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session_24___allergan_case_homework___student_version_1_.docx

session_24___an_introduction_to_cloud_computing___slides_3_.pptx

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session_24___the_allergan_case.docx

reading___third_party_logistics_and_sourcing.pdf

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Session 24: Allergan Case Study Questions
1. As the chief executive of an Allergan line-of-business, what would please you and what
would concern you as the company grows its use of cloud computing.
What pleases the Biz. Executive:
What concerns the Biz. Executive:
add more rows as needed….
2. As the chief information officer (CIO) at Allergan, what would please you and what
would concern you as the company grows its use of cloud computing.
What pleases the CIO:
What concerns the CIO:
add more rows as needed….
3. According to the CISR team, what are the implications of the six imperative for cloud
computing for the Allergan IT organization?
The Six Imperatives:
rethink the IT value proposition
re-architect your digitized platforms
redesign your governance
reallocate IT budgets
refocus on user needs and preferences
redevelop the IT organization
prepared by rmk 051614
Implications for Allergan IT






Page 1

Cloud computing is a model to enable network access to a
shared pool of configurable computing resources (e.g.,
networks, servers, storage, applications, and services or any
combination of these).
◦ Promotes flexibility, scalability, and stability of IT resources
◦ Can be rapidly provisioned or decommissioned as the needs of
the enterprise change
◦ Requires some management effort to ensure service-provider
delivery and compliance with contractual commitments
◦ Nowadays access is via the Web and is therefore user friendly
◦ Conserves capital and moves IT expenses to operating costs
◦ Allows others to worry about capacity, currency, security, etc.
2

New delivery model paradigm
Applications – Software as a service (SaaS)
Data processing capacity
Data Storage and backup services
Data Center hardware and software backup services
100% accessibility from anywhere in the world
where one can obtain access to the Internet
◦ Comparable security to in-house solutions






Over 69% of all Internet users have used
at least one cloud service
5









Ease of use; Web-based GUI
Centralization in data storage
Reduces some IT costs and afford greater flexibility in the
manner of IT spending (i.e. operational versus capital costs)
Possible reductions in end-user Software licensing fees
Agility in processing data faster
Cloud is highly scalable and flexible given the dynamics of
the organization’s business cycles
Location independence; available anywhere there is an
Internet connection
No up-front fees, no maintenance fees, billed as consumed
Cloud development is shifting toward open-source,
commoditizing and reducing software cost
6
• On-demand, self-service
• Ubiquitous network access
• Location independent resource
pooling
• Rapid elasticity, scalability
• Measured service, defined by SLAs
• Alignment with core business
processes
• Avoiding those activities seen as
proprietary by the enterprise
7

SaaS
◦ Software as a Service
◦ the vendor provides access to
software applications

PaaS
◦ Platform as a Service
◦ the vendor provides use of a
hardware platform

IaaS
◦ Infrastructure as a Service
◦ the vendor provides
networking services, storage
backup, and the like
8






Sold on a per seat basis
Good for mid-market companies with simple
requirements
Plethora of services available
Allows access to sophisticated tools
Often requires an extensive investment in
application set-up and data transfer
Information security implications need to be
carefully considered


Offers improved resource utilization
Highly flexible purchasing model
◦ Pay as you need orientation

Very specific service offerings




Backup
Storage
Virtual servers
Processing engines


Vendor dependent
Highly network dependent








Outages
Application Latency
Traffic congestion
Connectivity costs
Security concerns – who owns the data?
Difficult integration of services
Limited customization
Loss of control
Deployment Steps
In-house
Via Cloud
Commitment
required for undertaking
ditto
Analysis (Requirements) required for undertaking
ditto
Design
developing design docs.
seeing what vendor offers
Infrastructure
ensure the capabilities are
in-house
provided by vendor
Implementation/
Deployment
customize to in-house
requirements; move data
employ what the vendor
offers; move data
Certification (QA)
meets requirements??
SLA commitments??
Launch Steps
training and support
communicated; internal
service levels established
training and support, and
vendor service levels
communicated
Release Methodology
depends on service
depends on service
Ongoing service
management
via internal SLA for
services delivered by IT
staff
SLA with vendor with
some services delivered by
third party and others by
internal IT staff
12
The CIO, Internal IT Leadership
The CTO, Internal IT
Architecture Planning
Operations – Hardware, System
Software, Networks and Data
Centers
Systems – Application Software
that align with and enable the
enterprise’s core business
processes
Customer Services – e.g. Help
Desk, Training and Desktop
Support. Documentation,
maybe QC
Information Security
These units are relatively large in most
organizations and company the larger
portion of IT capital and staff cost
outlays. They afford opportunities for
replacement via the cloud.
Web Services
Data Analytics
These units are small in most
organizations and low cost,
and are likely to stay inhouse, but perhaps employ
consultants and contractors
as needed to help with
projects.
13
14

Cloud is not:









Replacement for IT infrastructure
Available for all applications
An architecture or a replacement of one
A fix for security
May require high-speed Internet bandwidth
Multi-tenancy driven, and will require reliable vendor
Will require multi-level of network security for
vendor(s) and in-house users
Open source Cloud services often lack
standardization
New compliance policies companies may dictate
what type of Cloud they can use
15





Network perimeter defense is not secure enough
Security strategy must account for all layers and tiers of
the Cloud environment
Employ defense internally
Compliance issues (e.g., HIPAA)
Issues to address:







Privileged user access
Regulatory Compliance
Data Location
Data Segregation
Long Term Viability
Disaster Recovery
Investigative Support
16
Global cloud IT market revenue is predicted to increase
from $180B in 2015 to 390B in 2020.
From 2012 to 2015, cloud demand accounted for 70% of
related IT market growth, and Bain expects it to represent
60% of growth through 2020.
Of the Fortune Global 50 companies, 48 have publicly
announced cloud adoption plans, many of which use
the cloud for a broad swath of their IT environments.
More than 90% of current customer demand for cloud
comes from replacing or upgrading existing, non-mission
critical applications and from the creation of new digital
businesses.
*Bain and Company, The Changing Faces of the Cloud, 2017.
1
7
Note: the business focus for Allergan is product leadership.
18
Founded in the early 1950’s, Allergan is a global, technology-driven multi-specialty health care company
pursuing therapeutic advances to help patients live life to their fullest potential. In making this
commitment, we work to develop an unparalleled level of insight into patients’ wants and needs — and into
the priorities and concerns of the medical specialists who treat them. To this end, we employ more than 50
percent of our work force in either research and development (R&D) or sales, ensuring our efforts are
focused on innovation and our customers.
Allergan’s flagship franchises in eye care, neurosciences, medical dermatology and urologics are structured
under the company’s pharmaceutical business portfolio, Allergan Pharmaceuticals. This portfolio offers
specialty physicians and their patients a wide range of treatments to help preserve and protect sight,
reduce physical disability and enhance quality of life.
With the acquisition of Inamed Corporation in 2006, Allergan added breast aesthetics and dermal fillers to
its business portfolio to create a world-leading medical aesthetics franchise. All of these products are now
represented within the Allergan Medical corporate division.
With specialty product lines focused on high-growth markets, Allergan represents a new multi-specialty
health care model for the future, where diversification and focus live together to offer physicians and
patients best-in-class treatments and a robust pipeline for continuous innovation. Bolstered by an
integrated R&D organization and global infrastructure, characteristics of some of the industry’s largest
pharmaceutical companies, Allergan also maintains a lean and efficient operation with solid growth
prospects, like many smaller and more specialized organizations in the health care field. Allergan is large
enough to command sufficient resources to address significant patient needs yet small enough for nimble
execution. As we look to the future, we will continue to follow our R&D technologies into additional specialty
areas and build a leadership presence of relevance to the doctors and patients we serve.
Source: www.allergan.com, accessed 11/17/14
19
20
Allergan in the News
Allergan Nears a Deal With Actavis to Block a Takeover by Valeant
by MICHAEL J. DE LA MERCED NOVEMBER 16, 2014 2:37 PM.
The Botox maker Allergan is hoping to cut off a hostile takeover campaign by Valeant.
After months of fending off unwanted takeover advances from Valeant Pharmaceuticals International,
Allergan, the maker of Botox, is close to completing its strongest defensive move yet: selling itself to
another bidder.
Allergan is near a deal to sell itself to Actavis for more than $62.5 billion, people briefed on the matter said
on Sunday, potentially ending one of the most bitter merger battles in recent memory.
Under the proposed terms of the transaction, Actavis would pay more than $210 a share in cash and stock,
these people said. An agreement could be announced as soon as Monday morning.
At that size, a combination of the two would be one of the biggest transactions of the year, outpacing
pending mega-mergers like Comcast’s takeover of Time Warner Cable and AT&T’s purchase of DirecTV. It
also would represent the latest maneuver to reshape the health care sector through deal-making, with drug
makers looking to add to their product pipelines.
Perhaps most important, by striking a friendly deal with a white-knight bidder, Allergan is hoping to finally
cut off the often-acrimonious campaign waged by Valeant since late April. Valeant, which has teamed up
with the hedge fund magnate William A. Ackman, who runs Pershing Square Capital Management, is
currently offering about $53 billion. The two first offered about $47 billion…….
Source: http://dealbook.nytimes.com/2014/11/16/actavis-said-near-deal-to-buyallergan/?module=BlogPost-Title&version, accessed 11/17/14.
21




For example, based on the case study, Allergan chose
sourcing options based on the ability of those options to
optimize Allergan’s flexibility in meeting its business
objectives.
What if the acquiring company’s focus is IT cost reduction
(where IT is viewed as part of overhead)? How might this
approach impact Allergan sourcing options? What is likely to
happen?
What would need to change for the acquiring company to
piggy-back on existing Allergan agreements with its Cloud
providers? What would be the benefits of such an
arrangement and the risks?
Are their scenarios where Allegan and its parent company
might be in conflict in terms of sourcing choices? If so, why?
22
Session 24: An Introduction to Cloud Computing
Introduction
Many of you use Google Docs for your computing needs. The benefits are that you are able to access
word-processing, graphics, and spreadsheet software via the internet without having to purchase and
install the software on your computer. And any document, graphics or spreadsheet you create can be
made available to others as needed, making group work much more efficient and effective. Cloud
computing is a term we use to describe the situation where software applications and the data they
collect and use can be stored in computers located anywhere within the internet (“the cloud”). Anyone
whose computer is connected to the internet can access those applications and data anytime they need
to. There is no need to store the software or data on each individual user’s computer. By storing
applications and data in the cloud, we can reduce or eliminate the need for organizations to purchase
software for every user. And by storing data in the cloud we can give anyone access to each other’s data
as needed (assuming they have permission to access those resources).
Cloud computing therefore refers to the sourcing of IT services, including infrastructure, hardware
(servers), and/or information systems from a centralized internal or external provider. While, you might
think that this is a topic more appropriately addressed in earlier sessions of this course (and indeed it
has been in our prior discussions of application service providers – ASPs, Web site hosting and
networking service provisioning), cloud computing may also be viewed as part of a larger set of
management strategies. In Session 23, we explored the sourcing of IT services and considered the
various options that an organization might draw in meeting its information management needs.
Throughout this discussion our conversations have been about staffing, managing, and contractual
arrangements. Cloud computing is an extension of this discussion where the “cloud” is more about
information technology platforms and capabilities that provide business organizations with the agility to
respond to circumstances in the fast-changing environment of global business practices. Cloud
resources may be internal, such as a set of services maintained by corporate IT and available to all
employees via the Internet, or they may be provided by a third party outside the company. Just like
with sourcing choices, different business factors cause companies to pursue a heterogeneous cloud
strategy. Thus, you will often find references to “internal” and “external” clouds within a single
enterprise’s plan for provisioning its IT capabilities. This Session’s case study of Allergan is such an
example.
In the earliest history of computing, most of us used such clouds because few organizations could afford
their own computer. These arrangements were called time-sharing, where the user paid for the amount
of computer processing resource that he/she consumed during the session. As computer systems
became less expensive and more powerful (Moore’s Law again!), most organizations brought their
computing inside, buying/licensing their own hardware and software. For some of these businesses,
financial services and healthcare companies to name just two, information security was another factor
in deciding to bring and keep their information processing in-house. But nothing stays the same in the
evolving global economy. As enterprises have become more disbursed and more global and as
employees have become more mobile, the demand for increasingly facile and accessible information
processing capabilities has come to the fore. Throughout, MISM 2301, we have seen repeatedly these
sorts of developments and how businesses have responded in adapting their IM and IT services.
As you witnessed in the case studies in Session 23, bringing all your IT resources inside the organization
has its own drawbacks. First and foremost, in an era where information management requires
compendious IT knowledge and management skills, not all enterprises have those aptitudes readily at
hand. Indeed, the demands of IT management may detract from management’s attention or core
prepared by rmk 051614
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Session 24: An Introduction to Cloud Computing
business issues. Also, many firms are not positioned to leverage economies of scale. Like FastFit, they
require lots of IM and IT capabilities but do not have the base of users of a Hardrock Café over which
they may spread those costs. Last, as mentioned above, one of the key competitive factors for many
organizations today is agility – the ability to turn on a dime. Your case study for Session 24 features such
a company. Allergan operates in over one hundred countries across the globe and must adapt its
product offerings, services, and business arrangements based on the needs of very different political,
economic, cultural, and medical circumstances. In managing this complexity, Allergan and many other
companies are turning to cloud services. Let’s consider what that means.
Here comes the Cloud!
Cloud computing as it is commonly thought of and used today is an outgrowth of the advent of the
commercially-available Internet. With the Internet, you can access information services from almost
anywhere on the globe and at any time of the day. Also the interface for accessing these services is
both standardized and simple – the browser accessing a Web site. As we have grown in our
sophistication in the use of the Internet, services of increasing sophistication have emerged, including:




storage as a service – data storage via the Internet
software as a service – Web-based access to software applications (a.k.a. application service
providers, ASAPs)
platform as a service – data processing throughput via the Internet
infrastructure (i.e. cloud) as a service – slightly more dynamic implications; an internetoptimized infrastructure for hosting applications
Organizations have built their own clouds for the secure use of their internal employees and perhaps
external partners, and increasingly, organizations are turning to so-called “public” clouds because they
afford:






location and time independence from access to IM/IT services
ease of access and use
centralize storage
the move from capital investments in IT infrastructure to the expensed cost of services that you
pay for as you use them
the reduction of software licensing costs – i.e. rather than buy a license for each corporate user,
pay only when a user actually accesses and uses the software in question
the agility that comes from leveraging a vast array of scalable resources if and when you actually
need them to operate your business.
Clearly, cloud computing can provide flexible IM and IT solutions for aspects of your business but it is
not without its own limitations. For example, your organization will still require an IT infrastructure of
its own to access cloud services, including significantly high-speed bandwidth, depending upon your
data transfer needs. Not all information systems are available to your company via the cloud.
Therefore, some software will continue to run inside your business. Compliance with information
privacy and security laws and corporate auditing standards within your industry may limit the extent to
which you can turn to cloud services for your business processes. Furthermore, running in the cloud
does to relieve companies of the responsibility of properly aligning cloud services with their internal
processes and in ensuring that those processes are operating properly. Finally, as with the broader
prepared by rmk 051614
Page 2
Session 24: An Introduction to Cloud Computing
sourcing discussion in Session 23, you will need the proper personnel within your organization to
manage the relationships with your cloud provider(s), based upon clearly written, measurable and
enforceable service level agreements (SLAs).
According to by John G. Mooney, Jeanne W. Ross, and Jarrod Phipps, the Center for In …
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