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Transactions, Systems, and Costs of Ownership

Fundamentals of IT andE-CommerceFall 2002 - Session 2aProf. Foster Provost

© Copyright IS MBA Core Faculty, 2002

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Learning Objectives:

§ Discuss ways IT adds value and the role of client/server systems as enabling technologies using Dell Online as an example.§ Describe the properties required of transaction

processing in mission critical business systems, giving an example of each.§ Explain the role of application servers in transaction

processing and why eCommerce has made them necessary.§ Briefly describe the principle of and components of

client/server systems, giving examples.§ Critically discuss the concept of total cost of ownership,

and the impacts of client/server systems on total cost of ownership.

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Dell Computer stock price

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DELL vs Compaq (1-year)

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Dell vs Compaq (5 years)

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How does IT add value to Dell’s Business?

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How does IT add value to Dell’s Business?

§ Integrated Supply Chain• Information reduces uncertainty: Inventory§ The Customer is brought inside Dell.

• Visibility through supply chain• Know more about customers (data)• Sales-force efficiencies• Low menu costs• Low customization costs• Service efficiencies• Better strategic planning/marketing

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N e t w o r k s&

D a t a b a s e s

T r a n s a c t i o nP r o c e s s i n g

S y s t e m s ( T P S )

M a n a g e m e n tIn format ion

S y s t e m s ( M I S )

K n o w l e d g e S y s t e m s ( K S )D e c i s i o n S u p p o r t S y s t e m s

( D S S )Analyzing Dell

more structuredtasks

less structuredtasks

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Mission-critical Business Systems

§ Different companies have different sorts of mission-critical transactions§ Consider Dell Online

• fundamental, mission-critical transactions (e.g. sales)• take place without human involvement§ Consider Banks

• transfers of money (for example)• often take place without human involvement§ Etc.§ These transactions need special attention

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Robust transactions - examples

§ transaction: sequence of predefined actions performed on behalf of a business application§ Dell

• consumer purchases a new computer• step-by-step

– charge credit card– CRASH!– oops!– (even worse other way around…)

§ Bank• transfer $1,000,000 from account A to account B• step-by-step

– withdraw from account A– CRASH!– oops!

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Properties of robust transactions

§ Atomicity: all or nothing (all steps are executed, or none)• e.g., you can’t withdraw money without debiting your account

§ Consistency: state of system must be consistent from business perspective• e.g., you can’t withdraw more money than is in your account

§ Isolation: transactions execute as if serial not parallel• e.g., two people can’t withdraw the same money from an

account

§ Durability: a committed transaction must survive failures• e.g., the system won’t “forget” a deposit once the receipt is

issued.

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How do we ensure that transactions are robust?

§ it is hard (technically)• also, there are major issues of performance for mission-

critical transactions

§ you often don’t want your in-house IS department building solutions§ buy a system that does it for you

• Transaction Processing (TP) Monitors.– CICS (IBM) - Customer Information Control System – BEA Systems

• Major database systems– ORACLE (and Informix, Sybase, IBM)– this one of the main reasons you buy a serious DBMS

Aside: Online Transaction Processing vs Batch Transaction Processing14

What’s new with eCommerce and eBusiness?

§ Companies always have needed robust transactions§ Now we need to have them …

• in enterprise-spanning systems (spanning multiple databases)• in inter-enterprise systems• in web-based, “client/server” systems

§ The solution: Application Servers• An application server is “middleware” software that provides

services to business applications including transaction monitoring, security, scalability and connectivity to other systems (applications and databases, web servers).

§ Examples:• BEA (WebLogic)• IBM (WebSphere)• Oracle, Borland, …• plus, eCommerce servers: Sun, Broadvision, Blue Martini, etc.

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N e t w o r k s&

D a t a b a s e s

T r a n s a c t i o nP r o c e s s i n g

S y s t e m s ( T P S )

M a n a g e m e n tIn format ion

S y s t e m s ( M I S )

K n o w l e d g e S y s t e m s ( K S )D e c i s i o n S u p p o r t S y s t e m s

( D S S )

Dell Online as aClient/Server System

more structuredtasks

less structuredtasks

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Client-Server Architecture

§ A Distributed System• ‘Division of labor’

§ Server• Definition 1: A powerful computer that will run

server software

• Definition 2: Software that provides a service to other systems

• E.g. File Server, Web Server, Database Server, Application Server, E-mail Server

§ Client• A system that requests a service• E.g. Browser, E-mail software, MS-Word,

(Database) Application “Client”, Lotus Notes client

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A “Multi-tier” Client/Server System

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Client/Server as anEnabling Technology

For example: Dell Online• Browser/Web server/TPS

– The customer is brought inside the system

• TPS/Database server– Dell knows the who, what and when of its customers and

their transactions

• Other applications/Database server– Target Marketing– Customer Service– Forecasting and Strategic Planning– Inventory Management

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N e t w o r k s&

D a t a b a s e s

T r a n s a c t i o nP r o c e s s i n g

S y s t e m s ( T P S )

M a n a g e m e n tIn format ion

S y s t e m s ( M I S )

K n o w l e d g e S y s t e m s ( K S )D e c i s i o n S u p p o r t S y s t e m s

( D S S )

Dell Online as aClient/Server System

more structuredtasks

less structuredtasks

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What is the Total Cost of Ownership (TCO) of IT?

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What is the Total Cost of Ownership (TCO) of IT?

§ TCO includes:• Initial purchase• Hardware upgrades• Software upgrades• Business process conversion• Training• Technical support