Chapter 13 Information Technology Economics. Agenda IT Organization IT Productivity IT Benefits Data...
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Transcript of Chapter 13 Information Technology Economics. Agenda IT Organization IT Productivity IT Benefits Data...
![Page 1: Chapter 13 Information Technology Economics. Agenda IT Organization IT Productivity IT Benefits Data Center Economics.](https://reader030.fdocuments.net/reader030/viewer/2022032414/56649ef15503460f94c01a04/html5/thumbnails/1.jpg)
Chapter 13
Information Technology Economics
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Agenda
• IT Organization
• IT Productivity
• IT Benefits
• Data Center Economics
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IT Department
CIO
OperationsSystems
Development Support
Computer Computer facilities facilities operationsoperationsData entryData entry
Systems Systems analysis and analysis and designdesignProgrammingProgramming
Data Data administrationadministrationInformation Information centercenterInformation Information technologytechnology
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Agenda
• IT Organization
• IT Productivity
• IT Benefits
• Data Center Economics
![Page 5: Chapter 13 Information Technology Economics. Agenda IT Organization IT Productivity IT Benefits Data Center Economics.](https://reader030.fdocuments.net/reader030/viewer/2022032414/56649ef15503460f94c01a04/html5/thumbnails/5.jpg)
Measuring Productivity
• Traditional measure
• Function point analysis
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Traditional Measure
• Source lines of code (SLOC)
• Lines of executable code (LOEC)
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Function Point Analysis
• Count number with Low, Average, and High complexity
• Multiply by function weight
• Sum to arrive at function points
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Function Point Analysis
• 5 functions are scored– amount of input (forms / screens)– Amount of output (reports / screens)– number of end-user queries– number logical files accessed / used– number interfaces to other applications
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Productivity Paradox
• Not all investments in IT will result directly in productivity gains or decreased costs– Infrastructure
• Staging for future opportunities
– Delayed benefits• E-commerce
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Agenda
• IT Organization
• IT Productivity
• IT Benefits
• Data Center Economics
![Page 11: Chapter 13 Information Technology Economics. Agenda IT Organization IT Productivity IT Benefits Data Center Economics.](https://reader030.fdocuments.net/reader030/viewer/2022032414/56649ef15503460f94c01a04/html5/thumbnails/11.jpg)
Measuring Benefits
• What’s important to management?– Not always dollars– Customer relations– Employee morale– Cycle time– Ask, don’t assume
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Measuring Benefits
• Use “Anchor” measures– Value of ratios for comparing across time and
function– Sales per employee– Revenue per employee– Revenue per customer– Cost per transaction
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Agenda
• IT Organization
• IT Productivity
• IT Benefits
• Data Center Economics
![Page 14: Chapter 13 Information Technology Economics. Agenda IT Organization IT Productivity IT Benefits Data Center Economics.](https://reader030.fdocuments.net/reader030/viewer/2022032414/56649ef15503460f94c01a04/html5/thumbnails/14.jpg)
Data Center Economics
• Budgeting
• Charge back
• Outsourcing
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Budgeting• 33% Systems and Programming
– 85% maintenance– 15% new development
• decreasing
• 10% Administration / Training• 57% IT Operations
– Systems operators• Operate hardware• Schedule application runs• Input / output preparation
– Data-entry operators– Maintenance technicians
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Charge-back
• No operating budget• Charge clients for services• Clients can shop elsewhere• Centers can spend what they collect -
NO MORE!• Increasing quality at decreasing cost• Strategies
– Upgrade to latest equipment / software– Consolidation
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Outsourcing
• Reasons– Overall business trend– Global competition– Need for technical specialists– Employee costs (fringe benefits)– Tax benefits
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Outsourcing Types
• Professional services (consulting)
• Services (training / data entry)
• Temporary employees– Contract programmers
• Transactions (credit reports)
• Systems integrators
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When to Outsource
• Activity not strategic
• Save at least 15%
• Need technology specialists
• Increase financial flexibility– Capital to operating expenses– Free personnel for development– Acquire new technologies quicker
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What NOT to Outsource
• Strategy (IT Plan)
• Architecture– Tied to firm’s culture
• Portfolio (What / When)
• Vendor management
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Preventing Outsource Failures
• Vendor expertise and sophistication
• Improved delivery quality
• Cost reduction
• Increased focus on core competencies
• Transition to new technologies
• Good contract and lawyer
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Raleys
• Prefer to acquire talented, retail-oriented staff
• Augments IT projects with consultants, contractors
• Outsource professional services such as training and data entry
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Raleys
• Main drawback of outsourcing is failure of outsourcing company to understand Raley’s business goals objectives and objectives
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Points to Remember
• IT Organization
• IT Productivity
• IT Benefits
• Data Center Economics
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Discussion Questions
• What will happen in your organization if the IT is outage?
• Does your organization measure its IT – Productivity?– Benefits?
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Assignment
• Review chapters 8-13 & technology 3
• Read chapter 14
• Group assignment
• Research paper