ESG IT Audit Validates EMC’s Remarkable Cloud Transformation

It’s official. EMC IT has achieved tens of millions of dollars in savings as well as huge leaps in agility and productivity over the last nine years on its journey to the cloud.  In a newly released audit report evaluating EMC IT’s cloud transformation, IT analyst firm Enterprise Strategy Group Inc. (ESG) concluded “the results that EMC has achieved are truly stunning.”

The results include $66 million in operating expense savings, $157 million in capital expense avoidance, an 88 percent increase in productivity, a nine-fold increase in agility and a 100-million-pound reduction in CO2 produced over the past nine years. And while we were making those strides, EMC grew its revenue from $8.2 billion to $21.7 billion. (Read the ESG IT Audit Report:

The ESG report, updating its two earlier IT audits in 2009 and 2010, is concrete validation of the cumulative results of the ongoing evolution of our cloud-based IT business model. The optimization of our infrastructure in and of itself— in terms of virtualization, standardization, consolidation and tiering—delivered tremendous financial benefits to the company. One project called out in the report is EMC’s new deployment of a fully virtualized SAP ERP system on Vblock converged infrastructure.

The resulting financial benefits from our cloud optimization have allowed us to not only save money but to actually move the needle upward on the percentage of our budget that gets allocated for new innovative capabilities as opposed to just keeping the lights on. That means the cost savings have been leveraged, not only into margin improvements, but we have also been able to deliver new capabilities at a faster rate than before.

EMC IT Transformation Results v1
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The ESG report also validates the benefits EMC has gained from pursuing our IT journey beyond infrastructure optimization, to create a business model and an organization that is in tune with service-based IT operations. If we had stopped at the optimization of our infrastructure, there certainly would have been benefits to that, but we wouldn’t have gotten the full financial power and agility gains that are articulated in this audit.

Our increased business agility, for instance, is in part enabled by an IT-as-a-Service (ITaaS) model where business consumption requests can be quickly fulfilled through efficient IT production, enabled by an IT engagement process that endeavors to satisfy consumption rather than discourage it. (Read An IT-As-A-Service Handbook: Ten Key Steps On The Journey To ITaaS.)

And while our cost savings and cost avoidance are tremendous achievements, we shouldn’t lose sight of another significant optimization gain – saving time and enhancing agility for our business units. While costs are always the easiest thing to measure and tend to attract a lot of focus, we have also made substantial reductions in provisioning time, time-to-value and time-to-market as a result of our cloud journey. In fact, I think the thing we should be proudest about at this point in our transformation is that we’ve not only reduced cost, but we’ve also improved the speed and quality of service delivery for IT.

When we talk to our internal customers about their needs, oftentimes it isn’t cost they single out as their top issue, it’s time. In fact, time-to-market is such an overriding issue for our business units that if we had just focused on cost improvements without providing time-to-market benefits, we could have ended up with a very efficient platform that no one would use.

The key components of our ITaaS model—creating operational and financial transparency to share with business users what the IT services they consume cost, what capabilities and value they derive from using them and establishing the financial management disciplines to support that, along with adopting a marketing and product-management mindset—have been crucial to our success. We are proactively addressing customer needs through an enterprise service strategy, instead of waiting for customers to ask for a service and then designing and building it.

We learned as we were going through this journey that it wasn’t a technology-only play. EMC IT required significant transformational shift from a people perspective and a business process perspective. These were big enough challenges that they couldn’t be reduced to Gantt charts or punch lists. They included things like getting a project-focused organization comfortable with adopting a product lifecycle approach, and orienting our management and financial teams to a financial management model that more closely resembles a P&L than a cost center. We learned the value of marketing, selling and promoting our ITaaS offerings, and the key role that user experience and branding play in shaping perceptions amongst existing and future customers.

We also learned that the organizational and process changes needed to enable ITaaS should not be underestimated and that having consulting assistance is a tremendous help.  For EMC IT, things like agreeing on a service taxonomy across the organization and mapping how the organization would evolve to align to new services turned out to be more difficult and time-consuming process than expected.  Fortunately, EMC Consulting worked with us side-by-side to resolve such challenges throughout our journey.

One important element of ITaaS that is not fully reflected in this latest ESG audit is the benefit of automation and self-provisioning. While some of our services are automated, we have much more work to do. As we automate more, we will see continued improvement in the speed and quality of service IT delivers. The ultimate goal is having every service be fully automated and instantaneously provisionable….within reason!

As ESG notes, “The lessons learned from EMC’s IT transformation provide a blueprint from which any organization can benefit.” We are glad to share our experiences with your organization to make that blueprint come to life.

As for our ongoing journey, we will continue to mature our business model and make sure it works optimally. From an ITaaS offerings perspective, we have good foundational services in place and can now start to work up the stack on more sophisticated offerings that address key use cases. Those offerings will likely feature the Big Data and mobility components so important to today’s IT users.

As we deliver those services to the business, we expect to further improve their time to value, further increase their agility and enable them to get products to market faster. As ESG points out, each step along the way of this transformation leads to new opportunities and we intend to continue innovating and uncovering new business value as we move forward on our journey.

About the Author: Jon Peirce