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Creating an Efficient Enterprise in the Virtual Era

Jeff Johnson and Kathy Karpinski

The Virtual Era encourages no separation between business strategy and IT execution. For the CIO, the Virtual Era represents an opportunity to recreate the role of CIO, redene how IT is run and create business advantage through efficiency and innovation.

Creating an Efficient Enterprise in the Virtual Era

It happens every 15 years or so, new demands and innovative technologies come along to transform the way we work, the way we live, the way we communicate. What started with mainframes in the 1950s morphed into minicomputing by the time we put a man on the moon. The client-server model made computing power ubiquitous and helped transport the world into the Internet age. The old models dont disappear the dominance of the Internet certainly wont fade anytime soon but the opportunities afforded by new technologies inevitably build to a critical inection point. We nd ourselves at one of those inection points today.

Welcome to the Virtual Era

This new age, the Virtual Era, is being driven by increased mobility demands and the widespread adoption of new technologies designed to abstract and virtualize enterprise infrastructure, services and processes from any given location or system. This evolution to anytime, anywhere data availability to thousands of new end-point devices makes IT infrastructure all the more complex, expensive and difficult to manage. To empower workers and drive productivity globally, organizations must adopt a new model of computingan efficient architecture that reduces the cost and complexity of the data center and leverages the benets of the cloudso that IT can put the right amount of computing power at the ngertips of every employee, whenever and wherever they need it.

The CIOs, CEOs and executive leaders who embrace these IT changes have an opportunity to out-innovate their competition. As IT becomes less of a support resource and more of a fundamental driver of business innovation, the role of the CIO and what denes efficiency is dramatically shifting. By leveraging cloud efficiencies and relying on virtualization technologies, an organizations information fabric becomes exible and open and data storage and retrieval faster, easier and more accurate. The Virtual Era will empower companies to scale with agility and provide the mobility that employees demand. Changing the fundamental cost structure around infrastructure so that more of an organizations IT spend can pursue innovation and drive business value is what CEOs want, CFOs wantand quite frankly, what CIOs must do to survive.

The Efficient Enterprise Opportunity: $200 billion

In an era of challenged budgets, how can IT decision makers cope with the explosion in technology demands? How can they transform IT from a cost center to a value center? And how can they successfully nd their way to the optimum set of digital assetsand the budgetthat will allow them to accelerate business agility and innovation? The answer lies in increasing IT efficiencyre engineering the organization into an Efficient Enterprise. It starts by challenging how IT budgets are spent. Today, of the annual US $1.2 trillion in estimated IT infrastructurerelated spending worldwide, around 80 percent is spent on maintenance. Only 20 percent is spent on the innovation that is essential to align IT with business objectives and gain the competitive advantages needed in the Virtual Era. Increasing IT efficiency enables organizations to allocate a larger percentage of the budget to innovation. As a result, CIOs can redirect their limited IT budgets away from maintenance, or simply keeping the lights on, and toward investments that grow top-line sales and revenue. Dell believes that companies should aim for reducing the percentage spent on maintenance from 80 percent to 50 percent, and that there is US $200 billion in efficiency-led savings to be had by addressing the people, processes, and technology that drive IT efficiency.

Dell on Dell: Implementing the Efficient Enterprise Strategy

In fact, weve already started at Dell. Over the past two years, weve overhauled our own data center architecture. We now run 97 percent of our infrastructure on x86-based systems. Weve consolidated our applications and images, spread virtualization technology to almost every corner of our technology footprint and employed our own services expertise some of it newly acquired to streamline management of our systems across the globe. We now manage 130,000 servers and clients from a single console. By the end of this year, our IT operating expenses will drop to 50 percent of our technology budget, freeing over $100 million to put toward investments that will further enhance our business.

The Efficient Enterprise Framework

Although the Virtual Era has challenged IT organizations to deliver much more for much less, it has also ushered in transformative solutions that make meeting these challenges possible. Dell has worked with thousands of organizations and the largest of hyperscale Web providers to understand the issues CIOs and IT organizations are facingand has used that knowledge to design solutions that harness technology and address the people and processes needed to deliver unprecedented IT efficiency. To re-engineer enterprise efficiency, begin with three simple questions about each layer of your IT infrastructure, every IT process and to every person who works in IT: Can this be standardized? Is there any way to simply this process/technology? Can this be automated? Start in the data center. Are there disparate, proprietary, and legacy systems that bog down efforts to operate efficiently? Migrate them to standardsbased components, common platforms, open tools, and a unied fabric. Organizations can reduce complexity and optimize data center infrastructure investments by operating fewer systems.

Dell recently partnered with to help them in a migration to industry standard platforms. Database performance doubled and costs reduced by 20X, all while giving customers faster access to data.

Are there redundant processes (technological and manual) across the IT environment? Virtualization and storage consolidation provide fewer touch points across a consolidated environment making greater levels of automation possible. Automated tools and best practices reduce manual intervention and boost productivity. Review processes across the IT organization and look for manual, repetitive tasks that can be eliminated, automated, hosted, or fully outsourced. Standardize, simplify and automate are the foundational pillars of the Efficient Enterprise. Dell has implemented Efficient Enterprise solutions based on these principles in three focus areas: the Efficient Data Center, the Efficient Workforce, and the Efficient Cloud.

Efficient Enterprise Solutions

The Efficient Data Center
economics scale services convergence

The Efficient Workforce

borderless secure connected productive

The Efficient Cloud

Modular ITaaS SaaS PaaS

The Efficient Data Center

Data centers provide a unique target for rapidly achieving efficiency gains using virtualization and cloud computing to solve some of the most costly IT challenges. By virtualizing and consolidating servers and storage, companies can reduce data center space requirements and costs, while increasing their computing and storage capacity. High costs associated with power, cooling and complex maintenance can be reduced to create a greener IT environment. Key elements of an efficient data center include: 1. Intelligent infrastructure Focus on innovation throughout the infrastructure stack to provide virtual-ready infrastructure with built in intelligence to minimize operating costs. Set a goal to virtualize more than 50 percent of workloads and enable cloud-based delivery models. 2. Simplied infrastructure management Implement solutions that integrate all the tools and technology needed to manage and deploy physical and virtual data-center infrastructure, freeing up time by automating most basic maintenance tasks and eliminating management and technology silos. 5

Dell is partnering with MGM Resorts to create the Efficient Data Center and shift from IT maintenance to innovation. MGM Resorts, Las Vegas, now spends 75% of its IT time on innovation. Dell partnered with MGM to help them consolidate legacy assets gained through numerous acquisitions, assess their overall organization and help MGM quickly become an Efficient Enterprise. Dell helped MGM consolidate 55% of its physical servers into a virtual environment in six weeks, and reduced oor space requirements by 88%.

3. Streamlined application and workload management Rapid delivery of key services will make it easier and faster for IT managers to create images, deploy workloads to a mobile employee base and monitor the health of their networks. 4. Intelligent data management Automate data storage with a focus on matching data value with availability needs and storage costs. Lower costs and alleviate concerns about exponential data growth. The ultimate goal is to build an intelligent and automated infrastructure that reduces tasks and manual processes, and is managed more by policy than by people. Dell used these building blocks to develop a new data center architecture that exemplies the efficient data center, the Dell Virtual Integrated System (VIS). VIS is designed to provide an open, cross-vendor data center platform that allows server, storage, and networking assets to be managed as a common resource pool. IT managers can provision and automate infrastructure management at every layerphysical or virtual, using any hypervisor. VIS uniquely addresses the people and processes needed to efficiently operate a data center. For example, rather than having to request resources from separate server, storage, and networking teams, an application programmer looking to set up a test environment can select options from a catalog of available resources. Using VIS, the programmer can go to one tool and nd a workload similar to the desired workload that has been preloaded into an approved catalog of resources. After a couple of clicks, the infrastructure is automatically provisioneda process that takes minutes instead of weeks. VIS can then monitor that workload to help ensure that the provisioned infrastructure is sufficient to the task and meets the service-level agreement. If the workload was over-provisioned, the resources can be automatically redeployed for other purposes. Thats a very effective tool for increasing data center efficiency, and it is designed to work with the data center investments that an organization has already madein both Dell and non-Dell equipment. Data center efficiency in the Virtual Era will be dened by open systems, like VIS, that preserve choice and drive capability at every layer of the architecture. This approach enables innovation, quality, and price to all work toward competitive advantage.

The Efficient Workforce

In the Virtual Era, personal and professional personas mix, as personal applications for music, entertainment, and social networking, are expected to coexist with corporate networks and assets. Increasingly mobile employees demand easy-to-use devices to stay connected and productive. From PCs and tablets to RFID nametags and inventory labels, everything has the potential to have an IP address. IT organizations need the ability to manage the thousands of new endpoints, provide employee data access whenever and wherever desired, yet protect corporate data. Managing, tracking, updating, providing applications and data to these devices is a potential nightmare for IT organizations yet expected by employees. Many companies have experimented with allowing employees to work with their device of choice, but in large enterprises, this creates a very complex environment to maintain; there are just too many options to be managed. The approach that is gaining favor is to restrict the options to a manageable number of endpoint devices and implement Desktop Virtualization to enable device partitioning for user and company applications. Users can then use the applications and entertainment services they desire in their partition, while the organization can provide a consistent image with access to data resident on corporate servers. Mobile users stay productive while IT remains in control. Building the appropriate foundation for an Efficient Workforce requires three key steps: Match the correct technology to the appropriate user class: Organizations must identify their different user groups, and then select technologies designed to meet their particular needs. Investigate alternate computing architectures: Desktop virtualization and cloud computing offers effective ways to support employee needs while protecting corporate IP. Centralize client infrastructure management: Centralized asset management helps keep users up and running via the Internet. Dell is at the forefront of Virtual Desktop technology and Dell Services are available to help plan and implement efficient workforce technologies.

Recently AXA, a global nancial provider, worked with Dell to nd ways to increase their IT efficiency. Dell Services helped AXA identify manual processes for asset management and support services. By moving to a cloud based SaaS asset management solution and outsourcing its support desk to Dell, AXA has realized $50M in efficiency savings, has freed up its IT resources and changed its IT economic model for IT support and asset management to pay as you go.

The Efficient Cloud

Responding to Virtual Era opportunities and challenges requires highly scalable, dynamic, virtualized IT operations. The IT department must be a nimble service provider to the business as well as a strategic partner. In an era when users can provision servers outside the organization in minutes using credit cards, IT must become agileable to scale up and down and provision capabilities on demand. Embracing cloud solutions can help increase IT responsiveness and efficiency while enabling new models for delivering traditional IT workloads and minimizing capital expenditures. Software as a service (SaaS), a class of cloud solutions, can immediately solve targeted IT problems like email archiving and remote client management. SaaS solutions free IT management from daily operational headaches and can be up in running in as little as a day, and are designed to provide greater reliability and resiliency when compared with most in-house solutions. For organizations building Web applications, traditional development tools are being replaced by tools that address the demands of Web-based software. Cloud in a box platform solutionsalso called platform as a service (PaaS) can scale on demand and help meet Web performance and bandwidth requirements. These solutions are well suited for Web 2.0 and e-commerce environments, telecommunications and large service providers. Dell and Microsoft have also recently announced a strategic partnership that includes developing and deploying an appliance based on the Windows Azure cloud platform, enabling organizations to deploy their own private clouds. Dell has spent years collaborating with cloud leaders to provide best-of-breed cloud hardware. These designs are extensible and support both public and private cloud deployments. Custom-built cloud servers offer an optimized combination of density, memory, and serviceability while helping save on power, space, and maintenance costs, and additional solutions are available to help meet the graphics, storage, and networking challenges of Web 2.0 content delivery.

Evolutionary and revolutionary paths to enterprise efficiency

On the journey toward enterprise efficiency, IT organizations are faced with some tough decisions. For green-eld deployments and new business leapfrogging directly to cloud-based infrastructure and applications can provide the highest levels of efficiency. For most organizations this approach would be very disruptive and require abandoning signicant investments in current architectures. It is important that organizations have an opportunity to evolve from existing, traditional data centers to achieve efficiency gains on a timetable and investment schedule that meets their needs. Organizations will need to choose the right path based on their workloads and business drivers, and often the answer will be both and Dell is available to help with either path. But a word of caution is in order. When vendors talk of virtualization and cloud computing by embracing solutions that are integrated, simple, and unied, they make a compelling argument. But check carefully to see if key terms are missing from the discussion: interoperable, best-of-breed, and open. A closed, proprietary approach puts price at a premium and usually ends up in vendor lock-in. An open approach is based on industry standards, embraces choice and is affordable, capable, and uncompromised. The path to a converged, cloud-based infrastructure shouldnt be reserved for the select few. It should be accessible to every company, large and small. Its the oldest battle in the industry: standard and open vs. proprietary and closed. Open always wins. When a company elects to invest in a closed solution, its opting for OPEX savings without regard for CAPEX. Its betting that one provider will out-innovate the entire industry. Theres no need to compromise between openness and efficiency. A business can have both as it plots its course to the Efficient Enterprise.

Go beyond the status quo

Creating an Efficient Enterprise requires an organization to rethink IT, how it builds out its IT infrastructure, and ultimately how it spends its IT budget. The result will be IT innovation that helps drive business strategy, business agility and business value to help the company thrive, in any economy. Dells open, capable, and affordable solutions can help unlock an organizations fair share of the US$200 billion available through increased IT efficiency and improved business agility. As a rst step the Dell IT Efficiency Model (ITEM), a vendor and product-neutral assessment tool that helps comprehensively measure IT efficiency, is available from any Dell representative to gauge possible efficiency improvements. By embracing the Virtual Era, aligning IT with the business, and redirecting resources toward innovation, organizations can take the rst steps toward breakthrough competitive advantageand begin their journey toward becoming an Efficient Enterprise.