By Jon Peirce – Senior Vice President, EMC IT
The transformation of IT organizations from a traditional service model to an IT as a Service (ITaaS) provider is a multi-faceted, comprehensive endeavor requiring a universal commitment from the enterprise, and tests the persistence and patience of all of us leading the charge.
In the case of EMC IT’s transformation, it is a story that began nearly five years ago, when we recognized that we would not optimize the beautiful infrastructure we built if we continued to operate with the same antiquated processes and governance we had used in the past. When looking at ourselves objectively, we had to admit that the truth hurt.
• We never had enough capacity to meet requests, and were constantly in the position of having to “manage demand down” to meet the available supply.
• Disconnects between the funding made available for IT services and the consumption of IT services was creating unproductive friction between IT and our clients.
• Increasingly, Business Groups looked to the public cloud because it’s faster and they could avoid the IT bureaucracy, even if it came at an increased cost.
• The increasing speed of EMC’s business was putting huge pressure on us to become faster and more adaptive.
• We found ourselves “sweeping up the mess” too often.
When EMC discusses its Journey to the Cloud, we do so knowing that we’ve planned, tested and validated the various technologies and solutions we used first-hand inside our own walls. This is driving force behind EMC IT Proven.
Over the last few years, EMC IT organization has transformed tremendously – embracing cloud computing, building a new cloud data center, and replacing its dated ERP system. This has resulted in:
- $157 million in capital expense avoidance
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- $66 million in operational expense savings
Today, EMC IT is focused on leveraging its cloud foundation and numerous EMC, RSA, VMware and VCE technologies to develop and broker services with a rich user experience, while driving agility and time-to-value for the business and its go-to-market opportunities.
For a peek into EMC’s own IT Transformation, IT as a Service, Big Data and to providing our users with consumer-grade experiences, read the 2012 EMC Corporation IT Performance Report now available as a PDF and iBook.
After you’ve read the Report, be sure to return to this site for the latest chapters our IT transformation story which we will share via blogs, white papers, and other reports throughout the year. And, most importantly, don’t hesitate to comment, ask questions or share what you read here with your colleagues.
Thank you for visiting EMC’s IT Blog.
By Neil Thibodeau — Senior Director, IT Business Management
**This is the first part of a three-part series about labor sourcing in the ITaaS business model**
You might wonder what moving our labor to a consumption-based model has to do with IT as a Service (ITaaS). The fact is a significant amount of our IT spend is made up of labor and these costs are then passed on to our business units in the form of invoices. Sourcing and contract strategies are essential to establishing our ability to effectively roll those costs into services and then back to the business units in the ITaaS business model.
Let me start by describing EMC IT’s effort to restructure its sourcing strategy. We wanted to move beyond “name-based” or “capacity-based” supply side sourcing, and move towards “unit based” supply side sourcing. In other words, rather than setting aside a specific IT employee or contractor to deliver services to a specific business group, we wanted to designate labor resources based on specific service requirements that can be leveraged for multiple business group needs. The idea was to pool like skills that would allow us to scale and be more efficient. Oh yeah, and we needed to do it cheaper while meeting and improving existing service levels.
When EMC IT committed to ITaaS, a key (and critical) objective was to improve the business relationship between IT and EMC business teams, by being able to communicate in terms of outcomes and not focus on regularly having to answer the labor allocation question, “what was John working on?” Our decision to further develop the ITaaS business model was also motivated by an underlying belief that there are always opportunities to improve efficiency.
By Paulo Prazeres, Senior Director of IT Finance
Sometimes simple is just better, even when complex financial and IT strategies are at stake. So it wasn’t totally surprising that EMC IT’s simple approach to creating financial transparency for its transformation to IT-as-a-Service (ITaaS) struck a positive note with financial leaders at two recent conferences where I gave presentations last month.
The first was a Finance Management Board meeting of The Research Board Inc. in late January, where I got to discuss EMC’s financial transparency program with some 15 IT finance leaders from other Fortune 500 companies. The following week, I gave a presentation on “The End of Flat-Tax Funded IT” to CFOs and other financial leaders from a cross-section of industries at the Corporate Performance Management Conference.
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Attendees at both were extremely interested in oursimplicity-first approach to making the shift from a traditional lump-sum IT service budget to a financial transparency system that shares with users the true costs of IT services they consume. Leaders whose organizations are in the throes of transformation to ITaaS wanted to hear more about how we created five broad “buckets” of services from which to allocate costs and establish a chargeback system to our IT users.
Want to Read More? Visit the EMC Executive Reflections Blog for the full post.
By Jon Peirce — Senior Vice President, EMC IT
It’s official. EMC IT has achieved tens of millions of dollars in savings as well as huge leaps in agility and productivity over the last nine years on its journey to the cloud. In a newly released audit report evaluating EMC IT’s cloud transformation, IT analyst firm Enterprise Strategy Group Inc. (ESG) concluded “the results that EMC has achieved are truly stunning.”
The results include $66 million in operating expense savings, $157 million in capital expense avoidance, an 88 percent increase in productivity, a nine-fold increase in agility and a 100-million-pound reduction in CO2 produced over the past nine years. And while we were making those strides, EMC grew its revenue from $8.2 billion to $21.7 billion. (Read the ESG IT Audit Report: http://www.esg-global.com/lab-reports/emc-it-leading-the-transformation)
The ESG report, updating its two earlier IT audits in 2009 and 2010, is concrete validation of the cumulative results of the ongoing evolution of our cloud-based IT business model. The optimization of our infrastructure in and of itself— in terms of virtualization, standardization, consolidation and tiering—delivered tremendous financial benefits to the company. One project called out in the report is EMC’s new deployment of a fully virtualized SAP ERP system on Vblock converged infrastructure.
By KK Krishnakumar, Vice President & Chief IT Architect
Planning our EMC IT strategy to meet the company’s future business capability requirements is a lot like planning for the future growth of a city. For a city to thrive and prosper, leaders must holistically coordinate infrastructure projects and resources across municipal departments to meet the needs and demands of its residents within city policies–hopefully with the least amount of bureaucracy. Road improvements, for example, need to link to traffic and development patterns and not conflict with sewer or water line installation.
As EMC’s business has become more complex, EMC IT has been striving to work closely with business units in a similarly holistic approach to map out what capabilities they need and how IT can support them. We are in the process of forging such a strategic plan for the current year, based on an increasing level of collaboration with the business units we serve.
Providing business users with financial transparency about your company’s IT services doesn’t just promote business unit (BU) participation in their own IT consumption choices; it can also be a great tool to make sure enterprise-wide IT initiatives are on track in meeting business and corporate objectives.
After launching financial transparency last year as part of our IT-as-a-Service (ITaaS) model, EMC IT invited business unit leaders to meet with IT executives to share details and opinions about our enterprise IT spending. They got to discuss their views with each other on a list of teed up enterprise IT initiatives— those projects that have cross-business benefits as opposed to serving a single business unit. In fact, we asked them to vote on the enterprise initiatives to help us rank their importance.
We used business leaders’ feedback to turn what was previously a less than precise approach to setting our enterprise IT spending priorities into a much more refined list of which initiatives we should spend money on and which should wait. In addition, we’ve maintained the goal of continuing to shift our overall EMC IT budget to enterprise initiatives.
By Tony Pagliarulo, Senior Vice President, Business Technology & Service Delivery
First we called it shadow IT. Then it was rogue IT. Now, we refer to it euphemistically as business-managed IT (BMIT). No matter what you call it, the longstanding problem of business groups buying, building and deploying IT solutions without company authorization presents the same challenges to IT executives everywhere.
In some cases, it could mean that business-sensitive information is being used and shared without proper security controls, sometimes in external environments. It often leads to fragmented architecture, a lack of integration and inconsistent and ineffective management of vendor contracts. It also increases overall costs, complexity and may create a “double standard” between IT and business-implemented solutions. And it is a practice that is on the rise across a wide range of industries, as cloud technology has evolved.
No longer limited to resorting to stealth servers under someone’s desk, the business now has easy access to a growing number of Internet-based providers offering nearly unlimited IT capabilities in the public cloud. But we in IT also have more options than ever to turn this headache into a business-empowering opportunity.
It’s not like business leaders’ reasons for using BMIT aren’t good ones. They are under increased pressure to drive top line revenue ASAP. They want new capabilities, and more agile IT tools. At the end of the day, business leaders’ choice to use BMIT is about faster time to market and better control.
The good news is that enterprise IT organizations have also transformed with cloud technology, and new, in-house IT models and can now compete with outside cloud providers to give the business the capabilities it wants, at competitive cost and in shorter cycle times.
Want to Read More? Visit the EMC Executive Reflections Blog for the full post.
By Kate Parsons, Senior Director, EMC IT
In my last blog, I talked about how EMC succeeded beyond expectations in launching our new ERP system – codenamed PROPEL – in a big-bang cutover that went live without a hitch on July 4, 2012. But the real test of the PROPEL project still loomed: closing out our first ever quarter using the new SAP ERP system.
I’m glad to report that PROPEL passed that critical test— thanks to planning, persistence and plenty of hard work by our project team, the business and everyone involved across EMC. While we are still honing processes, and evaluating training and resources to get the most out of our new system, we learned some valuable lessons by going through our first quarter-end (Q3 2012) processing using PROPEL. Here are some highlights that will hopefully help you in your transformation efforts.
After months of creating new cost models and reaching out to business units, EMC IT introduced financial transparency for IT services we had launched early this year. Each business unit is issued quarterly invoices for the IT services they consume, spelling out their usage and associated costs.
This new approach, part of our transition to an IT-as-a-Service model, is supposed to give our internal IT customers more say in how they consume IT. (Read our Financial Transparency white paper.) It is supposed to help create a more open and communicative relationship between IT and its users, as well as help both parties in setting more efficient spending priorities. Although we are still in the middle of our transformation journey, I’m glad to say, the financial transparency transition seems to be working well.