Virtualization: 4 Building-Blocks for Achieving Benefits
Advice on how to get results from virtualization and IT consolidation projects.
Tue, September 27, 2011
CIO — This week I was invited to attend a gathering at Collabworks, an organization focused on the virtual enterprise. Collabworks believes that the kinds of savings and efficiencies that virtualization has brought to IT can be brought to entire companies by reorganizing workplaces along the lines of what has happened in IT (virtualization to remove dependencies, focus on service outputs rather than processes, and use of specialized external resources rather than internal employees). As IT only accounts for around three percent of total corporate costs, if Collabworks' theory is right, there's clearly great opportunity for enterprises.
Collabworks puts together a program that included a speaker who was a former HP employee, who worked on HP's IT consolidation efforts, along with a panel that included the CTO from a large software vendor. We'll call the CTO "Bob" for purposes of this post.
What both of them described and the way they operated to restructure IT was really interesting, and a good vision for how most companies should approach this critical task.
The fellow from HP described some impressive stats to illustrate the restructuring outcomes: 85 data centers down to 6; 6000 apps down to 1500; resulting in over $1 billion in savings.
Likewise, Bob outlined some of the benefits that his organization has achieved: a large drop in costs, a shift to offering many of their products as cloud services, and most important, IT's ability to be much more agile.
How did they achieve these results? Here are some of the points they made:
1. Timebox the effort for any given initiative. Start with a fixed due date to ensure focus.
2. Aggressively reduce support for legacy systems. When people insist they need access to existing systems for laudable reasons (e.g., potential legal discovery), offer to keep them available—for a price. It's amazing how unimportant some "important" things can become when there's a cost associated with it.
1. Get out of non-differentiating packaged apps as quickly as possible. Move to SaaS offerings to replace on-premise software aggressively. This frees up budget to invest in innovation.
2. Change the relationship with business units from "point" projects (e.g., upgrading to the next version of Product X) to placing what are in effect product managers within the business units to understand needs that can be translated into technology deliverables—that are focused on profitable offerings and innovation.
3. Don't sell technology improvements to business units funding initiatives. For example, don't sell a SAML implementation as part of a move to Salesforce. Instead, sell the ability for a person to sign on once and have access to all SaaS applications he or she uses.
I have to say, most of these lessons seem sensible and pretty obvious. Why doesn't everyone implement them? What needs to be in place for these sensible lessons to occur in any IT organization. Here is my take: