Reconfiguring The Enterprise

One On One
Reconfiguring The Enterprise
Ed Sperling, 08.31.09, 6:00 AM ET
CIOs have some of the largest budgets in any company, but they're going to be spending it far differently coming out of the recession than going into the downturn.

At least part of the money will be spent on cleaning up the complexity and standardizing on new platforms, and delivering technology throughout the enterprise in different ways. And some of it will go into consolidating what's already there. To find out what's changing, Forbes sat down with Steve Schuckenbrock, president of Dell's large enterprise systems unit.

Forbes: What are you seeing as the big challenge for CIOs?

Steve Schuckenbrock: The overriding issue is the economy. Given that, CIOs are at one of two stages. Either they've gone to hunker-down mode where they've nixed everything, or they're investing sparingly in new projects that drive value for their businesses or that provide cost savings. Four or five months ago, the majority of CIOs were just in the hunker-down mode. Now, especially in the U.S, more of the CIOs are in the second category.

Is cloud computing part of that shift?

There's much more interest in cloud computing than there was six months ago. There's certainly more of a move toward hosted e-mail, which is a mission-critical application today. In the CRM space, Salesforces.com has done a fabulous job and people have grown increasingly comfortable with the ability to serve that through the cloud. There are some other niche plays, too. But nothing has gained enough speed to shift a high percentage of the infrastructure and applications in that direction.

Does that mean Dell is selling more servers into cloud providers?

There's no question about it. But when I look at the types of applications those cloud providers are enabling, search is huge, along with e-mail. Office automation, particularly Microsoft's Azure, is where we're selling a lot of servers and storage. But for critical business applications, it's a pretty big step from Salesforce.com to the next one. There's a lot of evaluation under way, but there isn't a ton of traction yet in those big mission-critical spaces.

What else can CIOs do to drive down their costs?

The economics of replacing old hardware with new hardware are pretty good. But the real gains are in rationalization of your applications. How many thousands of applications do you need to run the company? Are there alternatives to which you can migrate users instead of retaining so much redundancy? At Dell we had the same problem. I used to run IT here. We had 10,000 applications; we've brought that number down by about half, and by the time we're done, we'll bring it down into the hundreds.

What did that do for your hardware needs?

We've turned off 10,000 physical servers during the past 12 to 18 months and we've virtualized about 30% of the x86 infrastructure. That's what many CIOs are doing now--rationalizing applications; consolidating and standardizing their infrastructure, which could include modernization of hardware; and virtualizing everything. Virtualization has been incubating for awhile. It's moving from the experimental stage to becoming the norm.

How prevalent is this infrastructure standardization?

What happens in these cycles is that in good times we get sloppy and we allow people access to develop their own things, run it on their own servers and hook it into their own databases with their own analytics. All of that sounds great because it gives you the perception of speed. Then you find out you've got thousands of those, your servers are 15% utilized, you've got 10 different technologies in the stack, and while you've picked up some speed in the short term, every new idea is now a complicated integration project to bridge multiple, disparate things.

What's the best-case solution?

It's a combination of rationalizing applications, consolidating it to one set of tools and processes. I'm a big fan of what ITIL [Information Technology Infrastructure Library process framework developed at Carnegie Mellon University] is doing to our industry, and then standardizing the infrastructure as much as possible. That doesn't mean everything will always be served on one platform. In some companies it might be one, in others it might be two. But two is better than five, and five is better than 10.

Why is ITIL important?

It drives standardization of process and tools to manage that process, allows more labor efficiency, and gets things done. Our industry is moving forward toward that kind of a manufacturing six-sigma-type of orientation.

For a long time, performance was the driver for the enterprise. Then it became power. Where are we now?

It all comes down to cost. Green is all about cost, too. It's great for the environment, but it's still about cost. That's what it has always been about. Our industry is providing unbelievable performance for the price on industry-standard x86 platforms.

Is performance still a driver?

Performance is not the bottleneck anymore. With the [Intel] Nehalem chip we're able to combine nine physical servers into one. That's eight fewer software licenses, maintenance contracts and footprints and a lot less power. Performance is not the issue; it's optimizing the cost everywhere. Two Nehalem servers provide the capacity of almost 20 machines.

What's the next big driver for the CIO?

We think the industry spends about $1.2 trillion on infrastructure. Of that, roughly 20% is the hardware, another 10% is the network and the remaining 70% is labor and software. When you look inside a lot of data centers and realize they have hundreds of system management tools and different hardware and software platforms that need to be maintained, upgraded and managed, and then all of this has to be integrated. Then the next big wave will be the simplification and standardization of the infrastructure and a massive reduction of labor and software costs. That is the richest area for innovation, and that innovation will come in the form of systems management tools delivered through the cloud as opposed to standard software license mechanisms. It also will come from management services that are delivered remotely and through a fixed cost structure, rather than the variable cost structure caused by all the complexity. That will allow the labor and software component to be dramatically reduced.

As the economy rebounds is there any difference in terms of what kind of equipment companies are buying?

That's less of an issue than it was 10 years ago, because x86 is a standard. It's the only platform in the industry that's growing, and that's been true for years. Performance continues to raise the bar in application spaces where it has never been before. If you poll CIOs and ask them what they would do in a "green-field" scenario, they would all start with x86 running either Linux or Windows. And as the industry consolidates, the protection for customers is the open standards of the infrastructure.

Will the shift to mobile Internet devices be incremental, or is it similar to what happened with notebooks vs. desktops?

Today it's in addition to what is already there. But when you look at a netbook and a laptop, it's hard to say whether that space will converge into one thing. Is the netbook just a little laptop? When you look at the user experience, a 13-inch screen is ideal for portability and usability. When you get down to a 9-inch screen, portability is great but usability isn't as good. These new technologies will continue to mature and we'll get great battery life, but if you're going through a 75-page PowerPoint presentation and making comments, you want a bigger screen and a bigger keyboard.