Business Information Technology- Assignment
AJ-773
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Information Systems: A Manager’s Guide to Harnessing Technology V 3.0
By John Gallaugher
Chapter 12
Software in Flux: open source, cloud, and virtualized and app-driven shifts
Learning Objectives
Understand how low marginal costs, network effects, and switching costs have combined to help create a huge and important industry.
Recognize that the software industry is undergoing significant and broadly impactful change brought about by several increasingly adopted technologies, including open source software, cloud computing, and software as a service.
Software industry
Marginal cost: Cost of producing one more unit of a product
Is effectively zero to produce an additional copy of a software product.
Network effects and switching cost can offer a degree of customer preference and lock in.
Open source software (OSS): Software that is free and where anyone can look at and potentially modify the code.
Cloud computing: Replacing computing with services provided over the Internet.
Software as a service (SaaS): Firm subscribes to a third-party software and receives a service that is delivered online.
Virtualization: Technology that can make a single computer behave like many separate computers.
Helps consolidate computing resources and creates additional savings and efficiencies.
Learning objectives
Define open source software and understand how it differs from conventional offerings.
Provide examples of open source software and how firms might leverage this technology.
Know the primary reasons firms choose to use OSS.
Understand how OSS can beneficially impact industry and government.
Recognize that just about every type of commercial product has an open source equivalent.
Be able to list commercial products and their open source competitors.
Open Source Software
Linux: Open source software operating system.
Source code for OSS products is openly shared.
Can be changed and redistributed by anyone.
In stark contrast to the practice of conventional software firms who:
Treat their intellectual property as closely guarded secrets.
Almost never provide the source code for their commercial products.
Seen by some firms as a threat that undermines their economic model.
LAMP: Acronym for Linux, Apache Web server software, MySQL database, and Perl/Python/PHP.
Powers many of the sites visited each day, from Facebook to YouTube.
Why open source?
Cost
Reliability
Security
Security focused: Technology products that contain particularly strong security features.
Scalability: Ability to either handle increasing workloads or to be easily expanded to manage workload increases.
Agility and time to market.
Examples of open source software
Firefox
OpenOffice
Gimp
Alfresco
Marketcetera
Zimbra
MySQL, Ingres, and PostgreSQL
HBase and Cassandra
SugarCRM
Asterix
Free BSD and Sun’s OpenSolaris
Learning objectives
Understand the disproportional impact OSS has on the IT market.
Understand how vendors make money on open source.
Know what SQL is.
Oss and the IT market
Lowers the cost of computing and makes computing options accessible to smaller firms.
Reliable, secure, and lowers computing costs for all users.
Diverts funds that can be used for other competitive initiatives and encouraging innovation.
Business of Open Source
Vendors make money on OSS by selling support and consulting services.
Industry’s evolution (standards competition):
Pre-Linux days: Almost every major hardware manufacturer made its own incompatible version of the Unix operating system.
As such, they had difficulty attracting third-party vendors to write application software.
Now all major hardware firms run Linux, resulting in a large, unified market attracting software developers.
Linux on a desktop
Linux is common on mobiles, consumer electronics, and on enterprise solutions, but not on desktop computers:
It is not easy to install.
Its complexity can raise the total cost of ownership.
Total cost of ownership (TCO): All costs associated with the design, development, testing, implementation, documentation, training and maintenance of a software system.
Learning objectives
Understand the concept of cloud computing.
Identify the major categories of cloud computing, including SaaS, PaaS, and IaaS.
Categories of cloud computing
Software as a service (SaaS).
Utility computing: Firm develops its own software and then runs it over the Internet on a service provider’s computers.
Variants: Platform as a Service (PaaS), Infrastructure as a Service (IaaS)
Cloud Computing
Private clouds: Pools of computing resources that reside inside an organization and that can be served up for specific tasks as need arrives.
Evolution of cloud computing has huge implications across the industry:
Financial future of hardware and software firms.
Cost structure and innovativeness of adopting organizations.
Skill sets likely to be most valued by employers.
Learning objectives
Know how firms using SaaS products can dramatically lower several costs associated with their information systems.
Know how SaaS vendors earn their money.
Be able to list the benefits to users that accrue from using SaaS.
Be able to list the benefits to vendors from deploying SaaS.
Be able to list and appreciate the risks associated with SaaS.
Earning Money Through SaaS
Money can be earned via a usage-based pricing model similar to a monthly subscription.
Other SaaS firms:
Offer free services that are supported by advertising.
Promote the sale of upgraded or premium versions for additional fees.
Compete directly with the biggest names in software.
Benefits of saas to users
Lower costs and financial risk mitigation.
Faster deployment times and variable operating expense.
Scalable systems.
Higher quality and service levels.
Remote access and availability.
Limits development to a single platform.
Tighter feedback loop.
Ability to instantly deploy bug fixes and product enhancements.
Lower distribution costs.
Greater accessibility.
Reducing software piracy.
Risks Associated with SaaS
Dependence on a single vendor.
Concern about the long-term viability of partner firms.
Users may be forced to migrate to new versions.
Possibly incurring unforeseen training costs and shifts in operating procedures.
Reliance on a network connection, which may be slower, less stable, and less secure.
Data assets stored off-site may lead to security and legal concerns.
Limited configuration, customization, and system integration options compared to packaged software or alternatives developed in-house.
User interface of Web-based software is less sophisticated and lacks the richness of most desktop alternatives.
Ease of adoption may lead to pockets of unauthorized IT being used throughout a firm.
Learning Objectives
Distinguish between SaaS and hardware clouds.
Provide examples of firms and uses of hardware clouds.
Understand the concepts of cloud computing, cloudbursting, and black swan events.
Understand the challenges and economics involved in shifting computing hardware to the cloud.
Cloud offerings
Hardware and software exists “in the cloud,” meaning somewhere on the Internet.
You only pay for the amount of processing, storage, and telecommunications used.
Cloud vendors typically host your software on their systems.
Cloud computing efforts focus on providing a virtual replacement for a subset of operational hardware like storage and backup solutions.
SaaS provides the software and hardware to replace an internal information system.
A firm replaces software and hardware with a service provided by a third party online.
Cloud services
Examples of hardware cloud services:
Salesforce.com offers Force.com.
Includes several cloud-supporting tools to write applications specifically tailored for Web-based delivery.
Google’s App Engine offers developers several tools.
Including a database product called Big Table.
Microsoft offers Windows Azure.
Cloud providers
Platform as a service (PaaS): Cloud providers offer services for customers to build their own applications on the provider’s infrastructure.
Services include hardware, operating system, tools, and hosting.
Infrastructure as a service (IaaS): Cloud providers offer services that include running the remote hardware, storage, and networking.
Client firms can choose the software used.
Clouds in action
CLOUDBURSTING
Use of cloud computing to provide excess capacity during periods of spiking demand.
BLACK SWANS
Events that cannot be predicted but can cause an impact.
It is a scalability solution that is provided as an overflow service, kicking in as needed.
Scalable computing resources can help a firm deal with spiking impact from Black swan events.
Cloud computing challenges
Installing a complex set of systems on someone else’s hardware is very difficult.
Firms considering cloud computing need to do a thorough financial analysis.
Firms should enter the cloud cautiously, particularly where mission-critical systems are concerned.
Learning Objectives
Understand how cloud computing’s impact across industries is proving to be broad and significant.
Know the effects of cloud computing on high-end server sales and the influence on the trend shifting from hardware sales to service.
Know the effects of cloud computing on innovation and the influence on the changes in the desired skills mix and job outlook for IS workers.
Know that by lowering the cost to access powerful systems and software, cloud computing can decrease barriers to entry.
Understand the importance, size, and metrics of server farms.
Clouds and Tech Industry Impact
Shifting to cloud computing modifies the margin structure for many in the computing industry.
Cloud computing can accelerate innovation.
Changes the desired skills mix and job outlook for IS workers.
Enables organizations to spend less on hardware infrastructure and reinvest in strategic efforts and innovation.
Firms need to think about the strategic advantages that can be created.
Server farm
Provide the infrastructure backbone to SaaS, hardware cloud efforts, and many large-scale Internet services.
Require plenty of cheap land, low-cost power, ultrafast fiber-optic connections, and benefit from mild climates.
Google, Sun, Microsoft, IBM, and HP have all developed rapid-deployment server farm modules.
Massive network of computer servers running software to coordinate their collective use
Learning Objectives
Know what virtualization software is and its impact on cloud computing.
Be able to list the benefits to a firm from using virtualization.
virtualization
Each computer runs its own operating system and software.
Can be used to reduce an organization’s hardware needs.
Can create a firm’s own private cloud of scalable assets.
Can cut energy consumption and lower carbon footprint.
Virtual desktops: Running an instance of a PC’s software on another machine and delivering the image of what is executing to the remote device.
Allow firms to scale and upgrade systems far more easily than if they had to maintain each individual PC.
A type of software that Allows a single computer or cluster of connected computers to function as if it were several different computers
Learning objectives
Understand the benefits and challenges of app stores, and how these products are changing the way we conceive of software and the opportunities for firms to offer value-added services to consumers.
Apps and app stores
Compared with packaged software, apps lower the cost of software distribution and maintenance.
Apps offer a richer user interface and integrate more tightly with a device’s operating system.
Huge firms have leveraged smartphone apps as their only, or primary interface with consumers.
Critics say apps force consumers into smartphone walled gardens and raise consumer switching costs.
Learning objectives
Know the options managers have when determining how to satisfy the software needs of their companies.
Know the factors that must be considered when making the make, buy, or rent decision.
Variables to Consider for Technology Decisions
COMPETITIVE ADVANTAGE
SECURITY
LEGAL AND COMPLIANCE REQUIREMENTS
SKILL, EXPERTISE, AND AVAILABLE LABOR
COST AND TIME
VENDOR ISSUES
