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TAMU Case Competition: IT at Mobile Music
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  • ADD IN “TRACKER”
  • Add in link to fin’cls
  • Take a moment to assess what we’ve recommended and the costs & time associated with it.
  • “Speak the same language”btwn IT and business
  • To ensure continued future success of ourreccomendations, these meetings need to take place freq. The director of IT needs a palce at the corportaet board.As a result of this, IT director need to actively engage board members to get face time to get IT intiaitves carried out to ensure future succsess

TAMU Case Competition: IT at Mobile Music Presentation Transcript

  • 1. IT Strategy for MobileMusic Ensuring business growth through robust IT Team 1 - Scott Brier - Sanjay Joshi - Cerena Olsen April 9th, 2010 SUIT Case Competition
  • 2. Agenda MM’s current business & IT landscape Action items to align IT with business objectives Addition of capacity at data centers Upgrades in current IT systems IT governance and service management Conclusion and Q&A 2
  • 3. MM’s current IT landscape does not adequately support its business strategy MM’s Business Strategy MM’s IT Landscape Focus on aggressive growth “Reactive” approach to growth Emphasis on customer Customer experience affected by experience IT limitations Transition from a “startup” to a Lack of centralized IT managed environment management MM must immediately realign its IT priorities to match business priorities 3
  • 4. MM must immediately invest in expanding IT infrastructure, upgrade systems and introduce IT governance policies IT Action Items 1 MM’s Future IT Strategy Add capacity “Proactive” approach to growth 2 Enable positive customer experience Upgrade IT systems Centralized IT service 3 management Manage IT growth through IT Governance 4
  • 5. Data center capacity should be expanded immediately to roll out the new service offerings IT Action Items 1 MM’s IT Strategy Add capacity “Proactive” approach to growth 2 Enable positive customer experience Upgrade IT systems Centralized IT service 3 management Manage IT growth through IT Governance Action Item: CAPACITY 5
  • 6. MM needs higher infrastructure capacity to support growing user base and expand service offerings Music 100 MB per user Games Audio Books Matchmaking For 1 million users  100 Terabytes Service capacity needed at each center = 15 Terabytes With the current “reactive” approach, IT will be unable to support this user base Action Item: CAPACITY 6
  • 7. MM’s existing strategy of adding capacity reactively will lead to severe capacity bottlenecks by 2012 MM's Infrastructure ability to meet customer demands 2010 - 2020 1000 900 Data Capacity (in Terabytes) 800 Data needs 700 600 500 400 300 200 100 Data capacity 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Action Item: CAPACITY 7
  • 8. Adding capacity first is an important step towards ensuring business readiness and systems availability Enables immediate Ensures availability as rollout of services existing IT systems are upgraded Advantages Meeting business priorities will ensure stakeholder support for future IT initiatives Action Item: CAPACITY 8
  • 9. An upgrade of current IT systems will remove security and availability problems that impact customer experience IT Action Items 1 MM’s IT Strategy Add capacity “Proactive” approach to growth 2 Enable positive customer experience Upgrade IT systems Centralized IT service 3 management Manage IT growth through IT Governance Action Item: UPGRADE 9
  • 10. Security and systems integration issues directly impact customer experience and need to be fixed early Challenges Impact Customer data compromise Customer trust decreases Customer satisfaction System downtime decreases Systems integration issues Data inconsistency, downtime Investing in security and availability upgrades will save potential losses of $144,500 every year See Appendix A Action Item: UPGRADE 10
  • 11. Security and availability of the SM/CM are critical to retain customer trust and loyalty Security Availability Web Security – Digital Database Mirroring for Signatures, Secure Socket redundancy Layers (SSls) Data Security – Intrusion Added infrastructure Detectors, Secured capacity Perimeters See Appendix H See Appendix I Higher availability will reduce employee frustration with system inefficiencies ----------------------------------------------- Annual average savings over 5 years due to decreased turnover: $166,000 / yr See Appendix A Action Item: UPGRADE 11
  • 12. Finance and Procurement System should be upgraded from COBOL to UNIX to resolve integration issues Needs Limited availability Interfacing issues specialized COBOL due to with UNIX based skills COBOL Logistics System Migrate Finance and Procurement System (FP) to UNIX Streamlined system Elimination of interaction specialized skill set Action Item: UPGRADE 12
  • 13. MM’s investment in expanding capacity and upgrading IT systems brings significant advantages at a relatively low cost Adding Capacity Cost (USD) Storage Systems (1 PetaByte) $100,000 Total Upgrade Costs Memory Capacity (192 GB) $8,000 $1.33 million USD Network Devices (Multiservice router etc.) $5,000 Total Infrastructure Cost per Data Center $113,000 Total Cost to Add Capacity $791,000 This investment will prepare MM for any Cost (USD) future customer & Upgrading Current IT Systems service growth Intrusion Detection Systems $10,000 Web Security Installations $10,000 Database mirroring $50,000 Cumulative budget of Total Infrastructure Cost per Data Center $70,000 IT still below 10 Migration of FP to UNIX from COBOL $50,000 percent of revenue Total Cost to upgrade Systems $540,000 Recap 13
  • 14. Adding capacity and upgrading IT systems can be completed within five months BUSINESS BENEFITS Infrastructure 1 Ability to roll out Expansion 1 Month new services ASAP Security measures 2 Secure customer implemented data 1 Month Data Mirroring at 3 High system all centers availability 1 Month Migration of FP Elimination of system 4 architectural From COBOL to inefficiencies UNIX 3 Months Time Recap 14
  • 15. Support for future growth can be achieved through the use of centralized IT governance IT Action Items 1 MM’s IT Strategy Add capacity “Proactive” approach to growth 2 Enable positive customer experience Upgrade IT systems Centralized IT service 3 management Manage IT growth through IT Governance Action Item: GOVERNANCE 15
  • 16. An IT Governance Board will improve technology management and enable business-focused IT service delivery IT Governance Board See Appendix E STRUCTURE MISSION Define and IT Director document service levels Business IT Corporate Standardize and Partners Representatives Partners implement IT Policies See Appendix G Action Item: GOVERNANCE 16
  • 17. Identifying service levels will enable IT to meet MM’s business needs and also manage internal operations Why service levels? Maintain communication Service levels pertinent to MM’s 1 between IT and business IT department include: customers • Percentage of service level defaults • Number of review meetings 2 End user satisfaction per year • Percentage of users satisfied - CSAT • Number and severity of Create internal performance service breaches 3 benchmarks and key See Appendix B performance indicators Action Item: GOVERNANCE 17
  • 18. Standardization of IT management & governance components will increase operational efficiency and manage growth Why standardization? Components that must be standardized: Increased efficiencies in Change Management 1 processes and systems See Appendix C & D Test, document, and promote centralized business continuity plan Capitalize economies of scale to 2 decrease support costs Vendor Management See Appendix F Provide structure for managed Hardware & software guidelines 3 growth Action Item: GOVERNANCE 18
  • 19. Creation of the governance board and IT management processes will begin in conjunction with architecture changes Infrastructure Capacity Expansion 1 Month Security measures implemented 1 Month Data Mirroring at all Update centers 1 Month Migration of FP system From COBOL to UNIX 3Months Creation of a governance board 1 Month SLA Creation & Governance Process Continuation of standardization efforts Time 19
  • 20. Shifting to a business-focused IT strategy is the first step in making IT more central in MM’s future corporate strategy Next Steps MM’s IT Strategy Continued success depends on IT leaders frequently “Proactive” approach to growth talking to business Corporate Board should view Ensuring positive customer IT as more strategic and less experience as support Centralized IT service IT can increase profit management through added projects like Business Intelligence 20
  • 21. Questions? APPENDIX
  • 22. Appendix A - Financials 2010 2011 2012 2013 2014 Benefits from Cost Savings Reduction in computer crime from added security $ 144,500 $ 144,500 $ 144,500 $ 144,500 $ 144,500 Reduction in employee turnover $ 150,400 $ 157,920 $ 165,816 $ 174,107 $ 182,812 Total Savings $ 294,900 $ 302,420 $ 310,316 $ 318,607 $ 327,312 Adding Capacity Storage Systems (1 PetaByte) $ 70,000 $ 20,000 $ 10,000 $ - $ - Memory Capacity (192 GB) $ 8,000 $ - $ - $ - $ - Network Devices (Multiservice routers etc.) $ 5,000 $ - $ - $ - $ - Total Cost to Add Capacity $ 581,000 $ 20,000 $ 10,000 $ - $ - Upgrading Current IT Systems Intrusion Detection Systems $ 10,000 $ - $ - $ - $ - Web Security Installations $ 10,000 $ - $ - $ - $ - Database mirroring $ 40,000 $ 10,000 $ - $ - $ - Total Infrastructure Cost per Data Center $ 60,000 $ - $ - $ - $ - Migration of FP to UNIX from COBOL $ 50,000 $ - $ - $ - $ - Total Cost to Upgrade Systems $ 470,000 $ 10,000 $ - $ - $ - Total Projected Cost $ 1,051,000 $ 30,000 $ 10,000 $ - $ - Cash Flows $ (756,100) $ 272,420 $ 300,316 $ 318,607 $ 327,312 Cumulative Cash Flows $ (756,100) $ (483,680) $ (183,364) $ 135,243 $ 462,555 Breakeaven Period (in years) $ 3.6 ROI 22.7% Assumptions: Reduction in Turnover assumes 5% growth in employees Rate for programmer labor approx. $50/hr 5.6% average turnover rate at a cost of $4,000 per employee Average annual cost of IT crime $289,000 Back to Presentation WACC for Mobile Music is 8% 22
  • 23. Appendix B - Tiered support Model ISSUE Issue raised that MM MM Vendor 1 vendor is unable to address or resolve Issue still unresolved Passed to Tier 1 Vendor ISSUE Complete within 24 hours Less expensive vendor 2 Failure to do so results in: Simplistic Problems Tier 1 Vendor loss of money v re-negotiating contract 70 - 80% of Problems Issue still unresolved ISSUE Passed to Tier 2 Vendor Complete within 48 hours More expensive vendor Tier 2 Vendor 3 Failure to do so results in: Complex Problems loss of money v 20 - 30% of Problems re-negotiating contract Back to Presentation Page 23 23
  • 24. Appendix C – Implementing Change Management Initiate Assess & Verify / Build & Test Implement Changes Approve Close Specific development Validation that Departmental IT areas builds the change was Change put into create a RFC IT Steering ----------- successful implementation (request for Committee Quality ----------- and production change) & authorizes RFC assurance of RFC ticket ----------- submit it to the to be built & change closed Any immediate IT Steering tested ----------- ----------- changes made Committee Approve to Users notified of move to change implementation Emergency changes Cannot wait for After emergency Emergency treated differently approval before implementation, Changes then typical changes implementation change is reviewed Back to Presentation 24
  • 25. Appendix D - IT Change Management IT Change Management Process Overview Flow 6.0 Emergency Changes 4.0 Release / 1.0 Initiate Changes 2.0 Assess / Authorize 3.0 Build & Test 5.0 Verification Implementation Emergency Changes are defined as: A change with sufficient urgency that it can not wait for CAB approval The requestor and the before implementation Technical Engineering A changed is initiated with changed coordinator build Technical Engineering and Application Development deploys the approved the creation of an out the Detailed RfC and appropriate business reps builds and tests the change to production and Emergency Changes follow Unqualified RfC within a the Approval Body validate that the change change creates any additional a separate, abbreviated single tool authorizes the change to was successful change documentation process be built and tested QA evaluates changes The Approval Body decides against the Test Plans Technical Engineering which Unqualified RfC’s Emergency Changes updates system need to be investigated require testing, an Technical Engineering configuration data further. abbreviate Implementation creates the Implementation Plan, and a Roll-back Plan. Plan and Supporting Documents. The RfC and Problem Tickets are closed and appropriate users are Detailed Emergency The Approval Body reviews notified of change Change documentation is the Implementation Plan created post-deployment and Approves the move to production The CAB reviews all Emergency Changes after implementation for appropriateness Back to Presentation Source: www.knowledgeleader.com 25
  • 26. Appendix E - 10 principles of IT governance • Actively design governance • Know when to redesign • Involve senior managers • Make Choices • Clarify exception handling • Provide the right incentives • Assign ownership and accountability for governance • Design governance at multiple organizational levels • Provide transparency and education • Implement common mechanisms Back to Presentation Source: Harvard Business School 26
  • 27. Appendix F - Standardization of Vendor Management Stakeholder’s Responsibilities These controls must ensure satisfactory work SaaS Service Descriptions while being transparent about: Service Availability Costs SLA Service Quality Transparency & Communication Risks Penalties / Rewards Benefits Termination Conditions Back to Presentation 27
  • 28. Appendix G – Implementing IT governance Identify External Trigger Classify as Monitor Strategic Governance Board Event Strategic Direction • Criteria ` • Category Evaluate Deliver and Review • Standards • Criteria • Dependencies • Impact Advisory • Risks Services Back to Presentation 28
  • 29. Appendix H– Enhancing security at MM IT Security Ensure customer transactions Ensure sales data on MM’s are secure online CM system is secure Web Security Data Security Secure Socket Layers (SSLs) Sales information should be ensure confidential data stored behind stricter firewalls transfer Digital Signatures provide Network intrusion scanners third-party authentication in detect abnormal traffic transactions patterns to preempt attacks Back to Presentation 29
  • 30. Appendix I – Data Mirroring All resources are on the same network Main Server Mirror Server 1 2 Client Terminal Asynchronous data transfer during non- peak hours In case Server 1 is unavailable, its IP is assigned to Server 2, which then starts serving the client terminal Back to Presentation 30