Strategies for Utilising IT in Business Operations

Strategies for Utilising IT in Business Operations EXECUTIVE SUMMARY Carsem founded in the year 1972 and had been acquired by Hong Leong Group in the year 1984. Carsem had been allocating most of its revenue in the research and development to maintain its position in the market. The main objective of this report is to understand how Carsem utilize it available information technology (IT) infrastructure in operating the daily business processes associate with the challenges it faced. Analysis carries out enable the challenges to be group into three categories which are management, organization and technology perspective. In the generation of this report help had been provided by Mr. Chai and Mr. Koay (IT engineer from Carsem IT department) in the investigation of Carsem IT infrastructure and the challenges its faced in the maintaining of those infrastructure. Apart from that this report also evaluates and proposes on the cloud computing which will help to minimize and overcome challenges identified. Clouding had been recognized as a latest delivery model and provides comprehensive services which allow Carsem to compete in the market without the needs to spend an excessive investment in which this investment may be channel for organization products and services research and development. Cloud computing comes with a list of benefits and costs in which Carse needs to analyze and weight to which extend the clouding is needs in ones organization business processes. An organization that had decided to adopt clouding need to realize the cost associated with the implementation and come out with a series of strategy to transform those costs to benefits to be further competitive advantage in the industry. Parts of the benefits associate with clouding are: Reduced in the IT infrastructure investment. Automated system and application updates Allow IT to shift focus in the development of new program Highly secure infrastructure by the vendors Parts of the costs associate with clouding are: Organizational changes which lead to organization culture shock Information security issue Control issue over the data and information stored in cloud 1. INTRODUCTION 1.1 Carsem Carsem, a leading provider of turnkey packaging and test services to the semiconductor industry, and offers one of the largest package and test portfolios in the world with recognition of one of the largest in unit volume production in the industry. Carsem have proved to be one of the six largest independent semiconductor sub-contract assembly houses in the world. As a member of the Hong Leong Group (Appendix 2), the company has been operate in the assembly and test services for over 25 years with over 10000 employees and assembles in excess of 100 million units each week with 65 percent of this volume is fully electrically tested product. Carsem has three high-technology manufacturing factories (as shown in Appendix 5). Carsem organizational structure as shown in Appendix 3. 1.2 Carsem Strategy To be competitive in the industry and establish a long term relationship with customer, Carsem need not only compliance with Moores Law, which stated that device complexity doubles about every 18months (as shown in Figure 1 Appendix 4); but also to responses progressively to the Moores Second Law, which stated that cost increase on a semi-log scale (as shown in Figure 2 Appendix 4). To coherent with the Moores Laws, Carsem Technology Center (CTC) had been established as a Research and Development department in drive for the cost competitive and technology advancement. The role of the CTC as stated below and Carsem latest technology solutions such as system in package (SiP), copper wire bond (Cu WB), etc (as shown in Appendix 6) are some of the effort by CTC. Re-invest existing products for cost and efficiency Develop new capabilities in processes and equipment to push existing design envelopes Introduction of new materials per assigned material roadmap Drive towards a center of excellence for Semiconductor Subcontractor Packaging Provide a platform for the Nurturing and Education of Carsem Engineering Graduate Program 1.3 Carsem Services and Products Carsem incorporated with highly sophisticated equipment to ensure that the services stated below meet with the quality standards (as shown in Appendix 7) set by the automotive, telecommunication, computer and consumer electronics industries. Carsem is not only a world leader in manufacture of the MLP package with over 12 billion units shipped worldwide but also excel in the services of designing modeling of new package and process. Carsem offering a full range of turnkey test services for RF, mixed-signal, linear, digital and power devices. Product groups for each factory are shown in Appendix 5. Services: Packaging and Assembly Test Services 1.4 Carsem Vision and Mission Carsem employees strive to improve in quality, productivity, delivery, services and cost in order to be competitive and profitable in lieu with Carsem Vision and Mission shown in Table 1. The homepage URL of the Carsem Semiconductor is: http://www.carsem.com/. 1.5 Semiconductor Industry Semiconductors, or microchips, are tiny, powerful devices that control electrical current. They work like electric switches, either blocking or conducting the flow of electrical current. The best known semiconductors element is silicon. As per the Wikipedia, the semiconductor industry is the aggregate collection of companies engaged in the design and fabrication of semiconductor devices, or microchips. Semiconductor industry had been considered as a high-technology industry by where the companies allocate a large sum of their revenue to research and development. The industry is recognized as a key driver for economic growth in recent years by where the development of new semiconductor products, manufacturing technologies and applications has lead to the development of other important industries, such as computers, telecommunications, and consumer electronics. The industry consists of four main products as shown in Table 2. In year 2009, Intel still remains as the market leader for 18 consecutive years despite the global semiconductor revenue decline on year 2009. Mean while as per the source from iSuppli Corporation, the global semiconductor revenue on year 2010 had growth to $304 billion with a growth of 32.5 percent compare to year 2009. Top 20 semiconductor suppliers ranking recorded by iSuppli Corporation such as Intel, Samsung, Toshiba, etc as shown in Appendix 8. 2. CARSEM INFORMATION TECHNOLOGY INFRASTRUCTURE 2.1 Computer hardware platform Carsem engaged with Dell and Acer on it client machines; meanwhile Dell, Sun and Hewlett-Packard (HP) had been chosen in the support of it Server machines. The reason behind the choice is none others that cost related decision and the after sales service support and maintenance. 2.2 Operating system (OS) platform Carsem had been adopting in Microsoft Windows (Windows 7, Windows Vista, Windows XP, Windows 2000 and Windows NT4) for years in managing the resources and activities of the client machines. Linux, inexpensive and robust open-source software; Microsoft Windows Server 2008, most flexible and robust OS had both need the choice of Carsem for it server OS. Sun Solaris is also another OS by Carsem in managing it server machines. The need to control and reduce IT spending and license cost had been the main factors for above OS selection. 2.3 Enterprise software application Carsem had been attached with Oracle and Microsoft for years such as Oracle Database, SQL Server, Microsoft Exchange 2010, Microsoft Office, etc for it enterprise software application. The interrelationship between OS and enterprise software application had make Carsem to make such a decision with the consideration of Carsem needs. 2.4 Data management and storage Carsem selected Dell Equalogic Storage area networks (SANs) network-based storage technologies which connect multiple storage devices on a separate high-speed network dedicated to storage. The SAN with it huge storage capacity and stable performance is suitable for Carsem business processes. 2.5 Networking and telecommunication platform, Internet platform Carsem wide area network (WAN) had been attach with Telekom Malaysia (TM) providers for years due to the provider able to provide Carsem with a customized package pricing. Apart from that, WAN network equipment such as network termination unit (NTU) circuit, Cisco router is provided by TM as well. Carsem had been using Cisco router and switch for it local area network (LAN) for years for it is a market leader. Mean while as per management direction Dlink Wireless AP had been the choice in support Carsem wireless local area network (WLAN). To further align with management direction cost related, Carsem had been deploy with Voice over Internet Protocol (VOIP) under Asterisk for the recent years. 2.6 Consultants and system integrators Carsem maintain a continuous consultation contract with it providers such as Microsoft, Dell, Cisco, and TM due to providers able to provide a consistence and prompt service as needed. Providers professional skills and experiences on the infrastructure often give a handy solution to Carsem in a timely manner to minimize the factory losses due to the IT infrastructure down time. 2.7 Choice of Carsem In general the factors affecting the selection of IT infrastructure in Carsem including the management direction, business processes, budget, licenses, ease of use, life span, support, maintenance, associated partnership gain and etc. Take one examples, in choosing the brand of client computer hardware, there might be a number of vendors offering the same specification. But due to the product life span and in house supporting, Carsem had chosen Dell. Reason for engaging with Dell for years is due to the redundant to change by where the organization will need to go through a total change and adopt all necessary. Although the process is onetime deal but if the change does not generate a great improvement and additional benefits there is no value to make the change. This potential changes will also resulting in significant increase of the company cost. Another factor that is affecting the selection would be on the cost basis, by where the selected providers able to provide the infrastructure is a relatively low price compare to its competitors. This point is also applied to the maintenance cost. Dell solid reputation proven to be a reliable and prompt support services provider and that is another reason of Carsem choice. Dell also provides complete solution through its partnerships with software vendors such as Microsoft. As per Ratnam (Carsem former group IT Manager), Carsem manage to get Microsoft licensing through Dell so that the servers and desktops supplied to Carsem arrive with pre-installed software, all within one purchase order. For examples, in selecting an OS platform, Microsoft is preferable over others due to the system is more flexible and robust by where it can support a wide range of application included a third party software. 2.8 Carsem challenges in managing IT infrastructure Carsem faced with a legacy IT infrastructure that could not be accommodate the expanding manufacturing orders, the organization wanted to consolidate its server environment. The larger Carsem user base, the more diverse the environment, the greater the challenge will be. Some of the challenges are as per Table 3. Table 3: Challenges in managing IT infrastructure 3. CLOUD COMPUTING 3.1 Cloud computing Cloud computing, ‘a new delivery model; refers to style of computing in which various resources servers, applications, data, and other often virtualized resources are integrated and provided as a service over the Internet (Australian Government, Department of Finance and Deregulation, 2011). Cloud provides virtual server, software, store and secure immense amounts of data, application, which is accessible only by the authorized applications and users. Cloud computing eased the integration of photos, maps, and GPS information to create a mash up in customer Web browsers. As per professional like US National Institute of Standards and Technologys (NIST) and Sun Microsystems, 2009, cloud computing is pay-per-use networking computer with a minimal management effort and service provider interaction. Visual of NIST working definition cloud computing as shown in Appendix 9. 3.2 Cloud computing characteristic and types In general there are five essential characteristics that promote the cloud model included on-demand self service, broad network access, resource pooling, rapid elasticity and measured service. In detail cloud computing enable user to adopt and devise various resources as ones requirement without interaction with the services providers at any available clients platform such as laptop, mobile phones or PDAs. User gathers necessary resources through clouding in a flexible manner without the awareness on the resources location in a pay-per-use method. Detailed descriptions of each characteristic are shown in Appendix 10. Cloud computing can be on public cloud, private cloud, or hybrid cloud depending on an organization requirement (Appendix 11). Temporary application may be deploy in a public cloud due to cost censes and likewise a dedicated application should adopt a private or hybrid cloud. 3.3 Cloud computing services models Cloud computing providing a comprehensive services from hardware to applications and all this services may be grouped into three categories: Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS) as per Appendix 12. Organization will choose a cloud service based on the organization specific business, technical, and operational requirements. SaaS is a model that offers software as service over the internet. SaaS eliminates the need to install and run the application on the client hardware. PaaS providing a computing platform as service which compliance of cloud infrastructure and cloud applications. IaaS services deliver a virtualization platform for computer infrastructure. The top cloud computing providers such as Amazon, Google, 3Tera, etc are shown in Appendix 13. 3.4 Cloud computing trends Could computing isnt a new technology or a new architecture; its a new delivery model. This model is still an evolving paradigm. As per NIST, cloud computing definitions, use cases, underlying technologies, issues, risks, and benefits will be refined in a spirited debate by the public and private sectors. These definitions, attributes, and characteristics will evolve and change over time. In general cloud computing is like weather, full with uncertainty but a trend can be observed through it grow. The top ten cloud computing trends of current clouding are as stated below (Appendix 14). 3.5 Cloud computing solutions 3.5.1 Amazon Elastic Compute Cloud (Amazon EC2) Amazon EC2 is a specialized IaaS by where it provides a sizeable computing capacity to an organization through clouding. Amazon EC2 with the pay-per-use concept allow an organization to scale up and down as per the latest computing requirement by only paying for capacity the organization actually use. It saves the needs for an organization to spend heavily on its IT infrastructure in order to operate its business processes. Amazon EC2 allows an organization to have complete control over the selected combination of instances, operating systems and software. With the highly reliable environment and numerous securing mechanisms, Amazon EC2 providing an assurance service to an organization. With the Amazon CloudWatch, an organization can had an overview of its resources utilization and performance at own pace. This solution is suitable to be adopting by Carsem as it coherent with the business processes and environment requirement. 3.5.2 Google App Engine With its specialties in PaaS, Google App Engine enables an organization to develop and host applications on the cloud platform without the needs for the organization to hold any server. With no set-up costs and recurring fees, an organization will only need to pay on the resources such as storage and bandwidth that are used by organization to support those applications. Google App Engine with its ability to automatic scaling enables an organization to scale up and down according to its current needs. 3.6 Cloud computing benefits and costs Clouding able to reduces organization hardware and overall IT expenses, apart from the benefits of pay-per-use. With the scalability of the clouding, organization may choose to expand its storage without the needs to pay an expensive price for the hardware and the programs. The availability of Cloud solutions enables an organization to run project at own ease and increase the deployment of new products. There is no payment needed by the organization on the future updates due to clouding provide automate updates services. Clouding reduces IT focus on system administration work such as manage servers and application upgrades and channel their skills in integrating the legacy system with the new cloud solution. The availability of templates allows the implementation and deployment of cloud services is much easier and minimizes the needs of IT. Clouding also enable users to access and updates information anywhere as their own convenience. Data are being managed and protected by the skilled vendors and the amounts of infrastructure needed had been the responsible of the cloud providers. This will ease the pain of an organization in deciding on the purchasing and the maintenance of the infrastructure base on the rapidly increasing workload. With the high secure infrastructure by the cloud providers, an organization is being relief off the infrastructure disaster such as power lines cut off, flooding, fire, security, etc. Clouding able to reduce the run time of an applications and enable the batch jobs to be completed in a short time frame so that management able to make a prompt decision. As the cloud services is provided via internet, internet service loss may result an organization unable to perform its business processes or unable to make a prompt decision. Due to the physical infrastructure locations is unknown to the organization, the data and information might run at risk of not be compliance with local privacy requirements. Apart from that organization might run at a risk that the data being expose to others users especially for public cloud which might had hundreds to thousands user. Organization might loss of control over its storage due to had no insight of cloud provider contingency procedures whether there are any backup, restore and disaster recovery. Organization might run into cloud providers that are using different application programming interface which resulting both application unable to synchronize. Below table summarize a list of benefits and costs in running cloud computing. 4. CLOUD COMPUTING ADOPTION Carsem need to take into consideration forces such as market demand, business strategy, IT department strategy, IT assessment and competitors IT infrastructure related services in the implementation of cloud computing. 4.1 Market demand for Carsem services Semiconductor industry had been growing in a pace and face constant demand for products. In order to maintain its position in the market, Carsem needs to ensure that its customers, suppliers and employees are satisfied with the services provided. Currently Carsem facing with the challenges of maintain a good rapport with its customers by where queries unable to be attended on time and customers facing a hard time in getting a real time product status via extranet established by Carsem. Apart from that suppliers also having difficulty in monitoring the raw materials inventory level for a prompt replenish due to no inventory tracking system established. There is no real time data shared with the oversea sales team which will enable the team to make an on time potential sales decision due to the data are locked away with the factory. Mean while information availability to the in house employees to make an immediate disposition is an existing challenge, as the information is only made available to a specific level of employees with granted access right. 4.2 Carsem business strategy Carsem goal of maintaining as a leading semiconductor sub-contract assembly house by providing zero defects products in a reasonable pricing achievable through a series of strategy such as maintaining a good relationship with the customers, continuous improvement system towards zero defects, quality control measurement, on-going research and development of high-technologies products and comprehensive monitoring system. In order to maintain a good relationship with customers, on time delivery and products information visibility need to made available. To further impress the customers, Carsem employees will need to be able excel in operational, services and technology delivery. A good monitoring system will ensure that the product deliver on time with zero defects, never the least ensure that Carsem inventories is in a healthy state. Continuous improvement system such as employee suggestion system (ESS) or operators advancement training program will ensure that the employees equipped with needed information for their job. 4.3 Carsem IT department strategy IT department is a crucial department in driving Carsem business strategy to meet with market demands. The department prior tactic is to conduct a throughout analysis by department basis to understand each department requirements and access needs towards the use of information system. The result will enable the IT department to create a fitting system to drive the business strategies smoothly to achieve information sharing and better decision making. Therefore total cost ownership (TCO) analysis is needed to justify to which extend an investment is needed. TCO included direct costs and indirect costs such as software and hardware acquisition cost, setup cost, maintenance cost, infrastructure cost, downtime cost, space and energy cost associate with non other the hiring cost. Management will be able to make a wise decision base on the TCO analysis. 4.4 IT assessment IT department strategy will lead to the need of IT assessment, as an appropriate IT tools are key to IT strategy success. IT assessment will be consisting of an inventory check on the current IT infrastructure available in house in comparison to IT infrastructure needed in association of the IT strategy drawn. The assessment will also need to take into consideration whether the IT infrastructure compatible with individual department needs. Apart from internal assessment, external assessment is also critical. A comparison also need to be carry out between IT infrastructure suppliers to enable a better choice; taking into consideration the factors such as cost, support, standard, licensing etc. IT department need to ensure that there is a database information available persistence to customers IT infrastructure so that Carsem data and information successfully directed to customer. The most common systems used in today market included ERP system, data mining system, information sharing system, reporting system to resolve current challenges faced by Carsem effectively with future expansion therefore cloud computing will be the optimum environment to run above mention system. 4.5 Competitor services and investment In terms of the hardware platform, Carsem nearest competitor is engaged with Dell and conducting with dos system for its software. In general, Carsem and its competitor are offering the same standard of services to its stakeholders. To a certain point, Carsem competitor had a better system by where they had establish a share point system by where it allows employees to upload and share documents thru share point portal. In term of the operation system support, Carsem is gaining an advantage as Carsem had engaged with MES system compare to its competitor which still yet to develop to the MES. 5. CONCLUSIONS 5.1 Recommendations Carsem should go for cloud computing to be at the edge of competitive advantage. Cloud computing solutions such as Amazon Elastic Compute Cloud (EC2), Google App Engine are suitable to be adopted by Carsem. The stated clouding solution will ease off the burden such as managing issues, financial costing, and maintenance problem and in the mean time promote a secure environment for data storage and enable the user to access whenever and wherever they like. 5.2 Summary of findings Carsem had been rapidly growing to achieve competitive advantage in the semiconductor industry. Through the competitive forces model, it is get to know that Carsem is facing with the problem of satisfying its stakeholders due to the incompetence IT infrastructure. Carsem will also need to ensure that both its business strategy and IT strategy are aligned to meet with the markets demand. Additional knowledge of its competitors services and IT infrastructure investment are some essential forces in determining Carsem success. Challenges identified associate in managing Carsem IT infrastructure can be grouped into three categories which are management, organization and technology perspective. Carsem need to realize that information system is the key for solving business problems. As such information system needs to be managed wisely to gain competitive advantage in the market. Information delivers on time will save up time and in turn resulting in cost saving.