So, regardless of how demanding or finicky your CEO might be, I can guarantee three things he or she wants to find under the metaphorical tree this season: faster growth, higher margins and lower risk. Now, many IT are going to respond to this list by saying a) that someone else’s job and/or b) I can’t effect that stuff anyway. To response “A” I would argue that its everyone’s job. As far as response “B”, I would argue that you most definitely in a position to impact growth, margin and risk, but its a matter of connecting the dots.
One of the driving forces behind Data Center Business Advantage was to help the CIO and his/her organization link their IT investment to business impact. From my own personal experiences, I find that IT folks tend have a great handle on technical benefits (32% brighter and shinier) and operational metrics (five-nines uptime) but often fail to establish how they have made life better for the company: what is the difference between four-nines and five-nines in terms of revenue impact, customer sat, or regulatory policy exposure--and is the return worth the investment. Case in point: a couple of years ago, I come home with a new AppleTV. Now I am a geek at heart and my wife puts up with me showing up with a lot of new gear, so I have a pretty good idea of how this will play out with her:
- Question: “How much did THAT cost?”
- Muttering about growing up and finding better things to spend the money on like new curtains or cat beds
However this time, things looked a little different…
The conversation started as expected, but, while I was setting up the AppleTV, my wife realized she can now look at all of our family pics on the big screen TV in the living room instead of the computer upstairs and the AppleTV has transformed from a money pit into something that contributes to something she cares about and I am now looking like a genius! DC Business Advantage is about helping you make that transition, but with data center gear instead of home electronics--but hey, it could help you on the home front too!
So, how do you go about that? Well, the first step is to start thinking tying back your IT budget and your IT projects back to how they impact growth, margin and risk. In DC Business Advantage, we framed these in ways that are a little more IT friendly:
New Service Creation -- support growth by minimizing the time it takes to turn up new services, deploy new capabilities and address new customer needs
Profitability -- support margins by supporting revenue growth (the aforementioned new service creation) and lowering costs by reducing your data center total cost of ownership.
New Business and Governance Model -- reduce risk through new governance models and use lowered risk to support new business models’
And how does this translate to the real world? Pretty well. Let take a look at what Cisco IT has done on the first two. Some of you may have seen this data around Cisco IT’s migration from traditional infrastructure to our private cloud we call CITEIS.
Underpinning this transition are our Unified Fabric and Unified Computing technologies, which are the engines that drive the business results. So, if you look beyond the technical wizardry, what we really accomplished with CITEIS was a couple of things. First of all, we delivered significantly faster deployment of VMs--from about 6-8 weeks for a physical server to about 15 minutes for a VM. End-to end, it is still about 2-9 days, but by the time CITEIS is complete, it will be 15 minutes end to end. So, why should the VP of Sales care about this? Well, IT no longer the gating factor in deploying the new services and applications that will fuel a company’s growth--that is what we mean by “the power to say yes”. The second benefit of this provisioning model is that it let’s you run a much leaner provision model--you don’t have to over provision to deal with transient demand or as a strategy to deliver better responsiveness. This means you are buying less gear up front and reducing operating expenses related to power, cooling, space etc for underutilized or idle gear. The business benefit of that I’ll get into in the next couple of paragraphs.
The other benefit is reduction of TCO--in fact, we have gone from ~$3,700/instance/qtr to ~$1200/instance/qtr and we will continue to drive it lower with subsequent phases of CITEIS. If you look at the TCO reduction we have discussed in the last couple of paragraphs, one option is to some portion of the savings back to the company. Since most data centers are run as cost-centers, the reduction of that expense category is going to translate to better profitability. Its also important to note that the TCO reductions are long-term--they come from sustainable capex and opex reductions.
The other benefit of TCO reduction is that it frees up budget for innovation and investment in the data center. When Cisco IT started the CITIES project, roughly 70% of the data center budget was committed to supporting the existing infrastructure -- leaving just 30% for investment and innovation--not very much. At this point in the CITEIS project, Cisco IT has almost completely inverted that ratio--only 40% of budget is committed to care and feeding, which frees up the remaining budget for investment and innovation. This is a key shift because it creates an opportunity to shift the relationship of IT with the rest of the company. With a meaningful innovation budget, IT can take a leadership role is advocating IT-led transformation--changing how the company operates (handles growth, margin and risk) and interacts with customers.
So look for follow-up posts that dig into these concepts further--especially the transformation angle, since its fresh territory for many folks. And, if you happen to be in Las Vegas this week for Gartner Data Center, swing by the Cisco booth--would love to chat.