1.

Cloud Computing
Cloud computing is the delivery of computing services over the Internet. Cloud services allow
individuals and businesses to use software and hardware that are managed by third parties at remote
locations. Examples of cloud services include online file storage, social networking sites, webmail, and
online business applications. The cloud computing model allows access to information and computer
resources from anywhere that a network connection is available. Cloud computing provides a shared
pool of resources, including data storage space, networks, computer processing power, and specialized
corporate and user applications. The following definition of cloud computing has been developed by the
.!. "ational Institute of !tandards and Technology #"I!T$%
Cloud computing is a model for enabling convenient, on&demand network access to a
shared pool of configurable computing resources #e.g., networks, servers, storage, applications, and
services$ that can be rapidly provisioned and released with minimal management effort or service
provider interaction.
This cloud model promotes availability and is composed of five essential characteristics, three service
models, and four deployment models.
The characteristics of cloud computing include on&demand self service, broad network access, resource
pooling, rapid elasticity and measured service. 'n&demand self service means that customers can
re(uest and manage their own computing resources. )road network access allows services to be offered
over the Internet or private networks. *ooled resources means that customers draw from a pool of
computing resources, usually in remote data centers. !ervices can be scaled larger or smaller+ and use of
a service is measured and customers are billed accordingly.
The cloud computing service models are !oftware as a !ervice #!aa!$, *latform as a !ervice #*aa!$ and
Infrastructure as a !ervice #Iaa!$. In !oftware as a !ervice model, a pre&made application, along with
any re(uired software, operating system, hardware, and network are provided. In *aa!, an operating
system, hardware, and network are provided, and the customer installs or develops its own software and
applications. The Iaa! model provides ,ust the hardware and network+ the customer installs or develops
its own operating systems, software and applications.
-eployment of cloud services% Cloud services are typically made available via a private cloud,
community cloud, public cloud or hybrid cloud. .enerally speaking, services provided by a public
cloud are offered over the Internet and are owned and operated by a cloud provider. !ome examples
include services aimed at the general public, such as online photo storage services, e&mail services, or
social networking sites. /owever, services for enterprises can also be offered in a public cloud. In a
private cloud, the cloud infrastructure is operated solely for a specific organization, and is managed by
the organization or a third party. In a community cloud, the service is shared by several organizations
and made available only to those groups. The infrastructure may be owned and operated by the
organizations or by a cloud service provider. 0 hybrid cloud is a combination of different methods of
resource pooling #for example, combining public and community clouds$.
1ive examples of cloud computing
Email on the go: Email communication now plays a central role in most of our busy lives. If you travel
a lot, this may cause problems. nless you carry a mobile 2i1i&enabled laptop with you everywhere
you go or use push email on your cellphone, having an email client sitting on your computer at home
means that while out and about you risk spending time outside of the communication loop. This is one
area where the cloud finds its most fre(uent and useful application. 'nline email has been offered by all
the big names #such as 3icrosoft, 4ahoo and .oogle$ for a number of years and I have tried a lot of
different services.
No need for local data storage: -ata stored on your home or business computer suffers from many of
the same restrictions as email and, as with email, the cloud offers a solution. !toring your 3*56s, video,
photos and documents online instead of at home gives you the freedom to access them wherever you
can find the means to get online. True, you will undoubtedly be putting your life 7out there8 and with
that comes all the security and privacy baggage that also plague webmail. Examples of online storage
services include /umyo, 9umo-rive, 3icrosoft8s !ky-rive, !5from 0mazon, amongst others. 3any
offer both free and paid for storage and backup solutions.
Are you a collaborator: 'n occasion you may find yourself in need of the opinion of your peers.
-ownloading files onto flash memory, emailing documents to friends or family or colleagues or
sending submissions by snail mail is so last century. :ast year .oogle launched a service that allowed
groups of people to work on the same document, idea or proposal in real time or whenever convenient
to each participant. sing .oogle 2ave you can create a document and then invite others to comment,
amend, offer opinion, or otherwise ,oin in with the creation of the final draft.
!imilar to instant messaging but offering much more scope it can take a pro,ect that might have taken
weeks or even months to complete using other methods and potentially see it through to completion in
mere minutes or hours. .oogle is not alone in producing online collaboration tools but it is the only one
I have used myself. 'ther examples include !picebird, 3ikogo, !tixy and ;yew to name but a few.
Working in a virtual office: 4et again .oogle8s online suite of office applications is probably the best
known but by no means the only solution on offer. <ather than having a system and space hogging suite
of applications like a word processor, a spreadsheet creator and a presentation or publishing platform
sitting on your computer, you could opt to work online instead. 0ccessibility, potential for collaboration
and perhaps even online storage are ,ust some of the benefits of satisfying your office suite needs by
working online. Examples of online suites on offer include 0,ax=5, Think1ree and 3icrosoft8s 'ffice
:ive.
Need extra processing power: 1or the dedicated cloud enthusiast, something like 0mazon8s EC>
virtual computing environment might be the answer to all your needs. <ather than purchasing servers,
software, network e(uipment and so on, users would buy into a fully outsourced set of online services
instead. 3ost cloud environments on offer can customize the kind of service provided to exactly suit
the needs of the user. If you need more processing power from time to time, a cloud&based
infrastructure, being scalable, negates the need for up&front investment in client&owned resources.
'ther service providers include the open source 0biCloud, Elastichosts and "0!08s"ebula platform.
. !ey "roperties of #loud #omputing
$ser centric% This means once user is connected to cloud any data there, such as images, videos,
applications, becomes his property. "ot only the data but the devices connected also become his and he
can share it with other users.
%ask #entric% Cloud computing focus on what one need and how application can do it for us. /ere
documents are given more priority than the applications which create them.
"owerful% *owerful in the sense that as there are large computers more computing power and mass data
storage possible.
&elf 'ealing: Is called self healing because hot backups are available for every document in the cloud.
/ence if one document crashes there will be its duplicate ready to run.
(ulti)tenancy * +ntelligence% 3ulti&tenancy refers to sharing of data and costs across a large pool of
users. 0s various data are stored in cloud data mining and analysis are necessary for accessing
information in an intelligent manner.
"rogrammable% 3any processes in cloud computing shall be automate such as backing up crashed data
with its duplicate. /ence programming is associated with cloud computing.
,lexible% 1lexible as the users may be of different varieties and hence it has to match with their needs.
-enefits from #loud #omputing
.educes .un time and .esponse time% 0s there is large computing capability run time and response
time get reduced.
(inimi/e +nfrastructure risk% 0s there is service providers to provide necessary infrastructure and
services infrastructure risk get reduced. 2e need not purchase infrastructure.
0ower #ost of Entry% 1or new organizations the infra structure and services can be rented and this
reduces their cost of entry into the market.
+ncreased "ace of innovation: 0s the new and small firms can compete with the leaders in the
industry with the help of cloud computing, this increases the pace of innovation.
#ost #onscious users are satisfied: 3ost of the users are cost conscious. They are well satisfied by the
services cloud computing provides.
1. /ere are the different types of cloud computing services available, generally%
&oftware as a &ervice 2&aa&3: !oftware&as&a&!ervice #!aa!$ is probably the most popular of the
offerings cloud&computing vendors have. 3ost individuals and businesses ? whether they are aware or
not & use !aa! when they talk about cloud computing. Cloud storage and data backup solutions, web&
based tools and applications, popular services such as email, and literally thousands of such services are
offered to subscribers for a monthly, (uarterly, or annual fee #usually$. 2hen you subscribe to a !aa!
service, vendors give you both resources and applications to use. 4ou don8t have to install anything,
you don8t need to own or buy anything.
"latform as a &ervice 2"aa&3: 3oving from a simple pay and use model that !aa! promises to
be, *aa! slightly different !aa!. If you, as an individual or a business, ever developed an application for
business, you8d have used a desktop?based or self&hosted platform such as 3icrosoft 0ccess, 3icrosoft
0zure, or one of the many such platforms. *aa! features a web&based platform ? which itself is hosted
on a secure cloud ? to allow you to develop applications of all sorts using the platform. 0s a service
then, cloud computing vendors host, maintain and provide you the necessary platform along with
resources and other tools for application development.
+nfrastructure as a &ervice 2+aa&3: Infrastructure&as&a&service #Iaa!$ offers you all the resources,
assets, IT e(uipment and computing power as and when you need it. Instead of making heavy
investments in IT networks and the manpower needed to run it all together, Iaa! vendors let you focus
on your business while the entire infrastructure, resources, e(uipment, IT expertise, hardware, software
and manpower is managed by vendors themselves.
/ere are seven different types of cloud computing and a little bit about what they offer to
businesses%
Web)based cloud services: These services let you exploit certain web service functionality, rather than
using fully developed applications. 1or example, it might include an 0*I for .oogle 3aps, or for a
service such as one involving payroll or credit card processing.
&aa& 2&oftware as a &ervice3: This is the idea of providing a given application to multiple tenants,
typically using the browser. !aa! solutions are common in sales, /<, and E<*.
"latform as a &ervice: This is a variant of !aa!. 4ou run your own applications but you do it on the
cloud provider8s infrastructure.
$tility cloud services% These are virtual storage and server options that organizations can access on
demand, even allowing the creation of a virtual data center.
(anaged services: This is perhaps the oldest iteration of cloud solutions. In this scenario, a cloud
provider utilizes an application rather than end&users. !o, for example, this might include anti&spam
services, or even application monitoring services.
&ervice commerce: These types of cloud solutions are a mix of !aa! and managed services. They
provide a hub of services which the end&user interacts with. Common implementations include expense
tracking, travel ordering, or even virtual assistant services.
#loud #omputing &ervices
Ama/one Web &ervice
0mazone web services are the set of cloud computing services offered by 0mazon. -ifferent services
provided by 0mazone are
Elastic Cloud Computing #EC>$
!imple !torage !ervice #!5$
!imple @ueue !ervice #!@!$
!imple -atabase !ervice #!-!$
4oogle App Engine
.oogle 0pp Engine allows you to run your web 0pplications on .oogle8s infrastructure.
The environment includes following features.
dynamic web serving, with full support for common web technologies
persistent storage with (ueries, sorting and transactions
automatic scaling and load balancing
0*Is for authenticating users and sending email using .oogle 0ccounts
a fully featured local development environment that simulates .oogle 0pp Engine on your
computer
5. Transformation Aey !uccess 1actors
Two primary success factors allow IT to successfully transform IT value delivery. 'ne is related to
communicating IT value in terms that matter to business executives. The other is having a flexible IT
infrastructure architected to meet the simultaneous ob,ectives of cost transparency and reduction,
service (uality, and agility.
-usiness)focused communication
To engineer a successful transformation, IT executives need to change their communication strategy.
Transformation re(uires evolving through several specific stages. 2orking through those stages
incrementally builds business confidence in IT, to the point that IT can discuss strategic value and
directly impact and transform business strategy.
3any IT organizations are doing great work, and IT executives often see the potential strategic value
that IT can deliver to the business. /owever, when communication from IT isn8t business focused, it
creates doubts about IT8s ability to manage resources under their control. Those doubts erode business
executives8 confidence in IT, which limits an IT executive8s ability to even discuss IT support for
strategic business initiatives.
)y increasing the visibility of the linkage between IT spending and specific outcomes, IT executives
can give business executives information that helps them make decisions about spending priorities.
Costs that are not allocated at the user level or the service consumption level prevent decision makers
from determining whether IT is delivering the right services at the right cost and service level. nit
costing gives IT funders the data needed to compare alternatives and prioritize spending.
The next step in building business confidence occurs when IT demonstrates a clear understanding of
business ob,ectives and links IT spending to business outcomes.
'nce IT executives focus on and communicate IT investment strategy and accomplishments in terms of
business outcomes, business executives are more comfortable that IT understands their ob,ectives and
can help them achieve strategic outcomes. 'nly then can IT have constructive discussions about how
technology innovation can support or even transform business strategy.
0t top&performing IT organizations that effectively enable revenue&generating products and services,
staff&level IT employees have a visceral understanding of the uni(ue value proposition of the business.
In other words, IT organizations that have transformed and are driving strategic value understand both
the business ob,ectives and the organization8s competitive differentiation.
Effective business&focused communication is a prere(uisite for building confidence and breaking the
constraint cycle. Transformation is fueled by increasing levels of business confidence in IT.
Transforming IT communication is what builds business executive confidence.
,lexible infrastructure
IT needs an infrastructure and value delivery systems that meet multiple business&focused re(uirements.
0 traditional static infrastructure, managed in technology&siloed organizations, following traditional IT
service management processesBthis approach doesn8t meet the concurrent set of cost, service (uality,
and agility re(uirements that enable transformation.
/owever, for IT executives to transform IT from a cost center to a strategic value enabler, they must
simultaneously achieve cost, service (uality, and agility re(uirements.
Cost% IT should be on an ongoing (uest to drive down the unit cost of IT. Each new system
implemented includes a commitment to ongoing support and maintenance. nless IT retires old systems
at the same rate it adds new systems, then IT must reduce ongoing maintenance costs.
!ervice (uality% <educing costs and improving visibility are not enough to achieve IT value
transformation. IT must also deliver a level of service (uality that matches business re(uirements. 0
focus on business outcomes re(uires high availability of business&critical systems at a service level that
is fit for use, and it also re(uires that service support is responsive when service interruptions occur.
0gility% 'rganizations that are driving strategic value build on a foundation of cost transparency and
service (uality.
IT needs an architecture and infrastructure that can simultaneously facilitate a focus on cost, service
(uality, and agility. 'rganizations that have achieved value transformation possess an underpinning of
operational excellence as measured by cost and service (uality. )ut for IT to engage in strategy
conversations and drive business value through technology innovation, agility as measured by time to
capability becomes the most important re(uirement.
6. 2e define cloud computing as a computing paradigm where services and data reside in shared
resources in scalable data centers, and those services and data are accessible by any authenticated
device over the Internet.
2e have also identified some key attributes that distinguish cloud computing from conventional
computing. Cloud computing offerings are%
0bstracted and offered as a service.
)uilt on a massively scalable infrastructure.
Easily purchased and billed by consumption.
!hared and multi&tenant.
)ased on dynamic, elastic, flexibly configurable resources.
0ccessible over the Internet by any device.

7. There are primarily four cloud deployment models. These models have been recommended by the
"ational Institute of !tandards and Technology #"I!T$.
%he "rivate #loud
This model doesn8t bring much in terms of cost efficiency% it is comparable to buying, building and
managing your own infrastructure. -uring their initial adaptation to the cloud, many organizations face
challenges and have concerns related to data security. These concerns are taken care of by this model,
in which hosting is built and maintained for a specific client. The infrastructure re(uired for hosting can
be on&premises or at a third&party location. !ecurity concerns are addressed through secure&access ;*"
or by the physical location within the client8s firewall system. 1urthermore, for mission&critical
applications we need to consider downtime in terms of internet availability, (uality and performance.
/ence, hosting the application with an on&premises private cloud is the suggested approach. In addition
to security reasons, this model is adopted by organizations in cases where data or applications are
re(uired to conform to various regulatory standards such as !'C, /I*00, or !0! DE, which may
re(uire data to be managed for privacy and audits that govern the corporation. 1or example, for the
healthcare and pharmaceutical industries, moving data to the cloud may violate the norms. !imilarly,
different countries have different laws and regulations for managing and handling data, which can
impede the business if cloud is under different ,urisdiction.
!everal !aa! applications, such as !ugarC<3, provide options to their clients to maintain their data on
their own premises to ensure data privacy is maintained according to the re(uirements of the particular
business. 0mazon also provides the option of a virtual private cloud.
%he "ublic #loud
The public cloud deployment model represents true cloud hosting. In this deployment model, services
and infrastructure are provided to various clients. .oogle is an example of a public cloud. This service
can be provided by a vendor free of charge or on the basis of a pay&per&user license policy.
This model is best suited for business re(uirements wherein it is re(uired to manage load spikes, host
!aa! applications, utilize interim infrastructure for developing and testing applications, and manage
applications which are consumed by many users that would otherwise re(uire large investment in
infrastructure from businesses. This model helps to reduce capital expenditure and bring down
operational IT costs.
%he 'ybrid #loud
This deployment model helps businesses to take advantage of secured applications and data hosting on
a private cloud, while still en,oying cost benefits by keeping shared data and applications on the public
cloud. This model is also used for handling cloud bursting, which refers to a scenario where the existing
private cloud infrastructure is not able to handle load spikes and re(uires a fallback option to support
the load. /ence, the cloud migrates workload between public and private hosting without any
inconvenience to the users.
3any *aa! deployments expose their 0*Is, which can be further integrated with internal applications
or applications hosted on a private cloud, while still maintaining the security aspects. 3icrosoft 0zure
and 1orce.com are two examples of this model.
%he #ommunity #loud
In the community deployment model, the cloud infrastructure is shared by several organizations with
the same policy and compliance considerations. This helps to further reduce costs as compared to a
private cloud, as it is shared by larger group.
;arious state&level government departments re(uiring access to the same data relating to the local
population or information related to infrastructure, such as hospitals, roads, electrical stations, etc., can
utilize a community cloud to manage applications and data.
2/0T 0<E -E*:'43E"T 3'-E:! I" C:'- C'3*TI".F
Cloud services can be deployed in different ways, depending on the organizational structure and the
provisioning location. 1our deployment models are usually distinguished, namely public, private,
community and hybrid cloud service usage.
"ublic #loud
The deployment of a public cloud computing system is characterized on the one hand by the public
availability of the cloud service offering and on the other hand by the public network that is used to
communicate with the cloud service. The cloud services and cloud resources are procured from very
large resource pools that are shared by all end users. These IT factories, which tend to be speciGcally
built for running cloud computing systems, provision the resources precisely according to re(uired
(uantities. )y optimizing operation, support, and maintenance, the cloud provider can achieve
signiGcant economies of scale, leading to low prices for cloud resources. In addition, public cloud
portfolios employ techni(ues for resource optimization+ however, these are transparent for end users
and represent a potential threat to the security of the system. If a cloud provider runs several
datacenters, for instance, resources can be assigned in such a way that the load is uniformly distributed
between all centers.
1igure =% Three users accessing a public cloud
!ome of the best&known examples of public cloud systems are 0mazon 2eb !ervices #02!$
containing the Elastic Compute Cloud #EC>$ and the !imple !torage !ervice #!5$ which form an Iaa!
cloud offering and the .oogle 0pp Engine with provides a *aa! to its customers. The customer
relationship management #C<3$ solution !alesforce.com is the best&known example in the area of
!aa! cloud offerings.
"rivate #loud
*rivate cloud computing systems emulate public cloud service offerings within an organization8s
boundaries to make services accessible for one designated organization. *rivate cloud computing
systems make use of virtualization solutions and focus on consolidating distributed IT services often
within data centers belonging to the company. The chief advantage of these systems is that the
enterprise retains full control over corporate data, security guidelines, and system performance. In
contrast, private cloud offerings are usually not as large&scale as public cloud offerings resulting in
worse economies of scale.
1igure =% 0 user accessing a private cloud
#ommunity #loud
In a community cloud, organizations with similar re(uirements share a cloud infrastructure. It may be
understood as a generalization of a private cloud, a private cloud being an infrastructure which is only
accessible by one certain organization.
1igure 5% Three users accessing a community cloud
/ybrid Cloud
0 hybrid cloud service deployment model implements the re(uired processes by combining the cloud
services of different cloud computing systems, e.g. private and public cloud services. The hybrid model
is also suitable for enterprises in which the transition to full outsourcing has already been completed,
for instance, to combine community cloud services with public cloud services.
1igure H% /ybrid cloud usage
8. +% &trategic "lanning 9verview
IT strategic planning comes in many shapes and forms depending on the kind of organizations
performing it and for what reason. !ome organizations perform IT strategic planning as part of an
annual corporate or community process, others perform it because of specific organizational events%
change in leadership, mergers or ac(uisitions, perception of lack of IT value, etc. <egardless of the
reason, organizations generally follow the high&level methodology. 0 typical IT strategic planning
process consists of five ma,or steps.
o Establish missionIpurpose of organization
o -evelop vision #intent$ about future
o Establish goals, set ob,ectives
o Conduct !2'T 0nalysis
o Conduct *E!T 0nalysis
They must assess the strengths and weaknesses within the business+ the opportunities and threats
that the company faces outside of the business, and the country&specific political, economical, social
and technological #"E&%$ macro business environment.
They must conduct a situation analysis and identify and form strategies to manage the industry8s
micro&environment driving forces, and plan the management of their value&chain activities better than
their competitors.
*hase = #3issionI;isionI.oalsI'b,ectives$
!trategic *lanners must establish%
A (ission that explains the present purpose of the organization.
A :ision that declares the organizations intentions about its future.
Where the company needs to go
Who, and what, should its future customers, products, market and technology be.
Goals that will help the business achieve its vision.
Objectives to support the goals.
")% goals are broad, but fixed+ ob,ectives are narrow and flexible, and can change in order to achieve
the goal.
2hen the goal is reached through the ob,ectives, the vision is realized.
In the first step, the organization defines the strategic contextBthe strategic backdrop for which the IT
strategic plan is being developed. -uring this phase, the organization identifies #=$ why the planning is
being conducted, #>$ the desired outcomes of the IT strategic planning, and #5$ clear executive
understanding of the ma,or business priorities at both the organizational and business unit level.
*hase > #Environmental !can$
Conduct an environmental scan by asking and answering (uestions such as%
J 2ho are our current competitorsF
J /ow many entry barriers to our industryF
J 2hat kinds of substitutes exist for our productIserviceF
J Is the company too dependent on powerful suppliers andIor customersF
Analy/e internal strengths K weaknesses, external opportunities and threats
;evelop scenarios about what factors might influence the future
,orecast how variables might change in the future
-enchmark to identify best practices in different areas.
Complementary to this phase is a study of current&state IT realities% /ow effective is the current IT
environment and how well does it support current business needsF -uring this step, the organization
takes inventory of its overall IT staff #whether they report to the I! organization or are part of a
business unit$, assesses the effectiveness of its applications and infrastructure, and identifies
vulnerabilities, as well as areas for operational improvement.
0fter the completion of the first two steps, the organization should have a clear understanding of
business priorities and the current effectiveness of IT in support of the business.
*hase 5 & H #1orm !trategy+ !elect K Implement !trategy$
Conduct a situational analysis #!0$ in order to% studyIexamine past events+ current conditions+ attempt
to forecast future trends.
1rom the !0 develop alternative future goals and plans to achieve those goals. .oals must be%
!pecific
3easurable
0ttainable #but challenging$
<elevant
Time&bound
Evaluate advantages, disadvantages and potential effects of each alternative goal and plan. *rioritize
goals+ evaluate cost of initiatives.
&elect most appropriate and feasible one#s$+ put it in writing. Communicate the plans throughout the
organization. !upport strategy with ade(uate resources and a reward system.
0aunch strategy.
This sets the stage for developing a compelling and uni(ue future&state vision of IT for the organization.
"ormally, this involves the collaboration of multiple department heads and members of senior
management to think about the long&term contributions of IT to the business strategy, specifically,
finding areas of focus for IT investments. -uring this phase, intangible factors, such as corporate
culture #what kind of IT innovation would fit our cultureF$, receptivity to change #how likely are our
physicians and staff to accept new technologyF$, and (uality of current IT vendor relationships #how
supportive is our IT vendor in developing new products that support our visionF$, are taken into
account.
In this step, strategy options are developed and evaluated in an effort to find the appropriate strategic
path to ensure that the IT vision is realized. -uring this phase, high&level budgets, ma,or IT pro,ects,
and vendor product strategies are evaluated in an effort to determine the most viable blueprint for
strategy success.
3onitorIControl
&trategic control systems enable managers to evaluate the organization8s progress regarding its
strategy.
!trategic plans are not static. They must be continually monitored and ad,usted as changes in the
business environment occur. Corrective actions must be taken in order to keep plans on tract.
Effective strategic control systems%
J Establish valid performance standards
J *rovide ade(uate information to employees
J Ensure acceptability to employees
J 3aintain open communication
J se multiple approaches
The final step is all too often neglected or altogether forgotten after a long and hard planning cycle.
1ormalizing the strategic plan into an actionable strategy document with budget and pro,ect details
occur during this phase. 0 communication document is developed to inform managers and employees
alike of the strategic vision and plan. 3ost importantly, the executive team facilitates the
operationalization of the strategic plan by creating and deploying a strategy implementation plan. It is
during the strategy implementation process that specific pro,ect leaders are selected, ma,or IT pro,ects
are tasked, necessary funds are allocated, and milestones and metrics are established to monitor
progress. In addition, areas of organizational reengineering are identified, strategies to align incentives
and reward good outcomes are developed, and opportunities to foster organizational ownership are
established.
<. -usiness process reengineering is a radical redesign of a business process that improves its
efficiency and effectiveness, often by beginning with a Lclean sheet.M -usiness process management
is a management techni(ue that includes methods and tools to support the design, analysis,
implementation, management, and optimization of business processes. There was a time when business
environment used to be static, but now time changed and due to the cut throat competition in the
market, change is now an everyday activity. This enormous change in the business processes gave rise
to process automation and in turn to the terms like )usiness *rocess 3anagement, )usiness *rocess
<eengineering, and Enterprise 0pplication Integration and so on.
What is -"(=
0 process and management discipline to analyze, re&design, implement, document, monitor, control,
and measure both automated and non&automated business. )*3 enables organization to be more
efficient, effective and flexible. Its definition varies in different sectors. 1or software companies it is
often described as a particular technology while for academicians it is a management discipline.
0ccording to wiki )*3 goes through the below life cycle%&
;ision
-esign
3odeling
Execution
3onitoring
'ptimization
Critical components of )*3 #from 2ikipedia$
*rocess engine ? a robust platform for modeling and executing process&based applications, including
business rules
)usiness analytics & enable managers to identify business issues, trends, and opportunities with reports
and dashboards and react accordingly
Content management & provides a system for storing and securing electronic documents, images, and
other files
Collaboration tools & remove intra and inter departmental communication barriers through discussion
forums, dynamic workspaces, and message boards
)usiness *rocess 3anagement !ystems #)*3!$ are a new family of software systems that automate
and simplify the task of managing business processes over the entire lifecycle.
-"( versus -".
To differentiate between )*3 and )*< let us analyze them from different aspects%&
-usiness "rocess (anagement -usiness "rocess .eengineering
0utomates and reuses the existing
processes
<ecreates processes from the scratch
<isk is low <isk is high
Change is continuous 'ne big and radical change is done
Time taken for implementation is
comparatively less
It takes lot of time to be implemented
)usiness and IT collaboration is must )usiness and IT collaboration is optional
)*3!I)<E are the technology used )ased on workflow and E0I
'ne or more process can be
simultaneously taken and worked upon
'ne ma,or process is taken and worked
upon at a time
)*3 leads to asset optimization !ometime )*< leads to lay offs
-oes not have any effect on the culture
of the organization
-uring implementation cultural issues
become a ma,or concern
'utcome is continuous and
incremental
'utcome is drastic
:ess expensive 3ore expensive
)*3 and )*< can be considered as complimentary to each other rather than as a substitute. They both
contribute to the value addition of the organization. Nust the point to be noted here is that when )*< is
done, even the mission and vision of the company could be redesigned and reconsidered. Therefore the
deep change organizations go through could be sometime uncomfortable and very risky. It even shakes
the prevailing culture in the company. 'n the contrary )*3 is very flexible in nature and it
concentrates one or more process at a time, mostly automating and making them simple. It is neither
risky nor too expensive to implement.
)oth of them have their own benefits and shortcomings. )*3 contributes directly to the customer
satisfaction by immediately working on it whereas )*< studies the organization process from the start
and removes the processes which are barriers to the organizational growth. 2hen the processes become
very slow and is not able to fetch the desired result )*< comes in the scene.
+& 2information system3 is the collection of technical and human resources that provide the storage,
computing, distribution, and communication for the information re(uired by all or some part of
an enterprise . 0 special form of I! is a management information system #3I! $, which provides
information for managing an enterprise.
0n information system is an arrangement of people, data, processes, interfaces, and geography that are
integrated for the purpose of supporting and improving the day&to&day operations in a business, as well
as fulfilling the problem&solving and decision&making information needs of business managers.
I! ? a set of interrelated components working together to collect, retrieve, process, store, and distribute
information for the purpose of facilitating planning, control, coordination, analysis, and decision
making in business organizations
Input&process&output perspective
*eople&organization&technology perspective
Technology ? the means by which data is transformed and organized for business use%
/ardware
!oftware
-atabase
Telecommunication
*eople ? the users of I!
'rganization & a collection of functional units working together to achieve a common goal
I! in )usiness
)usiness functions
)usiness processes
0 series of interrelated activities through which work is organized and focused to produce a product or
service
)usiness levels
!trategic #long range planning$
Tactical #co&ordinate K supervise$
'perational #produce product K service$
<ole of I! in )usiness
Competitive advantage
:ow&cost #value chain$
3arket niche
*roduct differentiation
Customer loyalty
.lobalization
*eople #language$
'rganization #culture$
Technology #telecommunication$
I! 0pproach to *roblem !olving
*orter8s ;alue chain model
This model identifies specific activities where organizations can use competitive strategies for greatest
impact.

"rimary activities are those business activities that relate to the production and distribution of the
firm8s products and services, thus creating value for which customers are willing to pay. "rimary
activities include inbound logistics, operations, outbound logistics, marketing and sales, and customer
service.
&upport activities do not add value directly to a firm8s products and services, but support the primary
activities. !upport activities include accounting, finance, management, human resources management,
product and technology development #<K-$, and procurement.
>. business&value&architecture.pdf
*art )
=. IT ;alue Transformation <oad 3ap
Aey findings from several primary research studies have been combined to create a three&stage IT value
transformation road map. The road map leverages what has been shown to work at other organizations
to create an actionable model for transformation. The road map is designed to address key success
factors at the executive communication level and at the infrastructure level. 0ttention to both is needed
to ensure successful transformation.
The road map highlights the ob,ectives, challenges, re(uired capabilities, and key measures at each
stage. IT executives can use this road map to develop a transformation vision, gauge current state,
measure progress, and communicate results.
Each stage is catalytic in that it returns more resources to the organization thus fueling the next stage.
Each stage is ordered to address pre&re(uisites that are re(uired for success at the next stage. 0nd, each
stage is sustaining, creating enough value to the organization to remain in place even after the focus
shifts to the next stage.
!everal considerations that help ensure IT value transformation success include%
,ocus on business outcomes. IT value transformation isn8t about IT. It is about focusing IT efforts on
business ob,ectives. IT teams whose contributions are positioned solely in terms of low&cost IT
operations are perceived as having little value. Communicating IT efforts in business terms is critical
for raising business confidence in IT and elevating IT8s perceived value.
Evolve ob?ectives and measure. Transformation steps have evolving ob,ectives and desired outcomes
that build business confidence in IT. The key measures used to gauge transformation progress and to
communicate cost, service (uality, and agility results also evolve.
;o not skip steps. <esearch studies used to develop this transformation road map indicate that
transformation steps occur in a specific order. Executive&level communication evolves in a specific
order to build confidence. ;irtualization and cloud deployment also evolve in a logical progression. )y
taking transformation steps in order and building specific competencies, IT executives can lead the
organization to higher levels of business value.
+ncrease business integration. Increased levels of business value delivery re(uire increased levels of
business integration. This road map should include increasing levels of IT resources allocated to
business unit participation and researching game changing innovation. 0 better understanding of
desired business outcomes should not be limited to the IT executive level, however. To best identify
opportunities for technology innovation, IT manager and staff&level resources should participate in
business improvement efforts.
Establish processes for response. IT should develop and publish mechanisms so business managers
can make both tactical and strategic IT resource re(uests. IT should optimize processes to respond
effectively to those re(uests. Infrastructure should also be architected to allocate resources in response
to changing demands.
%ransformation &tage 1: #ost %ransparency
The ob,ective of the first transformation stage is to improve the cost transparency of IT spending. 0t
this stage, IT drives value primarily by supplying cost&competitive infrastructure and information
management services. ;irtualization technology is deployed in IT&controlled domains to build skills
and demonstrate success. ;irtualization reduces capital and operational expenses through consolidation
and improved operational efficiency. ;irtualization also helps improve service and cost visibility. 1ixed
cost, allocation and utilization based costing models can be used to tie infrastructure costs to specific
applications and business processes. Through increased visibility of service delivery related to costs, IT
can benchmark its cost and service levels, and can earn its role as the preferred service provider to the
business. 0t this stage, IT gains confidence in its virtualization skills and technology, and business
executives gain confidence in IT.
%ransformation ob?ective: ;emonstrate that +% is delivering value for money
)usiness executives8 low confidence in IT often starts with lack of visibility of the linkage between
spending and services delivered. To earn the role as the preferred service provider to the business, IT
must demonstrate that it provides the right services, at the right level of (uality, at a competitive price.
0t this stage, IT needs to communicate unit&level cost information related to the services delivered.
Enabling an apples&to&apples cost comparison gives business funders of IT the information they can use
to make decisions about priorities. 2ithout clear unit&level cost visibility, IT funders are skeptical about
IT8s ability to manage the organization. *roviding business&relevant unit&cost information is a
prere(uisite for building confidence.
The key communication challenge is to use business relevant terms to demonstrate that IT can
effectively manage the resources in IT8s domain of control. Top performers know their cost and service
delivery numbers, and they demonstrate that they are effectively managing IT resources.
!ey capabilities: Establish virtuali/ation foundation
In this phase, the IT department is the main driver for virtualization. 0ssets typically virtualized and
consolidated are file and print servers, domain controllers, and 2eb servers. Test and development
servers not in the production environment are also primary candidates for consolidation. )y virtualizing
systems that are within IT8s domain of control, the organization can gain skills and confidence during
initial deployments. The use of virtualization technology directly and significantly improves IT8s ability
to demonstrate cost efficiency and visibility.
:irtuali/ation value: #ost efficiency and transparency
The cost savings associated with initial server consolidation efforts are significant. IT can dramatically
increase datacenter capacity, delay capital investments, and reduce energy costs. I-C estimates indicate
that a simple consolidated infrastructure reduces total cost per user by 5OP. In addition, staff efficiency
can increase by as much as >EP.;irtualization also improves service visibility because the deployment
of virtual servers easily can be tracked, and resource usage information can be consolidated at the
service level. 0ccounting for service usage is a prere(uisite for breaking aggregated cost data into unit&
cost information.
!ey measures: #ost efficiency and visibility
Aey measures at this transformation stage are related to hardware and operational cost savings as well
as cost visibility%
/ardware replacement cost
*ower and cooling costs
!erver to system administrator ratio
!ervice usage transparency
%ransformation &tage : -usiness 9utcomes
The transformation ob,ective at this stage is to link IT spending to business outcomes. In addition to
managing shared information management services, IT also focuses on business process optimization
and business application availability. ;irtualization deployment is extended to business&critical
applications. ;irtualization at this stage helps speed the development&to&release cycle, increases critical
application uptime, improves service management response time, and puts more business systems under
disaster recovery control. !ervice and cost visibility further improves the linkage of IT spending to
specific business outcomes that result from optimized business processes. 'perational efficiencies
further reduce the unit cost of IT and reduce the budget spent on running what is in place, freeing
resources to drive specific business outcomes.
%ransformation ob?ective: 0ink spending to business outcomes
In the first stage, the ob,ective was to provide transparency of IT spending. In this stage, the ob,ective is
to link IT spending to business outcomes. Effective IT management of IT resources increases business
executives8 confidence in IT, and they then give IT permission to get directly involved in improving
key value&chain business activities. IT should seek opportunities to participate in business process
improvement pro,ects. )usiness executives should be invited to help set IT priorities and allocate IT
resources.
#+9 communication challenge: &how that +% spending is making the business better
The communication challenge is to shift all communications to an external business perspective.
Top performers have an external view of IT and present IT initiatives in terms of business outcomes.
CI's may expand their role as business manager and add functional responsibility in addition to IT.
!ey capabilities: :irtuali/e business)critical applications
-emonstrating proficiency with virtualization in stage = builds confidence that IT can effectively
manage virtual environments. In stage >, the virtualization footprint is expanded to include core
business applications such as 3icrosoft Exchange, financial applications, supply chain applications, and
database servers. In addition, many organizations adopt a Lvirtualization firstM policy re(uiring all new
deployments to be provisioned in a virtual environment if possible. The ability to enforce this policy
with business application owners is dependent on business confidence in IT. Efficiency gains free up IT
resources to participate in business process improvement efforts to better support business outcomes.
:irtuali/ation value: -usiness application service @uality
The virtualization value proposition at this stage shifts from a cost reduction and visibility focus to a
business outcome focus. ;irtualization value is focused on (uality of service and business continuity.
-eploying business&critical applications in a virtual environment reduces unplanned downtime. Cost
visibility is extended to business systems, allowing IT to link spending to business outcomes affected
by virtualized applications. ;irtualization operational efficiency gains further free IT resources to
participate in process optimization efforts. The speed of release to production deployment is
significantly increased+ new systems are deployed on average >H times faster, and new applications are
deployed on average twice as fast as in a dedicated server environment. These combined benefits
directly affect the management of business&critical systems and support business outcomes. ;irtualizing
key business applications at this stage has a direct impact on the ob,ective of linking IT spending to
business outcomes.
!ey measures: Auality of service
Aey measures at this transformation stage are related to business system service (uality and the speed
of development to production deployment%
a. 0vailability #uptime$
b. 3ean time to repair
c. *lanned downtime
d. "umber of systems under disaster recovery control
e. 0pplication deployment speed
f. *ercentage of resources running what is in place
'perational cost savings achieved at the =st transformation stage are extended at this stage, as more
systems are virtualized further improving service management and service support efficiencies.
%ransformation &tage 1: 'igh):elocity +%
The transformation ob,ective at this stage is to identify new sources of IT&enabled value to the
organization. IT drives strategic value by helping to identify new IT enabled products and services.
;irtualization and private cloud deployments help increase the agility of computing environments
through shared resource pools and high levels of process automation. 0s a result, IT can say LyesM to
more business opportunities and then (uickly scale high&(uality IT services on demand. IT executives
have demonstrated a fundamental shift in IT focus from technology to driving business results. IT
executives earn a place at the executive table, and they offer ideas about new ways IT can transform
business strategy.
%ransformation ob?ective: +dentify +%)enabled business opportunities
In the second stage, the focus was on supporting business outcomes by optimizing business processes.
In this third stage, the focus shifts to IT participating in strategy discussions and identifying new
sources of IT value. )usiness executives have high confidence in IT8s ability to focus on business
outcomes. In effect, IT gains permission to offer new ideas about how technology can be used for
competitive advantage. 'ne new source of strategic value is further innovation and transformation of
key value&chain processes. 0nother is identifying new technology&enabled product and service revenue
streams that would not be possible without technology.
!ey capabilities: "rivate cloud
0t this stage, virtualization forms the backbone of IT infrastructure management. The extension of
virtualization to a private cloud infrastructure allows IT to rapidly address changing business
re(uirements by tapping on&demand scalable resources. Everything new is deployed in a virtual
environment. Integrated service management tools and a high degree of automation further improve the
(uality of IT services. 0t this stage, virtualization and private cloud resources meet all three
re(uirements of the highvelocity, low&cost IT transformation.>Q Efficiency gains free up IT resources
that can be allocated to benchmarking competitors8 use of technology and researching the feasibility of
potential game&changing innovation.
:irtuali/ation value: 9n)demand resources
In the first two stages, virtualization enables cost reduction, better cost visibility, and higher service
(uality for business&critical applications. In this stage, virtualization technology makes IT nimble.
3any refer to their use of virtualization to manage dynamic pools of computing resources that can be
accessed on demand as a private cloud. Infrastructure is architected to gain significant agility and
scalability. *rivate cloud technology establishes a respond&and&scale infrastructure that can provision
new capacity in near&real time. IT can centralize resources to enable new business models where IT is
an internal service provider. Costs are further reduced by reaching the highest levels of resource
utilization and by optimizing process efficiency through high degrees of automation. Top performers
with advanced use of change and configuration tools, capacity planning, and inventory management can
achieve a >EP staffing efficiency gain.
!ey measures: ;eployment agility and scalability
Aey measures at this transformation stage include the following%
Time to capability
-ynamic resource scaling
<educed process variability through automation
!ystem utilization
>. Cloud computing% *ros and cons
Advantages of #loud #omputing
:ower computer costs. 4ou donRt need a high&powered and high&priced computer to run cloud
computingRs web&based applications. !ince applications run in the cloud, not on the desktop *C, your
desktop *C doesnRt need the processing power or hard disk space demanded by traditional desktop
software. 2hen youRre using web&based applications, your *C can be less expensive, with a smaller
hard disk, less memory, more efficient processor, and the like. In fact, your *C in this scenario doesnRt
even need a C- or -;- drive, as no software programs have to be loaded and no document files need
to be saved.
Improved performance. 2ith fewer bloated programs hogging your computerRs memory, youRll see
better performance from your *C. *ut simply, computers in a cloud computing system boot and run
faster because they have fewer programs and processes loaded into memory.
<educed software costs. Instead of purchasing expensive software applications, you can get most of
what you need for free. ThatRs rightBmost cloud computing applications today, such as the .oogle
-ocs suite, are totally free.
Instant software updates. 0nother software&related advantage to cloud computing is that youRre no
longer faced with choosing between obsolete software and high upgrade costs. 2hen the app is web&
based, updates happen automatically and are available the next time you log into the cloud. 2hen you
access a web&based application, you get the latest versionBwithout needing to pay for or download an
upgrade.
Improved document format compatibility. 4ou donRt have to worry about the documents you create
on your machine being compatible with other usersR applications or operating systems. In a world where
2ord >EED documents canRt be opened on a computer running 2ord >EE5, all documents created by
web&based applications can be read by any other user accessing that application. There are no format
incompatibilities when everyone is sharing docs and apps in the cloud.
nlimited storage capacity. Cloud computing offers virtually limitless storage. 4our computerRs
current >EE gigabyte hard drive is peanuts compared to the hundreds of petabytes #a million gigabytes$
available in the cloud.
Increased data reliability. nlike desktop computing, in which a hard disk crash can destroy all your
valuable data, a computer crashing in the cloud shouldnRt affect the storage of your data. That also
means that if your personal computer crashes, all your data is still out there in the cloud, still accessible.
In a world where few individual desktop *C users back up their data on a regular basis, cloud
computing is the ultimate in data&safe computing.
niversal document access. Ever get home from work and realize that you left an important
document at the officeF ThatRs not a problem with cloud computing, because you donRt take your
documents with you. Instead, they stay in the cloud, and you can access them whenever you have a
computer and an Internet connection. 0ll your documents are instantly available from wherever you
are+ thereRs simply no need to take your documents with you.
:atest version availability. 0nother document&related advantage of cloud computing% 2hen you edit
a document at home, that edited version is what you see when you access the document at work. The
cloud always hosts the latest version of your documents+ as long as youRre connected, youRre never in
danger of having an outdated version.
Easier group collaboration. !haring documents leads directly to collaborating on documents. To many
users, this is one of the most important advantages of cloud computingBmultiple users can collaborate
easily on documents and pro,ects. )ecause the documents are hosted in the cloud, not on individual
computers, all you need is a computer with an Internet connection, and youRre collaborating.
-evice independence. 4ouRre no longer tethered to a single computer or network. Change computers,
and your existing applications and documents follow you through the cloud. 3ove to a portable device,
and your apps and docs are still available. ThereRs no need to buy a special version of a program for a
particular device, or to save your document in a device&specific format. 4our docs and their apps are
the same no matter what computer or other device youRre using.
1. ,ast start)up
SCloud computing is really a no&brainer for any start&up because it allows you to test your business plan
very (uickly for little money. Every start&up, or even a division within a company that has an idea for
something new, should be figuring out how to use cloud computing in its plan,S says )rad Nefferson,
CE' of 0nimoto.
. &calability
To figure out if youRre a good cloud service prospect, first consider the variability of the resource
utilization of your own IT structure, says Tom "olle, CE' of CI3I, a high&tech consulting firm. SIf
youRve got enormous peaks and valleys, youRre forced to oversupply IT resources to address the peaks.
It may be significantly less costly for you to outsource the peaks,S he says.
1.-usiness agility.
S4our mind really changes (uickly when you can solve problems using IT resources but you donRt need
a long&term commitment and you donRt have to wait a long time to get them,S says 3ichael Crandell,
CE' of <ight!cale, a cloud management and support company. SCloud computing changes the whole
pattern of agility at a much lower cost.S
5. ,aster product development
6. No capital expenditures
;isadvantages of #loud #omputing
There are a number of reasons why you might not want to adopt cloud computing for your particular
needs. :etRs examine a few of the risks related to cloud computing%
<e(uires a constant Internet connection. Cloud computing is impossible if you canRt connect to the
Internet. !ince you use the Internet to connect to both your applications and documents, if you donRt
have an Internet connection you canRt access anything, even your own documents. 0 dead Internet
connection means no work, periodBand, in areas where Internet connections are few or inherently
unreliable, this could be a deal&breaker. 2hen youRre offline, cloud computing simply doesnRt work.
-oesnRt work well with low&speed connections. !imilarly, a low&speed Internet connection, such as
that found with dial&up services, makes cloud computing painful at best and often impossible. 2eb&
based apps re(uire a lot of bandwidth to download, as do large documents.
Can be slow. Even on a fast connection, web&based applications can sometimes be slower than
accessing a similar software program on your desktop *C. Everything about the program, from the
interface to the current document, has to be sent back and forth from your computer to the computers in
the cloud.
1eatures might be limited. This situation is bound to change, but today many web&based applications
simply arenRt as full&featured as their desktop&based brethren. 1or example, you can do a lot more with
3icrosoft *ower*oint than with .oogle *resentationRs web&based offering. The basics are similar, but
the cloud application lacks many of *ower*ointRs advanced features.
!tored data might not be secure. 2ith cloud computing, all your data is stored on the cloud. /ow
secure is the cloudF Can unauthorized users gain access to your confidential dataF Cloud computing
companies say that data is secure, but itRs too early in the game to be completely sure of that.
!tored data can be lost. Theoretically, data stored in the cloud is unusually safe, replicated across
multiple machines. )ut on the off chance that your data goes missing, you have no physical or local
backup.
9N %'E ;9WN&+;E
-andwidth could bust your budget
App performance could suffer
0 private cloud might, but a public cloud definitely wouldnRt lead to improved application
performance && not when taking network latency into account, says Tony )ishop, CE' of 0daptivity, a
consulting firm specializing in next&generation IT infrastructure.
SI couldnRt see an investment bank putting a latency&sensitive application on an external cloud,S adds
!teve /arriman, a vice president at "et@o!.
;ata might not be cloud)worthy
S'n -ay =, we probably had eight to =E applications that we would have loved to take into the cloud,S
says Eli :illy8s *owers. S)ut, knowing the type of data we had and the classification Tof who could see
itU, we decided going through internal governance and rigor around taking care of that data would be
appropriate.S 0nd, definitely donRt put an application that provides competitive advantage or contains
customer&sensitive information in the public cloud, )ishop adds.
%oo big to scale
SThe bigger you are, the bigger your IT resource pool. 0nd the bigger your IT resource pool, the less
likely it is that youRll see any enormous financial advantage in outsourcing to the cloud,S CI3IRs "olle
says. SCloud computing promotes better resource utilization, V but the gains are greatest when moving
from relatively small consumption of resources upwards. If youRre a very large enterprise, you might
find you can achieve better economy by doing your own cloud than going to an outsourced one.S
'uman capital may be lacking
Exploring next&generation IT models re(uires an adventuresome spirit and technical astuteness, says
/yper!tratusR .olden. SIf you donRt have the human capital thatRs willing to stretch and learn new
things, taking on cloud computing can be very frustrating.S
H. 3ichael *orter provided a framework that models an industry as being influenced by five forces.
The strategic business manager seeking to develop an edge over rival firms can use this model to better
understand the industry context in which the firm operates. 3ichael E. *orter, a leading theorist of
competitive strategy, developed a five forces model to explain competition in an industry. :ist these
forces and describe the impact of the threat of new entrants.
0nswer% The five forces model by *orter are the threat of new entrants, the threat of substitute products
or services, the bargaining power of buyers, the bargaining power of suppliers, and the competitive
rivalry among current members of the industry. #<efer pOf.pdf$
"ew entrants to an industry bring new capacity, a desire to gain market share and position. They also
bring new approaches to serving customer needs. "ew players mean prices will be pushed downward
and margins s(ueezed, resulting in reduced industry profitability in the long run. 0ccording to *orter
there are eight ma,or sources of barriers to entry, the presence or absence of which determines the
extent of threat of new industry entrants. #=$ Economies of scale, which refer to the decline in per&unit
product costs as the absolute volume of production per period increases. 0lthough the concept of scale
economies is fre(uently associated with manufacturing it is also applicable to <K-, general
administration, marketing, and other business functions. #>$ *roduct differentiation is the barrier that
depends on the extent of a productRs perceived uni(ueness. -ifferentiation can be achieved as a result of
uni(ue product attributes or effective marketing communications, or both. #5$ Capital re(uirement is
another barrier. This may include fixed as well as the working capital. !ome industries re(uire
enormous capital for various activities. #H$ The one&time switching costs caused by the need to change
suppliers and products are another barrier. These might include retraining, ancillary e(uipment costs,
the cost of evaluating a new source, and other related aspects. #O$ The access to distribution channels is
another barrier. If channels are full or unavailable, the cost of entry is substantially increased because a
new entrant must invest time and money to gain access to existing channels or to establish new
channels. #W$ .overnment policy is fre(uently a ma,or entry barrier. #D$ Established firms may also
en,oy cost advantages independent of scale economies that present barriers to entry. 0ccess to raw
materials, a large pool of low&cost labor, favorable locations, and government subsidies are several
examples. #Q$ Competitor response can be a ma,or entry barrier. If new entrants expect existing
competitors to respond strongly to entry, their expectations about the rewards of entry will certainly be
affected.
. #hief information officer ##+9$, or information technology #+%$ director, is a ,ob title commonly
given to the most senior executive in an enterprise responsible for the information technology and
computer systems that support enterprise goals. The title of Chief Information 'fficer in /igher
Education may be the highest ranking technology executive although depending on the institution+
alternative titles are used to represent this position. .enerally, the CI' reports to the chief executive
officer, chief operations officer or chief financial officer. Information technology and its systems have
become so important that the CI' has come to be viewed in many organizations as the key contributor
in formulating strategic goals for an organization. The CI' manages the implementation of the useful
technology to increase information accessibility and integrated systems management. 0s a comparison,
where the CI' adapts systems through the use of existing technologies, chief technology officer
develops new technologies to expand corporate technological capabilities. 2hen both positions are
present in an organization, the CI' is generally responsible for processes and practices supporting the
flow of information, whereas the CT' is generally responsible for technology infrastructure.
!enior management should ensure IT systems meet the needs of the organization. The senior IT
manager or Chief Information 'fficer #CI'$ is responsible for the key IT initiatives of a company. The
CI' focuses on strategic issues and the overall effectiveness of the IT organization. This position
typically oversees the IT budget and maintains responsibility for performance management, IT
ac(uisition oversight, professional development, and training. In addition, the CI' is responsible for a
companyRs IT architecture and strategic and capital planning. The CI' should be a member of executive
management with direct involvement in key decisions for the company and usually reports directly to
the CE'. The CI' should play a key role in the strategic technology planning as well as supporting
activities of peers in various lines of business. The position often has a leadership role on the IT
steering committee.
#hief %echnology 9fficer 2#%93
!ome institutions hire a Chief Technology 'fficer #CT'$ to more narrowly focus on tactical issues and
the efficiency of the IT organization. The CT' should report to the CI'. The CT' is responsible for
understanding the evolution of current technology and how to maximize the value of institution
investments in technology.
The significant role of technology in strategic business decisions has created the need for executives
who understand technology and recognize profitable applications to products, services, and processes.
3any companies have addressed this need through the appointment of a Chief Technology 'fficer
#CT'$ whose responsibilities include monitoring new technologies and assessing their potential to
become new products or services, overseeing the selection of research pro,ects to insure that they have
the potential to add value to the company, providing reliable technical assessments of potential mergers
and ac(uisitions, explaining company products and future plans to the trade media, and participating in
government, academic, and industry groups where there are opportunities to promote the company8s
reputation and to capture valuable data.
3onitoring and 0ssessing "ew Technologies
!trategic Innovation
3ergers and 0c(uisitions
.overnment, 0cademia, *rofessional 'rganizations
3arketing and 3edia <elations
Company Culture
The CT' should insure that policies and practices are constructed to attract the right kind, right number,
and right placement of technologists. This will re(uire the establishment of formal and informal
networks to implement the policies and to insure that they are aligned throughout the company. These
networks will also serve as the conduits through which corporate vision and direction can be
communicated.
.elationships that Empower the #%9
The CT' position was initially created to insure that senior management paid appropriate attention to
their corporate technological capability. 0ttracting this attention and operating as an effective member
of the executive team, re(uires that the CT' nurture relationships with a number of people and groups
internal and external to the company.
#hief Executive 9fficer and Executive #ommittees
*roviding strategic advice to the CE' and the Executive Committee re(uires much more than technical
expertise. The CT' must earn the trust and confidence of the CE'. The CT' must exhibit a clear
understanding of and dedication to improving the competitive position of the company. The acceptance
of the CT' as a business strategist is an important step. It will determine whether the CT' is treated as
an e(ual member of the executive team or is isolated as an outside source for technical advice and
information. Ed <oberts8 study of the strategic management of technology indicates that most
companies include the CT' on the Executive Committee along with the CE', C'', C1', and CI'..
2hen the CI' position emerged, they too were branded as technologists who could not function as
business strategists. This image has diminished as CI's have shown themselves to be ,ust as effective
at making business decisions as their management&schooled peers. Therefore, the CT' should be
able to learn from the integration experience of the CI'. Executive Committee members should also
recognize that the technological stereotype that was not accurate for the CI' might also prove to be
inaccurate for the CT'. If the CT' is to provide business decisions and advice, there needs to be some
measure of the (uality of this advice. The CT's performance should be measured against a plan
worked out with the CE'. This plan may include achieving milestones, introducing new products,
reducing costs, reducing uncertainty, and selecting the right research pro,ects to fund.
#hief +nformation 9fficer
3any organizations have a difficult time separating the responsibilities of the CT' from those of the
CI', which can make the working relationship between the two very difficult. 0t the >EE= Info2orld
CT' 1orum, CT's from !un 3icrosystems, e)ay, -ell Computer, and other companies identified their
responsibilities as being externally focused while the CI'8s responsibilities were internally focused.
Corporations have realized that they need a CI' to oversee the application of technology to internal
operations. This has included computer systems for accounting, billing, telephony, security, and a host
of other functions. *rior to the creation of the CT' position, the CI' was the only executive
technologist and was often called upon to support manufacturing computerization, the purchase of
computer aided design packages, and strategic decisions for in,ecting technology into products.
Therefore, the CT'8s relationship with the CI' should be based on a more clearly defined division of
responsibility. The goal is to create a complementary and supportive relationship that maximizes
contributions to corporate strategy and profitability.
#hief &cientists
Chief !cientists are much more intimately involved in the day&to&day execution of scientific and
technical pro,ects. Each of these is usually limited to the laboratory, division, or facility in which he or
she resides. 0s described earlier, senior technologists are often very eager to explore new areas. )ut,
these explorations should be harnessed to contribute to the company8s strategic direction. That is one
reason that it is important for the CT' to mentor the Chief !cientists and to direct their focus such that
it contributes to the success of the company. Chief !cientists may also have informal networks of
technologists that span business areas, but they do not have the official charter to cross&pollinate
technologies. The CT' can organize an internal council of technologists to search out and apply the
best technologies available across the company.
.esearch and ;evelopment 0aboratories
!ince the =XWEs, research and development laboratories have been transformed from independent
scientists working on challenging, but (uestionably marketable technologies, to organizations that are
expected to make direct contributions to company profits. The CT' can play an important role in
monitoring and directing these labs. Erickson recommends several principles that a CT' should use for
directing <K-. 1irst <K- personnel should be kept in touch with the company8s customers and
markets. 1ew labs can seclude themselves from the market and conduct research for its own sake.
!econd, the CT' should foster open communications between <K- staff, manufacturing engineers,
and the marketing department. Third, the CT' should hold the <K- labs to schedule and budget
commitments. If an <K- pro,ect is not delivering results, it may need to be terminated and the funds
applied more productively elsewhere. !ome longstanding pro,ects constantly show great promise and
absorb resources, but produce nothing. These pro,ects, though considered Lpillars of the lab,M must be
held accountable and face termination if they do not produce results. <K- laboratory budgets should be
the topic of critical reviews by the executive staff. The CT' should lead initial funding reviews in
which <K- pro,ects present the expectations for the pro,ect, its applicability to market needs, the
position relative to competitors, and a record of past successes. The CT' should also hold in&progress
reviews to monitor problems and successes. 0 CT' can serve as an honest broker in these reviews
because he or she comes from outside of the laboratory and is not personally involved in the pro,ects.
&ales and (arketing
These CT's recognize that some products are so technically sophisticated that explaining them to the
trade media re(uires a technical representative. 2hen the CT' is used to explain the subtle, but
significant, differences between the company8s products and those of competitors, he or she becomes
a de facto member of the marketing staff. 2orking with the sales and marketing departments also
insures that the CT' remains rooted in the customers8 need for the product, rather than the technical
sophistication of the product.
%echnology and Executive 0eadership
Companies began adding Chief Technology 'fficers to the executive ranks in the =XQEs because
technology was becoming an integral part of many strategic decisions and future plans. The CI'
already provided strong expertise on the internal application of technology. )ut, senior managers
needed expert advice regarding the inclusion of technologies in existing products and the creation of
new products and services with large technical components. 0 CT' that is actively involved in
monitoring new technologies, separating marketing rhetoric from technical facts, and identifying
profitable applications for those technologies can make a significant difference in the company8s
competitive future. The CT' can also add value to the company by participating in government,
academic, and industry groups in a manner that creates positive attention for the company. Technology
companies are involved in thousands of ac(uisitions every year. !electing the best target for an
ac(uisition often re(uires reliable advice on technical issues at the executive level. The CT' is also a
valuable tool in addressing the increasingly well informed media about the products, services, and the
future plans of the company. CT's can speak as peers to other technologists and can play a role in
convincing the media that the company8s decisions are sound and will add value for the company8s
stakeholders. It is important that the CT' not become the senior technologist of the company. Instead,
he or she is the senior business executive with a focus on technology. In the CT' position, senior
management is not looking for enthusiastic advice from a research scientist. Instead, they need sound
advice on business decisions involving technology.