriented department.



Introduction

_____________________________________________________________________________________________________

5

Evolution of the IT Industry


The IT industry is an extremely varied sector of the economy, including thousands of
small, medium
-
sized and big companies serving many different markets. One way of
looking
at it is to distinguish three segments, centered on
hardware
,
software,

and
services
. Until the 1980s, these three segments were structured
vertically
. Customers
selected an IT solution from a few vendors, such as IBM, DEC, or Wang. These
delivered complet
e solutions, including hardware, software and the adjoining services.
Because of the proprietary nature of these solutions, customers were tied to their
suppliers and there were few opportunities left for other vendors to offer
complementary products or se
rvices. Two events led to a fundamental change in this
situation: low cost microprocessors and open software standards. These events
transformed the IT industry; vendors became specialized in hardware, software or
services. In every segment, many competin
g or complementary products exist, all
complying with a limited number of standards.


The IT industry is currently one of the most dynamic in the global economy. As a
sector, it not only creates millions of high
-
level jobs but it also helps other
organiza
tions to be more efficient and effective and it stimulates innovation. T
he
importance of IT is not so much the growth of its share of the total economy but in the
changes that are introduced in the organizations that use and assimilate it.


Recent events s
eem to be showing that a new evolution is going on. A tremendous
shakeout is now taking place in which smaller vendors are taken over by the big players
who are now completing their portfolio with complementary products and services. It
looks as if the pen
dulum is swinging back in the other direction and we can expect new


even more severe


vendor lock
-
ins. To be watched very carefully by the decision
makers!




Introduction

_____________________________________________
________________________________________________________

6

About this book


IT is not just about computers; it connects at least eight different domains

stacked upon
each other as building blocks:


Fig. 1.1



Domains of IT




This framework will serve as the structure of this book.

Every chapter will discuss one
domain in more detail. Do not expect a comprehensive survey but a management
summary. Only th
e topics contributing to this work will be put in perspective, others
will be just mentioned or simply dropped. Several links to Web sites and good books
will allow the reader to dig deeper in the discussed items.


As this book has to be a practical help f
or the IT manager, there will be a
n important
part about the best practices in the different domains of IT.
A best practice

is a policy,
procedure, technique, tool, or method

that, through experience and research, has proven
to lead reliably to a good resu
lt. Best practices are a source of competitive advantage as
they are often the result of significant experience and costly trial and error. In this work,
these best practices will aim at four objectives: information liquidity, availability,
agility, and co
sts.


Introduction

_____________________________________________________________________________________________________

7



Information Liquidity

-

Much like cash liquidity, the liquidity of information is a