Asset Management: Reuse Hardware and Software

One of the hallmarks of this year’s crop of CIO 100 honorees is a commitment to reusing technology assets, be they hardware, software or both. Yet being truly resourceful involves more than saving money. Any organization can reduce expenses or avoid additional purchases by reusing assets it already owns. What sets CIO 100 honorees apart from the merely cost-conscious is their reuse of assets in innovative ways that actually boost revenue, improve service or otherwise enhance how business gets done.

Hardware

Organization: Air Force Flight Test Center

Resourceful reuse of hardware:

Equipment turn-in center

Payoff: $1.7 million saved since 2000

Keeping an accurate inventory of hardware is tough for most organizations, but the IT group at the Air Force Flight Test Center at Edwards Air Force Base in Southern California has two unique challenges. At 470 square miles, Edwards’ hardware assets literally cover a lot of ground. Add to that the constant turnover of military personnel, and no wonder most obsolete hardware used to end up stockpiled in closets, lost or was otherwise unaccounted for.

In October 2000, the newly formed IT group established the IT Turn-In Center, outfitted with a crew of drivers and trucks to go out and pick up old equipment. For the people looking to ditch outdated hardware, a phone call to the center is all it takes. The paperwork—which, before, was more troublesome than dumping old stuff in a closet—is now handled by the center staff, who also evaluate old equipment for reuse, recycling or retirement. To date, the center has reutilized 978 items worth $829,733 and donated 618 items worth $845,198 to schools, according to Sean McMorrow, deputy CIO. For taxpayers, that adds up to a cool $1.7 million saved.

Organization: Merrill Lynch

Resourceful reuse of hardware:Internal online auction

Payoff: $500,000 in savings

Sometimes innovative ideas for reusing IT assets can happen by chance. At Merrill Lynch, the IT group was interested in open-source software. At the same time, the company’s communications department wanted to conduct a fund-raising auction for charity. During a December 2001 meeting between communications and IT, the two groups came up with an idea that would meet both their needs: build a Linux-based internal online auction that would operate much like eBay. MLXchange was born. IT staffers spent 30 business days implementing the system. So far, employees using MLXchange to sell everything from wine to swimming lessons have raised $82,000 for the United Way.

But MLXchange hasn’t been limited to charity efforts. “We always bought new hardware when there was perfectly capable hardware lying around,” says John Helm, director of architecture. Using the auction software as a platform, Merrill began to post lists of hardware available for reuse throughout the company. From August 2002 to May 2003, more than $700,000 worth of hardware was traded via MLXchange, resulting in an overall cost avoidance of $500,000.

Organization: Raytheon Aircraft Co.

Resourceful reuse of hardware: Server consolidation

Payoff: $500,000 in savings

Raytheon Aircraft was like a lot of companies in the 1990s. “Every time someone put in a new request for a new application, we’d get a new server,” says Vice President and CIO Doug Debrecht. It got to the point where the 390 servers weren’t getting anything near the 70 percent to 80 percent utilization rate the company sought. When the recession forced the IT group to change its free-spending ways, consolidating server deployment was a good place to start.

By combining two or three applications on a server, the IT group has cut the number of servers from 390 down to 272, a total of 30 percent. The company’s bottom line has benefited from retired leases and reduced support costs, Debrecht says, and he even managed to sell a dozen of them.

The smart server consolidation has freed up enough cash for Raytheon to improve its IT infrastructure without breaking the bank. Recently, IT staffers implemented a storage area network. Raytheon employees now enjoy faster and more convenient computing services, and the company has reduced IT expenses by $500,000.

Software

Organization: Kirkpatrick & Lockhart

Resourceful reuse of software: Library of components for building client extranets

Payoff: A lure for clients

CIO Steven W. Agnoli knows that clients come to Kirkpatrick & Lockhart, one of the nation’s largest law firms, for the quality of legal services, not for technical services. Nevertheless, K&L sees technology as a way to differentiate itself. “In the last two years, we sought to add value to our services by providing client extranets,” Agnoli says.

Typically, clients want the same types of functionality for their extranets, ranging from document repositories, chat rooms and calendaring to topical law alerts, expertise locators and contact lists. K&L uses reusable software components to provide such functions; applications need be written only once. Thereafter, all the IT folks have to do is snap the various pieces together—which they can do as quickly as one day.

Agnoli hasn’t quantified the payback from the extranet component library, but he knows client service has improved. Recently, K&L’s extranet services played a part in landing two clients, he says.

Organization: Lands’ End

Resourceful reuse of software: Legacy order-entry system coupled with a product database

Payoff: $20 million in additional revenue

In 2001, retailer Lands’ End introduced Great Go-Togethers (GGT), a link between its product database and order-entry system. When a customer orders a product, GGT automatically opens a screen—on customers’ computers for online orders, and on the computers of customer service representatives for telephone orders—that suggests other products. “A customer who orders a shower curtain may not have thought to order the liner as well,” notes Senior Vice President and CIO Frank Giannantonio.

As a cross-selling tool, GGT is a significant improvement compared with the old method, which required customer service reps to call up a counterpart in Lands’ End’s specialty shopper service. IT staffers interviewed the specialty shopper folks to build the knowledge database and then linked GGT to the existing order-entry system, a process that was relatively straightforward, according to Giannantonio. The payoff: an estimated $20 million in additional revenue directly attributable to GGT. Giannantonio estimates that it would have taken over $40 million to build a new system.

Organization: Washington State Department of Information Services

Resourceful reuse of software:Shared infrastructure components

Payoff: $300,000 in annual productivity savings

The Washington State Department of Information Services scored a hit with its Applications Template and Outfitting Model (Atom). Launched in the fall of 2000, Atom is an online resource for project management processes and infrastructure components. The brainchild of senior policy adviser Paul Piper, Atom includes the policy information, shared infrastructure components, business planning documents, standards and reusable code needed to create an Internet-based government application.

Atom promotes the reuse of enterprise investments, says Piper, by making information on best practices easily available to state agencies online (see www.wa.gov/dis/atom). The system’s target audience includes business and project managers, application developers and third-party contractors who, thanks to Atom, have now taken an average of 40 hours off of project planning and development time. With 150 projects under way each year, Atom adds up to a savings of $300,000 for the IT department.