By Chris Mullan,
Head of Medium Business,
UK & Ireland, Dell Corporation
CIOs are walking new ground as they seek to improve competitive business advantage in an economic downturn – balancing the pressure to reduce capital expenditures against unprecedented opportunities to increase productivity and stay on the forefront of innovation.
In today’s global economy, IT effectiveness and business innovation are two sides of the same coin. As the strategic importance of advanced technology and best-practices management comes into sharp focus, and the global economy positions itself for a recovery, executives are looking to eliminate wasteful spending and evaluate all IT investments by the amount of productivity improvements it delivers to the business — not just by how much it costs.
But what does this mean on a day-to-day basis? What can CIOs do to help ensure that they invest wisely for sustainability and growth?
The new reality of IT
According to Gartner, in 2009, resource constraints were the biggest factor limiting organizational growth for medium sized businesses. As the economy recovers generating demand, organizations are looking for ways in which they can invest for strategic returns. The challenge is that most medium businesses feel that they are already investing a great deal in IT, and in many cases, they are not wrong. For medium sized organizations with technology-dependent business processes, evolution is virtually impossible when 80 percent of their IT resources are committed to legacy systems that do little more than keep the lights on and maintain the status quo–leaving just 20 percent to invest in strategic development for growth. To succeed in the face of today’s economic pressures, executives must change the balance of their IT spending.
Smart CIOs are advocating a fresh approach to enterprise spending — rather than spending more, what if they could do more with what they are already spending? Instead of focusing simply on cost-cutting measures, they are developing new methods to evaluate the business return on their IT investment and the most effective ways to allocate the IT budget following from that analysis.
The pursuit of enterprise efficiency
What could your organization do if you retained all of your talent while gaining the opportunity to refocus it on strategic initiatives? Enterprise efficiency is the key to answering this question. For example, Dell has shown that by freeing up computing resources, cutting capital expenditures, and streamlining employee efforts, medium sized enterprises may succeed in reallocating 30—50 percent of their IT budgets toward strategic development and sustainable growth.
Where to start?
Enterprise efficiency is based on three simple steps that every medium sized business can implement: standardization, simplification and automation.
Standardization is the first step toward achieving these goals. As database workloads outpace aging hardware with demands for higher compute density, memory capacity, and I/O scalability, industry-standard architectures can go a long way toward lowering the cost of doing business and freeing up IT resources that can be redirected to innovation.
Simplification is the second key to unlocking efficiency. It isn’t unusual for a medium sized business to run hundreds of different applications; consolidating onto a smaller number of applications and platforms leads to dramatic savings on maintenance and support.
Automation is the last step toward redirecting IT budgets from maintenance to innovation. By reducing labor costs–which account for a significant proportion of IT spending–automation allows enterprises to work within tight budgets to advance business agility while also facilitating short-term contracts, improving flexibility and scalability, and increasing productivity with self-service IT models.
How Will I Know it Will Work?
Dell knows the Efficient Enterprise methodology works because the company rolled it out first within its own data centers. Before initiating the Efficient Enterprise strategy, Dell spent 80 percent of its IT budget on maintenance of the legacy environment. The company standardized, simplified and automated to dramatically improve IT returns.
Dell began its transformation by standardizing several of the key components within its data centers. The company chose to leverage the open systems architecture of the x86 platforms for 97 percent of its servers, which previously had run on an assortment of legacy systems. Just two primary server images–.NE T/Windows and Oracle/Linux–were used throughout the organization. In addition, Dell adopted a single global client image to dramatically simplify client management, upgrades, and maintenance as well as reduce costs.
After standardizing the core components of the IT infrastructure, Dell looked for further opportunities to simplify. After thoroughly reviewing the applications in use, the IT team reduced the company’s application footprint by 25 percent per year over three years. Multiple regional systems were replaced with single global instances. IT leaders aggressively deployed virtualization throughout the production environment–even adopting a “virtual first” policy in which all new applications that do not require dedicated hardware are tested and deployed in a virtual environment.
After deploying virtualization and reducing its application base, Dell then focused on automation. Automated provisioning capabilities on the newly virtualized server infrastructure enabled imaging and deployment of servers in hours, rather than days or weeks. Today, Dell end users can reimage their client systems themselves in about an hour by running an application from their desk instead of relying on an IT administrator to manage the process. As a result, IT staff can manage 130,000 servers and clients from a single console.
The Efficient Enterprise methodology delivered results quickly for Dell–and the company expects to continue reaping benefits into the future. Dell has already returned 30 percent from fixed spending to maintain a legacy environment to discretionary strategic spending and is on track to achieve 50/50 fixed versus discretionary spending by the end of 2010.
Becoming an efficient enterprise is within every company’s reach. Since enterprise efficiency is an operational framework and not a product, organizations, even if they are not as large as Dell, can realize both short term and longer term benefits by deploying this operational framework.
Chris Mullan is the Director and General Manager of Dell’s Medium Business Division for the UK & Ireland. Chris has been with Dell for over ten years in a wide variety of roles. In his current role, he is responsible for ensuring that Dell continues to provide world-class solutions, services and support to medium-sized businesses in the UK & Ireland. Chris Mullan is the Director and General Manager of Dell’s Medium Business Division for the UK & Ireland. Chris has been with Dell for over ten years in a wide variety of roles. In his current role, he is responsible for ensuring that Dell continues to provide world-class solutions, services and support to medium-sized businesses in the UK & Ireland.
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