When it comes to determining true costs and accurate consumer usage for the new IT-as-a-Service model, there’s a lot more behind your business unit invoice than you think.

At EMC a team of business analysts has spent months conducting rigorous reviews of EMC’s IT data and then mapping and costing out every aspect of each ITaaS offering to make sure the new, financially transparent model is accurate.

As EMC IT makes the transition from working with a lump sum budget to charging back or showing back costs to individual business units for the IT services they consume each month, users can be confident that their usage is being carefully tracked and priced. After reviewing and remediating data gaps, we estimate that we are currently at 92 percent accuracy and climbing.

Getting to that level of quality data shouldn’t be underestimated, nor should the importance of such an achievement to the ITaaS transition. After all, each time a business unit consumes a service via ITaaS, IT needs to make sure the amount it is charged for that service reflects all of the costs to provide that service, from the more obvious infrastructure on which it runs to the labor supporting and other non-direct cost such as data center overhead.

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Harnessing the power of Big Data is a lot like harnessing the power of the Web. It has the potential to revolutionize business decisions much like the Web did for everyday consumer choices.

Just think of the pain you used to go through when trying to decide which car or VCR to buy. If you were more diligent than I, you would search for consumer reports, news articles, reviews, and maybe check with friends and relatives before making a choice. But that required quite a bit of effort so, more than likely, you would base your decision on advertisements, maybe some comparison shopping and gut feel from making purchases like this in the past. Now you can get many times that amount of product information on the Web in an instant to guide your decision.

Big Data holds a similar promise for corporate decision-makers, including those at EMC. With the right tools and know-how, they will be able to go from using the standard 10 to 20 percent of data now at their disposal to using many times that amount. The vast amount of information contained in Big Data has tremendous potential for improving the quality of everything from marketing and sales forecasts, to product quality guidance to company security alerts.

Rather than information for choosing the best car, the corporate world will use Big Data to identify the next customer to call on or the next product innovation to pursue.

But what exactly is Big Data and does EMC have it?

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Transitioning to an IT as a Service (ITaaS) model will have far-reaching effects on how IT Finance structures, analyzes and manages costs and resources. It will also open up new communications between IT Finance and controllers in individual business units to optimize EMC’s IT investments, shape new priorities and create new cost efficiencies.

ITaaS essentially requires that we shift from a centralized, cost-center-based budget to a service-cost-based, financially-transparent system. In other words, rather than using siloed categories, we need to reshuffle how we group and apportion IT costs around the ITaaS offerings and how they are consumed. In this way, we will be able to share with business units exactly what it costs to provide services, so they can make their own IT expenditure choices.

Under the traditional IT model, Finance administers a lump-sum budget for IT operations and oversees employee, capital and operating expenses by breaking them down into 60 to 70 separate cost centers based on function. For instance, costs for Telecom falls into one cost center; Help Desk falls into another; and Database another.

But this doesn’t work for charging each individual business unit for the IT services they consume because costs for providing an ITaaS service offering, such as email or TelePresence spans multiple cost centers, including Telecom, Help Desk, and Network.

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Jon Peirce - VP of Global Infrastructure and Services and corporate sponsor for the EMC IT as a Service project

Changing IT from a traditional corporate IT organization to a professional service provider offering IT as a Service is a bit like making the ideological leap from communism to capitalism. The transformation encompasses everything from the changing IT processes and technologies to getting people to think and behave differently as they begin to deliver services instead of technology piece-parts.

Not only that, but this seismic shift has to be accomplished quickly with limited resources because every day we delay this transformation, more and more of our business clients turn to other sources to get their IT needs met, whether it’s public cloud service providers or standing up applications on servers underneath their desks.

While the work is not taking place in someone’s garage, here at EMC IT our ITaaS launch has all the markings of a start-up business venture—which is just the mindset I’ve encouraged my team to adopt as we move forward. Think like an entrepreneur. Act like a startup. Continue reading →

Reposted from Chuck’s blog entry on 10/25/2011:

By Phil Gormley, CIO Office

“The true benefits of ITaaS come from better investment decisions, not demand management. While most CIOs plan to use IT service definitions to better manage investment priorities for business partners, they often find themselves trying to control demand. In fact, end-to-end IT services will not always reduce demand for IT offerings and may even increase it.”

–The Corporate Executive Board Company, July 2010

EMC IT—like many corporate IT operations— struggles with two conflicting client expectations. Year after year, the total cost of IT is held constant or reduced in the name of keeping overhead costs down. Meanwhile, business demands on IT keep growing and becoming more sophisticated.

For example, think about the tools available for collaboration today versus 10 years ago. With the evolution of multimedia conferencing, we can turn a telephone call into an interactive conference with tens, hundreds and even thousands of participants sharing ideas. And TelePresence lets colleagues around the world interact as if we are sitting at the same table without the time and cost of travel. These valuable, expensive new tools were in their infancy only 10 years ago.

While IT leaders near the breaking point from trying to do more with limited resources, the business units they serve have little recognition of the value of IT’s services. With no financial transparency, they only know a lump sum goes to undifferentiated IT. They don’t track the cost of the individual services they consume or even how much of each service they use.

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Mark Schafron

EMC

Sometimes, the journey to the cloud hits a little turbulence. So it was for EMC when its Westborough, Massachusetts data center began running out of room.

“Like our customers,” says Sanjay Mirchandani, EMC CIO and COO, EMC Global Centers of Excellence, “we were grappling with unrelenting information growth, increasingly complex application environments, and congested, energy-exhausting data centers.”

So EMC took a bold step. Instead of cramming in more capacity to make-do in Westborough, work began on transforming a 450,000-square-foot warehouse in Durham, North Carolina into a super-efficient virtualized showcase. For Jon Peirce, EMC Vice President of Global IT Private Cloud Infrastructure and Services, the massive effort was Extreme Makeover, Cloud Edition.

“Designing a multimillion cloud data center from scratch was a huge challenge,” Peirce says. “We were blazing a new trail—we weren’t replicating what we already had. We were designing as the data center was being built.”

Today, the data center project that Peirce describes as a “once-in-a-career opportunity,” is the new home of EMC’s first U.S.-based Center of Excellence, joining six other COEs in Ireland, Russia, Egypt, Israel, India, and China. The Durham COE will consolidate regional EMC research, development, and proof-of-concept labs, and will also offer consulting, development, technical services, and showcase EMC and partner solutions.

“It will extend our global cloud computing capabilities,” Mirchandani explains, “to support EMC and help our customers accelerate their own cloud computing and IT transformations.”

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That’s the big question to be answered…. And the answer must be YES.  Otherwise most internal IT organizations will increasingly lose “market share” to the Public Cloud and in some cases will become largely irrelevant outside core networking and security services. 

 Disconnected Supply and Demand:   Let’s face it… in the pre-ITaaS world most IT shops are run like regulated monopolies where the supply of IT Services is fixed – defined by an IT budget set at the beginning of the year, based on last year’s run rate.   IT spends much of their effort rationing their limited capacity and budget amongst Business Units that have  insatiable and possibly unreasonable demand for those IT services.  In the face of service  rationing, Business Units’ demands increase even more, just to make sure they get enough to fulfill their line operational objectives.  Many shops do not charge back these shared and scarce services, or if they do, the basis for chargeback is something that does not lend itself to intelligent and optimized consumption.  Consequently, the only forces that can possibly reconcile the supply and demand are:

• IT managing the demand down to match the limited supply (aka Demand Management)
• IT finding ways to scale the supply without increasing cost, which usually means cutting corners or reducing service levels

What happens when IT pushes back on requests and cuts corners to scale capacity?  Quality and agility both suffer, and the Business Units’ operational objectives are placed at risk.  IT feels caught in an untenable situation of being unable to live up to the expectations and needs of its customers.  In short, it’s a death spiral.

These situations became the fertilizer for “shadow IT”, when the BUs take control over their destinies and do what they need to do in order to IT-enable themselves.  Five years ago, the BUs would buy servers and stand up applications under their desks or in labs.  The amount of “shadow IT” was regulated because there was a real cost of buying servers, storage and applications not to mention the ongoing maintenance and support of the applications and infrastructure.   IT could afford to take the ostrich (head in the sand) approach and pretend that shadow IT didn’t exist, because the business was only capable of doing so much with servers underneath their desks, and would eventually have to come back to IT for enterprise-class applications and support.

 The Public Cloud has changed everything.   Including shadow IT.  What used to require  servers now only requires a URL and a P-Card.  The Public Cloud is instant gratification,  easy to use and Public Cloud services cater to what their target markets need, including enterprise-class capabilities.  Oh, and Public Cloud providers are constantly trying  to increase demand for their services by developing new services and refining existing ones.
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