1 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Paul A. StrassmannProfessorGeorge Mason University
SessionTitle:Transformation of HP Information Technologies
WelcomeWelcome
to Transformation and Innovation 2007 The Business Transformation Conference
2 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
HP Transformation Program
-Reduce number of applications from 5,000 to 1,500.
-Reduce the number of servers from 19,000 to 10,000.
-Increase server utilization from 20% to 80%.
-Consolidate 100 world sites for IT development to 29.
-Consolidate 85 data centers to six.
-Build a data warehouse to be SOA accessible.
-Reduce I.T. workforce from 19,000 to 8,000.
-80% of staff on new projects, 20% on maintenance.
3 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
HP vs IBM Share Prices
HP
IBM
4 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
HP vs. IBM Revenues
1995199619971998199920002001200220032004200520060
10
20
30
40
50
60
70
80
90
100
HP
IBM
5 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Reduce Applications
Application Simplification
6 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Example of Application Simplification
7 78
6 6 3
22 2 2 2 2
6 66
6 66
43 3 2 2 2
9 98
5 55
55 3 3 3 3
7 77
7 77
74 4 4 4 1
11 1110
10 1010
4
3 2 2 2 2
11 98
8 66
6
5 5 5 5 5
10 108
88
7
7
7 6 6 6 6
21 21
15
1414
13
13
44 4 4 4
17 17
16
1616
16
13
132 2 2 2
16 16
15
1313
12
12
12
7 7 74
30 30
27
2727
27
5
5
2 2 22
24 24
24
2423
22
15
13
10 10 1010
0
50
100
150
200
CurrentFY06 - Q2FY06 - Q3FY06 - Q4FY07 - Q1FY07 - Q2FY07 - Q3FY07 - Q4FY08 - Q1FY08 - Q2FY08 - Q3FY08 - Q4
Training & Cert
Dashbd & Reporting
Prog adm/compens
Data Collection
Portal
Newsgram
Marketing Mgt
Datawarehouse
C&R - deal
P & S Catalog
Quote/Config
Mkt Dev Fund
Locator
Acct Mgt & P.
Profiling
Leads Mgt
Data cleansing/Std
stock protect
contract
A2A Integ
Pricing Comm
Content Publi.
Fraud Mgt
Rebate Comm
Control - EUV
C&R - promo
Portal Metric
Domain (All) Primary Y Region (All) Owner GCP
Count of Asset Name
Period
Capability
7 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Examples of Application Reduction
Consolidate personnel information systems into a single data base to be accessible from a portal.
Retire 84 procurement transaction systems into five.
HP portal offers capabilities for user-initiated inquiries.
8 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Standardize, Consolidate, Integrate
67 52 79 56 83 95
33 48 21 44 517
0%
20%
40%
60%
80%
100%
Low Commonality
High Commonality
Marketing Ops
SalesOps
OrderMgmt
Supply Chain
Finance HR
9 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Improve the IT Infrastructure
Reorganize the Information Infrastructure
10 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Data Center Consolidation
85 locations to three geographical zones;
Two sites per zone with total space ~400,000 sq ft;
Lower cost structure – eliminate redundant costs;
Each site designed for high availability, disaster recovery and business continuity;
Refresh to current technology.
11 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Data Center ConsolidationReductions Increases
60% retirement of
legacy applications
global applications
30% fewer servers
80% more processing
power
decrease in cost of storage
double the storage
half the cost of networking
30% more bandwidth
less HP IT cost
more capability
12 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Continuity and Disaster Recovery Zone A
Site – 1 Site – 2
Active
Dark
Active
Dark
Active
Dark
Active
Dark
Active
Dark
Active
Dark
Zone B
Site – 3 Site – 4
Active
Dark
Active
Dark
Active
Dark
Active
Dark
Active
Dark
Active
Dark
Business continuity
Disasterrecovery
Business continuity
Next generation data centers Next generation data centers
13 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Backbone Network
Servers connect to the network at 1 Gbps;
Network edge switches interconnect at 10 Gbps;
Routing handled at network level rather than at the host layer– No need for host routing tables;– E-service networks will have a direct routed path to internal
networks;– Host will be connected to either internal or external networks;
Intrusion Detection System in front of e-services environment;
Intrusion Prevention System in front of internal networks.
14 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Infrastructure PoliciesNo dedicated IP addresses; everything is Direct Addressing
Standard naming conventions used for all servers
All storage is shared; No dedicated storage
Business Continuity and Disaster Recovery is standardized
No regional application.
40% increase in use of shared services
Development and Testing in shared environments
Equipment provisioning to plan, not to future.
Applications transformed to operate globally and centrally
15 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Database Administration
• 20+ ways to manage databases• 20,000 database incidents/month• Dozens of weak monitoring methodsProcess
Technology
• Global and standardized processes• <850 database incidents/month• Two global monitoring solutions
• 3 database technologies• 6 releases/year • <1,500 database failures• <4,000 databases• Pooled/virtualized IT resources
• 17+ database technologies • 150+ point releases/year• 5,830 database failures• 14,292 databases• Standalone servers & storage
Current Planned
16 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Enterprise Data WarehouseLegacy applications = chaos Enterprise data warehouse = order
ContinuityConsolidationControlCollaboration
Single version of the truth
DataWarehouse
Production Control
MRP
InventoryControl
Parts Management
Logistics
Shipping
Raw Goods
Order Control
Purchasing
Marketing
Finance
Sales
Accounting
Management Reporting
Engineering
Actuarial
Human Resources
17 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Global Data
Integrated Global Views
Worldwide Orders DataWorldwide Service Data
Other Data
Enterprise Data Warehouse
Thousandsof worldwide feeds daily
Middleware
Data is complete and detailed
Define, model and map all data
Ensure all data has integrity
Provide complete access
Flexibility and scale
All data entered only once
18 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Standards
Standard servers and storage
Technology Standardization
Technology version harmonization
Increased virtualization
Load balancing, clustering, database mirroring
19 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Deliver Improvements
Measure Progress in Transformation
20 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
IT Budget
$3.04 $2.11I.T. Spending - $ Billions
HP - 2004 HP - 2008
21 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Example of Project Savings
22 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
IT Portfolio Scorecard
% Innovation vs. Sustaining
% Projects On Quality Target
Value-Added/IT Developer
Annualized Benefit ($B)
% On Time Delivery
Target PerformanceMetric
81% 90% 95% 98%
$150+K$250+K $350+K $450+K
80%75%60%
46%
90%85%65%
45%
$2.5B$2B
$1B
$3B
2004 2005 2006 2007
23 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Workforce Directions
•Build world-class IT workforce–Predominately HP workforce with increased productivity;–Reduce contractors from 11,000 to < 5,000;–New skill-sets based on shift from sustaining to innovation focus;–Increased collaboration; –Increased co-location from 100 to < 29 sites.
24 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Summary
HP Business Transformation case offers an opportunity to study performance improvement while costs are cut severely.
Cutting the number of applications becomes the driver for delivering performance and cost reductions.
Gains are primarily in freeing resources to shift from maintenance to innovation.
Case demonstrates the advantages of planned
centralization.
25 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
HP vs. DoD Budget Allocations
12%
38%
13%
37%
0%
9%
36%
54%
Available for Exploration and Agility
Application Innovation - RDT&E
Maintenance - O&M
Infrastructure
H-P (2008) DoD (2007)Distribution of I.T. Spending
26 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
DoD Transformation Comments
1,969,000
$30.6
151,000
$3.2
Staff
I.T. Budget - $Billions
DoD - 2007 HP - 2004
27 May 22-24, 2007
Washington Dulles HiltonThe Business Transformation Conference
Thank YouPaul A. StrassmannProfessorGeorge Mason University
Contact Information:[email protected]
Top Related