1ISM 50 - Business Information SystemsLecture 15Instructor: John MusacchioUC Santa CruzNovember 16, 20102Class announcementsThursday:Messerschmitt Ch 18 (493-512)Database assignment due TuesdayAssignment 4 due3Student Presentations4Some pricing alternativesPrice discrimination?Usage dependent?Terms and conditionsfixed, leasing, per-use, subscriptionBundlesmaintenance, supportWho pays?sometimes not the end userSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice5Infrastructure acquisitionBuild andoperateInfrastructureBuild butdo not operateDo not buildbut operateNeitherOutsourcedoperationsSystemintegratorTrendServiceproviderSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice6Application acquisitionBuy asproductApplicationDevelopinternallyContractdevelopmentSoftwaresupplierOutsourcedeveloperTrendProductw/customizationSupplier,consultants7Stovepipe vs. Integrated Infrastructurestovepipe architecture---or---Turnkey SolutionSingle supplier provides all encompassing solution (complete with infrastructure) Integrated Infrastucture Separate infrastructure that can support many applicationsSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright noticeInfrastructureApplicationApplication andInfrastructure8From stovepipe to layeringData Voice VideoMany applicationsIntegrated Infrastructure(Maybe broken intoAdditional layers.)Application-dependentinfrastructureApplication-independent9Stovepipe vs. Integrated InfrastructureWhat are some examples of each?What are the advantages of each approach?Slide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice10Vertical Integration vs. DiversificationA company is vertically integrated when it makes rather than buys the subsystems in its products.A diversified company produces products across different industry segments.Slide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice11Vertical Integration vs. DiversificationWhy do customers favor less vertical integration?Prefer competition amongst component suppliersMix and match componentsReduced lock inDisadvantages??Customer needs to integrate components from different suppliers.Slide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice12Vertical Integration vs. DiversificationWhy do customers favor diversification?Reduce coordination costs by having to deal with fewer suppliers.Slide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice13General TrendLess Vertical IntegrationMore DiversificationOf course there are exceptions14Todays supplier structureSemiconductors, componentsEquipment (network, computers)Infrastructure (network, OS) softwareMiddlewareFrameworks and componentsApplicationsSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice15StandardizationSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice16Purpose of a standard?Allow products or services from different suppliers or providers to be interoperableSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice17Scope of a standardIncluded:interfaces (physical, electrical, information)architecture (reference model)formats and protocols (FAP)compliance tests (or process)Excluded:implementation(possibly) extensionsSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice18Reference modelDecide decomposition of systemwhere interfaces fallDefines the boundaries of competition and ultimately industrial organizationcompetition on the same side of an interfacecomplementary suppliers on different sideshierarchical decomposition at the option of suppliers(possibly) optional extensions at option of suppliersSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice19Some issuesOnce a standard is setbecomes possible source of industry lock-in; overcoming that standard requires a major (~10x?) advancemay lock out some innovationIn recognition, some standards evolveIETF, MPEGbackward compatibilitySlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice20Types of standardsde jureSanctioned and actively promoted by some organization with jurisdiction, or by governmentde factoDominant solution arising out of the marketVoluntary industry standards bodyIndustry consortiumCommon or best practiceExamples?Slide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice21Examplesde jureGSM, ISDN Telephone interfacede factoMicrosoft Windows API (Application Programming Interface)Intel Pentium instruction set, Voluntary industry standards bodyIEEE (Institute of Electrical and Electronic Engineers)IETF (Internet Engineering Task Force)Industry consortiumW3C (World Wide Web Consortium) Best practiceWindowed GUISlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice22The changing processAs technology moves more quickly, global consensus activity has proven too unwieldye.g. ISO New age standards activities are more informal, less consensus driven, and involve smaller groupse.g. OMG, IETF, ATM Forum, WAPProgrammable/extensible approaches for flexibilitye.g. XML, Java Slide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice23Old giving way to the newSlide adapted from slides for Understanding Networked ApplicationsBy David G Messerschmitt. Copyright 2000. See copyright notice24Reasons for changeFrom government sanction/ownership to market forcesIncreasing