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