CIO March 15 2010 Issue by Sreekanth Sastry

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From The Editor-in-Chief

The CIO Staffing Survey 2010 reveals that last year, attrition within IT

Outsource Attrition Recruit. Groom. Retain. Source?

departments averaged about 17 percent. Being the conservative sort of chap I am, I estimate that this year, given the resurgent economy, that figure will be in the range of 30 percent. In a few verticals, I am already seeing CIOs lose key staffers ahead of the appraisal cycle that kicks in this month. So how are you going to tackle this situation? A couple of years ago market research firm Gartner had suggested that attrition (of between 15 to 20 percent then) was driving Indian organizations to choose outsourcing. In fact, Gartner forecast that the Indian IT Services market will grow to $10 billion (about Rs 45,000 crore) by 2011. Wow. That’s some number. I’ve heard arguments to this effect earlier. I’ve also been informed that the only way CIOs can Is outsourcing a tool combat attrition at junior levels is to to better tackle attrition outsource all non-value add activities. or to acquire skill sets, A CIO from the manufacturing vertical build capacity and was clear: “Outsourcing is good, because cut cost? one need not invest in certain skill sets. Low-end roles like facilities management are easy to outsource, so also high-end skills where training and retention may become an issue.” A couple of our Governing Board CIOs had a contrarian view on this though. “Internal churn is not the primary factor for considering outsourcing, however it is one of the contributors if attrition becomes unmanageable,” pointed out one. Another CIO was even more specific that outsourcing should be viewed as another tool in the IT department’s arsenal. Thus, he said, organizations should outsource to acquire a new capability, ramp up capacity, increase agility and cut costs. Both added that even with an outsourcing relationship in place, IT teams should look for performance improvement, knowledge acquisition and retain a firm control on long-term planning. Not too much talk of combating attrition, huh? Upon my asking whether it was easier to outsource all activities that didn’t require domain expertise, the Bharti-IBM relationship was evoked. This alliance has challenged what in an organization is core and what isn’t. What was now being defined to me as the ‘core’ of the IT-business interface covered the ‘design of the service model for best delivery of IT services, the technical architecture and governance mechanisms.’ Do you agree with our Board members on this? How do you look at outsourcing?

Vijay Ramachandran Editor-in-Chief vijay_r@cio.in

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content MARCH 15 2010‑ | ‑Vol/5‑ | ‑issue/05

Ten IT leaders listened to the call of their businesses and came through with projects that impacted their enterprises in a way that’s hard to beat: They made a dent into the bottom line.

Business Leadership

Deep Dive

COvER stORY mOnEY mIntERs | 24

I P hoto by dat ta kUMbhaR

Tired of the IT-is-a-cost-center refrain, some CIOs are making their presence felt where it counts the most: team CIO the bottom line. Feature by t

IT Management

PLUs:

mOnEY mAkInG mOvEs | 42

CoVER: d ESIG n by MM Shan I t h

IT is a great resource for competitive advantage. But to get that edge, CIOs and their teams need to learn to play the business game. Feature by Diann Daniel CIO Leadership summit season 2 |

ACCELERAtInG GROWth

Industry leaders tell you how to tweak your system and influence your peers during this period of growth. more » 4

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DAtACEntERs | 59 With ever more computing power being crammed into datacenters, problems are starting to crop up everywhere. Here’s how you can simplify your datacenter.

tECh tEAm’s GREAtEst EnEmIEs | 54 How to spot — and take down — the six most nefarious adversaries of IT. Feature by Dan tynan t

Cloud Computing PRIvAtE AnD COnFIDEntIAL | 46 Private clouds are efficient, cost-effective and unlike public clouds, keep data within boundaries. But is there a downside? Feature by mark Everett hall

more » Vol/5 | ISSUE/05

content

Thrive | 88 Social Networking | Don’t Get Blogged Down

Feature by Kristin Burnham

Mentor | 90 Project Management| Recipe for Success

Column by Sanjay Jain, WNS Global Services

From the Editor-in-Chief | 2 Outsource Attrition

By Vijay Ramachandran

NOW ONLINE “Only 11 percent of students in India get higher education. IT can play a significant role in increasing that number,” says Anand Sudarshan, MD and CEO, Manipal Education.

For more opinions, features, analyses and updates, log on to our companion website and discover content designed to help you and your organization deploy IT strategically. Go to www.cio.in

c o.in

Executive Expectations View From The Top | 50 Anand Sudarshan, MD and CEO, Manipal Education, says IT can play a transformational role as the fast-growing educational sector opens up new frontiers.

Interview by Sneha Jha and Shardha Subramanian

IT Career Look Before You Launch | 20 Just because the economy is up, isn’t good enough reason to change jobs. Column by Adam Lawrence

marc h 1 5 , 2 0 1 0 | REAL CIO WORLD

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AdverTiSer index PublIShEr louis d’Mello EDITOr IA l EDITOr-IN-ChIEF EXECuTIVE EDITOr (COMPuTErWOrlD) ASSOCIATE EDITOr (ONlINE) FEATurES EDITOr COPy EDITOr COrrESPONDENTS

Vijay Ramachandran

Gunjan trivedi t kanika Goswami Sunil Shah Shardha Subramanian anup Varier, Priyanka, Sneha Jha, Varsha Chidambaram PrODuCT MANAgEr ONlINE Sreekant Sastry CuSTOM Pub l IShINg ASSOCIATE EDITOr arakali a harichandan COPy EDITOr kavita Madhusudan COrrESPONDENT deepti balani DES IgN & PrODuCTION lEAD DESIgNErS Girish a V, Jithesh C.C Vikas kapoor, Vinoj kn SENIOr DESIgNErS Jinan k V, Sani Mani DESIgNEr M M Shanith PhOTOgrAPhy Srivatsa Shandilya PrODuCTION MANAgEr t k karunakaran Dy. y. PrODuCTION MANAgEr Jayadeep t k y EVENTS & AuDIENCE DEVE lOPMENT VP Rupesh Sreedharan SENIOr MANAgEr Chetan acharya MANAgErS ajay adhikari Pooja Chhabra MANAgEr PrOjECTS Sachin arora MArkETINg & SA lES (NATIONA l)

PrESIDENT ESIDENT SAlES AND MArkETINg VP ClIENT IENT MArkETINg VP SAlES gENErAl MANAgEr SAlES Sr. MANAgEr ClIENT IENT MArkETINg ASST. T. MANAgEr MArkETINg T ASST. SST gM brAND SST. ASST. T. MANAgEr brAND T ASSOCIATE MArkETINg AD SAlES CO-OrDINATOrS

Sudhir kamath alok anand Sudhir argula Parul Singh Rohan Chandhok Sukanya Saikia Siddharth Singh disha Gaur dinesh P hema Saravanan C.M. nadira hyder

rEgIONA l SA lES bANgAlOrE ajay S. Chakravarthy kumarjeet bhattacharjee Manoj d DElhI aveek bhose, Mohit dhingra Prachi Gupta, Punit Mishra MuMbAI dipti Mahendra Modi hafeez Shaikh, Pooja nayak Rajesh Punjabi

All rights reserved. No part of this publication may be reproduced by any means without prior written permission from the publisher. Address requests for customized reprints to IDG Media Private Limited, Geetha Building, 49, 3rd Cross, Mission Road, Bangalore - 560 027, India. IDG Media Private Limited is an IDG (International Data Group) company.

Printed and Published by Louis D’Mello on behalf of IDG Media Private

Amercian Power Conversion

7, 18 & 19

Quest Software

Ctrl S Datacenters Ltd

SAS Institute (India) Pvt Ltd

Emerson Networks Power(I) Pvt Ltd

Sify Technologies Ltd.,

Epson

Socomec UPS India Pvt Ltd

Extreme Networks

Symantec

Trimax

49 BC

hP Enterprises

Tulip Telecom Ltd

hP PSG

Tyco Electronics Corporation I Pvt Ltd 43

IBM India Pvt Ltd

IFC & 1

Interface Connectronics Pvt Ltd.,

Krone Communications Ltd

Lenovo Net App

Corrigendum In our February 15, 2010 issue, Geometric was inadvertently run as Geometric Software. the error is regretted.

IBC 11

This index is provided as an additional service. The publisher does not assume any liabilities for errors or omissions.

Form IV Statement of ownership and other particulars about the magazine Real CIO World, as required to be published under Section 19-D Subsection (b) of the Press and Registration of Books Act read with Rule 8 of the Registration of Newspapers (Central) Rules) 1956. Place oFF PublIcatIon: PerIodIcIty oF PublIcatIon: PrInter Name: Nationality: Address: PublIsher Name: Nationality: Address: edItor Name: Nationality: Address:

‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Monthly Louis D’Mello Indian ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Louis D’Mello Indian ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Louis D’Mello Indian ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka

Names and addresses of individuals who own the magazine, and partners or shareholders holding more than one per cent of the total capital: IDG Media Pvt. Ltd Geetha Building, 49, 3rd Cross, Mission Road, Bangalore 560027 I, Louis D’Mello, hereby declare that the particulars given above are true to the best of my knowledge and belief.

15 March 2010

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Limited, Geetha Building, 49, 3rd Cross, Mission Road, Bangalore - 560 027. Editor: Louis D’Mello Printed at Manipal Press Ltd., Press Corner, Tile Factory Road, Manipal, Udupi, Karnataka - 576 104.

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new

hot

unexpected

APAC Bosses Cheer for Growth Asia Pacific CEOs are more confident than they were last year about immediate and long-term economic growth, according to PwC’s 13th annual global CEO survey. Indicating that the worst of the global downturn is behind them, 82 percent of Asia Pacific CEOs are confident of growing revenues during the next 12 months, almost identical to the global average of 81 percent, said PwC. This is a stark contrast to 2008 survey results, where only 66 percent of Asia Pacific CEOs felt this way. Underpinning this optimism is a belief that Asia will be the center of economic growth in a new world order. "The sense of optimism is especially keen in Asia, which will undoubtedly be a center of growth in the new world order. To capitalize on this, Asia Pacific CEOs must remain focused on their long-term prospects despite the global changes

S u rv ey

and challenges that the downturn has brought,” said PwCs' Global International Chairman Dennis Nally. Globally, the majority of CEOs (82 percent) are expecting to grow their businesses in Asia in the next 12 months, said PwC. Although Western Europe is currently the most popular region for an acquisition at 53 percent compared to 42

percent for Asia Pacific, this is expected to change very quickly over the next 12 months, said PwC, adding that Latin America is the next investment region of choice at 75 percent. Leadership and talent development is a key area (75 percent) in which Asia Pacific CEOs will focus their long-term investment decisions, according to the survey results. However, the crisis has also caused CEOs to be more prudent about their spending with initiatives to realize cost efficiencies coming in highest (84 percent), said PwC. Despite the focus on cost savings, almost 50 percent of CEOs expect to increase headcount over the next 12 months, while only 16 percent expect to reduce headcount, the firm added. Despite a challenging past year, 47 percent of APAC CEOs indicate that they have in place a strategy to respond to climate change. — By Computerworld Hong Kong Staff

Quick take

Ashu Gupta on Domain Expertise There’s increasing pressure on CIOs to take on a strategic business role if they want to stay relevant. It doesn’t matter which side of the table they are on, IT leaders are expected to know the nitty gritties of their respective industries. The question is: while domain expertise helps, does it limit a CIO’s career? Sneha Jha spoke to Ashu Gupta, VP-IT, Canara HSBC Life Insurance, to find out what she thinks.

IllustrAtIon By MM shAnIt h

SkillS

Do you think domain knowledge is vital for a CIO? Why? Domain knowledge is certainly a valuable asset. It helps CIOs innovate and exploit growth opportunities. Without it, CIOs struggle to communicate with IT consultants, who may have little understanding of their domain. It's also harder to communicate with business heads who have a deeper understanding of their sectors. Then shouldn’t other CXOs also have IT knowledge? The CIO may be familiar with the intricacies of

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technology but other CXOs make the final call on whether a project is worth investing in or not. This means business heads really need to know about technology to feel confident in their decisions. Doesn't such a focus on domain expertise make it hard for CIOs to jump verticals? Yes because different industries require different kinds of CIOs. Rather than being the expert on 'how', CIOs should focus on the 'what and why' of aligning business processes with IT. Although a CIO can change his position in the same industry, shifting to a completely different industry is not advisable.

Ashu Gupta

What are the skills that can help CIOs excel in their domains? Understanding the customer is important. And to do that, CIOs need to have a bird’s eye view and the ability to drill down where necessary. reAL CIo worLD | m a r c h 1 5 , 2 0 1 0

How Do You Ensure Agility in Your Enterprise? CIOs play a critical role in building a nimble organization: one that can respond to changing business imperatives. Being the IT head, a CIO is uniquely positioned to provide his organization with flexibility and agility in a dynamic environment. Sneha Jha spoke to your peers to find out how they infuse agility into their organizations.

Agility

“I keep business processes simple.

trendlineS

From the stage of designing IT systems, we focus on simplicity and flexibility so that they are tuned to the changing business requirements. We also run a BPR exercise before designing IT systems.” k.r. bhat GM-It, nABArD

"We have leveraged our applications to build intelligent reports so that well-informed decisions can be taken. This improves agility with respect to inter-departmental functioning. " pratap GharGe DVP & CIo, Bajaj electricals

"We ensure agility in our enterprise, by encouraging people to think laterally and to come up with

innovative solutions." SabYa Y Sachi Ya thakur CIo, AIoCD

Lend Your

Voice

Write to editor@cio.in 10

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Out of the Mix There's probably no greater indication of a CIO's strategic importance to his company than what happens at the time of a merger or acquisition: Is the CIO a key player during pre-deal negotiations and analysis? Is his expertise sought on whether back-office IT consolidation will be able to produce the desired synergies? Does the board ask for his risk analysis on whether key ERP, CRM, BI or supply chain systems will be harmonious or disastrous? Or is the CIO relegated to afterthought status, as in the CEO wondering: "I guess we should ask Gene if he can actually pull this off?"— after the deal has been consummated. Unfortunately, even in 2010, when businesses know fullwell how critical IT is to their success, the latter scenario happens more often than not. That's according to a new Forrester Research report, A CIO's Guide to Merger and Acquisition Planning. With a few exceptions, CIOs are still playing the part of Cinderella at the M&A ball, relegated to mop-up duties, writes analyst George Lawrie. And IT's presence typically vanishes like Cinderella's pumpkin. Strategic M&A expertise has long been a skill set desired by CEOs and most needed by CIOs. As global financial markets continue to improve, companies are likely to see new corporate restructuring initiatives and "distress investing" strategies, notes Lawrie. IT's presence during such significant proceedings seems appropriate and smart. And yet IT leaders interviewed by Forrester for the report say that "the deal team, in any corporate restructuring, often omits significant IT involvement until the deal is closed." Lawrie contends that too many businesses "take IT integration lightly." One executive interviewed for the report, Lawrie adds, "estimated that the potential benefit of post-merger IT harmonization delivering common processes and systems was up to 10 percent not merely of operating cost but of operating profit, a truly huge impact on shareholder value for his firm." "Although their ugly stepsisters in finance and line-ofbusiness leadership usually banish CIOs from the glamour of the M&A pre-deal ball," Lawrie writes, "they still expect IT to sweep up on deal day plus-one." To augment shareholder value, restructuring must reduce operational expenses. Typically, CIOs will have some form of inventory of IT assets and skills from the firm being acquired. However, most CIOs have too little detail and insufficient support to develop a practical integration program before the deal is closed. But this doesn't stop line-of-business colleagues from asking them to undertake the unknown amount of integration work with the staff they already have.

BuSineSS iSSueS

— By Thomas Wailgum

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A Snapshot from 2012 M a nag e m e n t Gartner announced key predictions that it claims will change the nature of business today and beyond. Here are some of the top predictions: By 2012, 20 percent of businesses will own no IT assets. Several inter-related trends are driving the movement toward decreased IT hardware assets, such as virtualization and cloud-enabled services. The need for computing hardware, either in a datacenter or on an employee's desk, will not go away. However, if the ownership of hardware shifts to third parties, then there will be major shifts throughout every facet of the IT hardware industry. For example, enterprise IT budgets will either shrink or will be reallocated to more-strategic projects; enterprise IT staff will either be reduced or reskilled to meet new requirements.

trendlines

By 2012, India-centric IT services companies will represent 20 percent of the leading cloud aggregators in the market (through cloud service offerings). India-centric IT services companies will leverage established market positions and levels of trust to explore non-linear revenue growth models (which are not directly correlated to labor-based growth) and working on interesting research and development (R&D) efforts, especially in the area of cloud computing. The collective work from Indian vendors represents an important segment of the market's cloud aggregators, which will offer cloud services. By 2012, Facebook will become the hub for social network integration and Web socialization. Through Facebook Connect and other similar mechanisms, Facebook will support and take a leading role in developing the distributed, interoperable social Web. As Facebook continues to grow and outnumber other social networks, this interoperability will become critical to the success and survival of 12

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By 2012, Indiacentric IT services companies will represent 20 percent of the leading cloud aggregators in the market. The collective work from Indian vendors represents an important segment of the market's cloud aggregators. other social networks, communication channels and media sites. By 2014, most IT business cases will include carbon remediation costs. Today, server virtualization and desktop power management demonstrate substantial savings in energy costs, and those savings can help justify projects. Incorporating carbon costs

into business cases provides a further measure of savings, and prepares the organization for increased scrutiny of its carbon impact. In 2012, 60 percent of a new PC's total life greenhouse gas emissions will have occurred before the user first turns the machine on. Progress toward reducing the power needed to build a PC has been slow. Over the course of its entire lifetime, a typical PC consumes 10 times its own weight in fossil fuels, but around 80 percent of a PC's total energy usage still happens during production and transportation. Gartner research predicts that by 2014, there will be a 90 percent mobile penetration rate and 6.5 billion mobile connections. Penetration will not be uniform, as continents like Asia (excluding Japan) will see a 68 percent penetration and Africa will see a 56 percent mobile penetration. Although not every individual with a mobile phone or Internet access will transact electronically, each will have the ability to do so. â&#x20AC;&#x201D;By Computerworld Hong Kong staff

What You Need to Be

Indian CIOs think that longterm strategic thinking and planning is the most critical competency to be CIO.

Long-term strategic thinking and planning 52% Expertise in running the IT function 25% Team leadership 20% People development 12% Collaboration & influence 12%

Source: CIO India Research

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Credit

CrunCh

Worldwide spending on It will continue to feel the effects of the global recession throughout 2010. According to a new forecast from IDC, worldwide It t spending will increase by just 3 percent in 2010 at constant currency. "Despite pent-up demand for upgrades and new applications following the deep spending cuts of the past year, economic uncertainty will combine with capital and credit constraints to inhibit spending in mature economies," said stephen Minton, VP of Worldwide It t Markets and strategies at IDC. "the engine of global industry growth in 2010 will be in emerging markets, in particular China and India, where It t spending will recover much more quickly." "Following a decline in overall tech spending of 4.5 percent at constant currency in 2009, It t spending will not fully recover from the global recession until sometime in 2011," Minton noted. IDC's forecast of 3 percent growth in worldwide It t spending is at constant currency, and does not assume future fluctuations in the value of the us dollar or other international currencies over the next 12 months. Asia/Pacific: overall, the region will experience 6 percent growth in It t spending, following a 1 percent decline in 2009. however, China and India are both expected to experience double-digit growth (11.5 percent and 13.5 percent, respectively) this year. Following a decline of 8 percent last year, no It spending growth is forecast for Japan this year. EMEA: Following a worst-ever decline of 7 percent in 2009, It t spending in Western europe is forecast to be effectively flat in 2010. A few market segments are expected to return to positive growth, but the market sentiment across the region remains weak. In Central and eastern europe, the 20 percent spending crash of 2009 will be followed by 9 percent growth in 2010. North America: the gradual economic recovery will enable many us organizations to relieve some of the pent-up demand for system and network upgrades following last year's spending cuts. But spending will continue to be cautious and, in contrast to the emerging markets, the sMB sector will struggle to fund new It t initiatives. In Canada, a subdued market is forecast to produce a decline of 1 percent in It t spending this year. it

avatars of

Geekdom trendlineS

C i O r O l e In the workplace you'll generally meet three kinds of personalities: Type A, Type B, and Type IT. The last are a breed apart from the rest. We've identified the eight classic personality types you'll find in virtually any reasonably sized IT department.

the emptY Suit (Department manager, business analyst) Profile: Hired to be a liaison between top-level management and the techies — with whom top-level management, or anyone on the business side, would rather not deal directly. Acts as a go-between during client visits to keep the geeks at a safe distance. Has memorized most of the important acronyms and mastered the art of nodding knowingly in meetings and then surfing Wikipedia afterward to find out what everyone was talking about. the roadbLock (Software developer, enterprise architect) Profile: No matter what task or project is presented, this guy responds in exactly the same manner: It can't be done. This is then followed by a painfully detailed list of all the reasons why this task or project will cost too much, deliver too little, and can't be implemented in anything resembling the proposed time frame. And, oh yeah: It was a stupid idea to begin with. the promiSer (Outbound sales, business development) Profile: There is nothing this person won't say to close a deal. You want features the original product was never designed to deliver? Done. You need it within six months? He will get it to you in three. Of course, he or she doesn't have to deliver anything — that's a job for the developers. Delays, cost overruns, and impossible feature-set requirements are all someone else's headache. the Shadow (Unknown) Profile: It's not my problem, it's not my job, it's not my fault — that's the mantra of the Shadow, who somehow manages to take up space in the IT department (and on the payroll) without actually filling it. No one's sure what the Shadow does, mostly because he or she has become expert at doing as little as possible. —By Dan Tynan 14

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Budget

— By Channelworld staff Vol/5 | I ssue/05

Security Challenges in the Making We gathered some of the industry's best known security pros in search of insight on what the current months will bring. Here are the opinions of Howard Schmidt, former eBay CISO and vice chairman of the President's Critical Infrastructure Protection Board; and ICSA Labs, a vendor-neutral testing and certification lab for hundreds of security companies.

t h r e At S

will be the tipping point as to much wider adoption in all sectors. The overall net effect will give us a better chance to develop more security in the cloud using better vulnerability reduction and strong authentication.

trendlineS

Malware Goes Mobile. Malware for smartphones will escalate as more apps are provided that enables users to do more things related to e-commerce. Given that many end users feel less vulnerable on their mobile devices, it could be a steep learning curve to convince them that they need to take similar protections as they would on their PCs. The Cloud as Security Enabler. While we have been doing some form of cloud computing for more than 10 years, 2010

Software Will Be Tested — For Real. Procurement actions will require more robust testing of software to ensure significant reduction of many of the vulnerabilities that we are dealing with today. This might even rise to the level of some sort of software ‘certification’ schema to show consistency of best practices. Two-factor Authentication Becomes the Rule Rule. 2010 will be the year for wider adoption of two-factor authentication. With federation of the various types of twofactor authentication that are around today we will finally see strong authentication become the rule NOT the exception. Social Networking Threats Skyrocket. As more businesses turn to social networking sites to extend their customer reach, sensitive data becomes even more vulnerable. Vendors and purveyors of social media sites need to play a more active role in educating their users. — By Bill Brenner

Five must-haves for Better IT From breaking the trend of working in domains, or silos, and aligning It services better with business needs, It departments face many formidable tasks in 2010. It service assurance: It departments need to be able to get visibility into network traffic flows as well as application performance across multiple components supporting It services. From advanced discovery technology to traffic flow analysis to transaction monitoring, It departments need to see the entire path of a service. Virtual systems management: Vendors looking ahead to 2010 seemed to get quiet on virtual systems management in favor of touting cloud management capabilities, but industry watchers say that without support for heterogeneous virtual systems and advanced features covering performance and capacity management, there can be no cloud management. In 2010, enterprise It organizations will be certain to equip their toolboxes with multi-hypervisor virtual system support. It service catalog: As It departments start to optimize service delivery, they will also be improving how they communicate the services they offer to the user community. Analysts say the trend toward putting available It services into teChnOlOgy

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an easily digestible Web-based It service catalog will explode in 2010 as It organizations streamline processes and better align their efforts with business demands. It t process automation: Virtualization and cloud computing initiatives will rely on automation more than any other technology. Analysts say It process automation has already become a mandatory tool for companies deploying virtual servers but add to that the potential of cloud computing services and It organizations simply cannot function without automation. It process automation is expected to be in such demand that companies that aren't directly focused on management software are even putting money into the technology. It resource planning: It organizations already using virtualization and hoping to explore cloud computing will also need to adopt It resource planning processes and ultimately technologies in 2010. It resource planning will enable It departments to understand how services are being consumed and ensure that even in the most dynamic environments they can respond quickly to business demand. — By Denise Dubie

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alternative views B Y a n u p va r i e r

Need-based vs discount buying

Should CIOs buy more in the short term for long-term discounts?

“By pushing technologies and products without examining if the CIO needs it, vendors create a no-win situation for both parties.” Sanjay Malhotra VP-IT (BS and e-Biz), Amway India

P hotos by Srivatsa S han dilya

to a business strategy. So unless and until I have a pressing business need I will not even consider buying new technology. And if I have little or no use of that technology then it would be a disastrous investment on my part. From my perspective, it is difficult for any CIO to just go all out to help his vendors and partners (to meet quarterly targets in return for long-term discounts). I would only be ready to buy a new technology if there is an appropriate business strategy in place and the vendor’s product falls within my budget. In no way can I indulge in over-spending. I think partners need to understand that from a long-term perspective, over-selling will not work well for the relationship. Look at it this way, would the vendor be willing to take back whatever I have bought if I find that I don’t actually need it? Or would he even consider waiving maintenance cost on infrastructure I'm not currently using? By pushing technologies and products without examining if the CIO needs it or not, vendors create a no-win situation for both parties. And that could hamper the relationship in the long run.

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more in the short term also avoids vendor lock in.” Saradindu Paul, GM-Corporate IT, ElectroSteel Castings

We live in a dynamic world and there are new technologies in the market everyday. Due to this constant change, what you buy today will, in any case, be replaced by a newer technology every quarter or six months. So, staggering one’s purchase for an IT implementation over a longer period (in the hope of maintaining flexibility) doesn't really make sense. And if you invest in a new product now, by the time you are ready for an upgrade — say in a year or two — you can skip at least one or two versions of the same product. In fact, this strategy gives you more flexibility. With cabling and communication networks, even a minor problem like cut wires can cause major disruptions. Buying more in the short term can help overcome such problems. Also, given a rapidly expanding business scenario, this strategy makes IT infrastructure more easily scalable and ready for growth. With proper planning, one can make a decision which is advantageous not only in terms of cost but also in terms of technology. But CIOs can employ this strategy only if their architecture allows them to accept products from any vendor. It's important to keep control in your hands and keep your options open.

REAL CIO WORLD | m a r c h 1 5 , 2 0 1 0

trendlines

All technology needs are tied

“Apart from discounts in the long term, buying

3/9/2010 2:03:04 PM

Adam Lawrence

IT Career

Look Before You Launch Just because the economy is up, isn’t good enough reason to change jobs.

Illustrat io n by MM Shan ith

ndoubtedly there are positive signs for the economy. And with the upturn IT workers are beginning to look for greener pastures. I'm already seeing evidence of it with some of our clients. They are beginning to hire to make up for having cut too deeply during the downturn, or are planning major rampups this year to meet aggressive sales forecasts. The message from employers is clear: The war for talent is back on. Even though a recovery appears to be in motion, IT professionals considering a job change in 2010 must remain cautious. There are essentially two types of recession: U-shaped and W-shaped. A U-shaped recession lasts one cycle, and a W-shaped recession is really two recessions backto-back. Unfortunately, there is no way to accurately gauge which type of recession we are currently dealing with. If we are recovering from a U-shaped recession, we can look forward to steady economic improvement. However, if we are just midway through a W-shaped recession, then we still have to travel down the back side of the W before enjoying a true sustained recovery. This means that we could actually see a repeat of the recession cycle we experienced over the past year-and-a-half. This also means that all of the good we are experiencing in the economy right now — the rising stock market, growing employment, a real estate sales uptick and increasing consumer confidence — could tumble back to the lows we experienced just a few months ago. With this in mind, as you contemplate making a job change in 2010, consider these points: Run to a new job or career, rather than away from the one you have. The economy has affected most

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Adam Lawrence

IT Career

companies around the globe. Don't be naive in thinking that while you suffered, your neighbors and colleagues did not. If you, as the professional manager of your own career, have determined that your current employer cannot offer the career opportunities that you desire and are truly qualified for, then you certainly are justified in exploring other options. If, however, you do have viable career options with your current employer but advancement opportunities have just been delayed because of the recession and current corporate climate, consider staying with your current employer and waiting until the economy has shown steady improvement for at least six months. Then re-evaluate. Question the assumption that the grass is greener on the other side. As the market has picked up over the past few months, so has the number of job openings in the marketplace. But again, don't be deceived into believing that every company in your specialty area has recovered except yours. Do your homework on the companies you're interested in. Financial information for publicly traded companies is available online. Also, networking is a good way to find out what people are saying about a company they have left. Just be cautious: People who talk about their job experiences tend to express either overwhelmingly positive or overwhelmingly negative feedback. If you're dealing with a recruiter, ask him to tell you what is driving the need to hire. Former employees of a company can also be a rich source of current information if their connections with the company are still intact. Just be prepared to filter through any sour grapes if their employment with the company did not end amicably. The devil you know is better than the devil you don't know. It might be cliché, but there is some truth to the adage. Consider the environment in which you currently work. Perhaps you have established yourself as a trustworthy and reliable employee with a reputation for getting things done. You have probably built valuable relationships and professional alliances. You have likely figured out how to navigate the environment and ‘systems’ you work within, and know the best processes for accomplishing things. You know who the strong performers are, and you stay close to them because they are like you. You also know who the poor performers are and are prepared to avoid them. You know the boss and the politics and, like it or not, you know the routine, which ultimately brings some comfort and senseof stability. In a new company, you'll know none of these things. It could take months, or even years, before you attain the knowledge and comfort level you have in your current position. Taking

on a new position in a new company always comes with the risk of the unknown. You need to determine if it's worth it. Interview your future employer. I've been directly involved with recruiting for the past 20 years. In that time, I have seen many shifts in the way that companies interact with candidates. Namely, I have noticed that now, more so than in the past, prospective employees take more of a lead role in interviewing their potential employers. I think this is a positive improvement from the days when hiring managers practically interrogated candidates. Today, it's perfectly acceptable for a prospective employee to ask pointed questions of the interviewer regarding the company's financial stability and strategic direction, specific career path options, educational and professional backgrounds of company leaders, benefits, training and perks. Recently, I even was asked by a candidate what my firm's ‘employee value proposition’ is. In other words, why should she come to work here? While that was certainly a first for me, I was pleased that she cared enough about her career to ask the tough questions. And you, too, should not be afraid to ask difficult but relevant questions of your prospective employer to ensure that the role and the organization will be a good fit.

In a new company it could take months, or even years, before you attain the knowledge and comfort level you have in your current position. You need to determine if moving is worth it.

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According to a recent study by Right Management, a minimum of 60 percent of employees will at least consider making a job change in 2010. If you're one of them, be sure to evaluate your reasons for making a switch, really get to know the other organizations you're considering, and weigh the pros and cons of any move. Before you leave your current organization, make sure you really have exhausted all the opportunities there, and that a move to a new job or company really will be the best thing for your career. In short, look before you leap. CIO

Adam Lawrence is vice president of service delivery at Yoh, a leading provider of high-impact talent and outsourcing services and a unit of Day & Zimmermann. Send feedback on this column to editor@cio.in

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Money Tired of the IT-is-a-cost-center refrain, some CIOs are making

Bus-ting Costs MSRTC

Booking Profits Oxford Bookstore

Distance Makes Costs Sweeter Reliance Capital

Extending a Customerâ&#x20AC;&#x2122;s Life Max New York Life

Daily Savings Mid-day

Bringing IT to Life Crest

Rise and Shine Sheela Foam

Shrinking to Expand Financial Technologies

Lavasa Finds Its Land Legs Lavasa

Bailing Out Mail Aegon Religare

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Reader ROI:

Simple projects that can make a dent in your company’s bottom line. Why it is important to re-evaluate old notions Different business areas IT can contribute to

minters their presence felt where it counts the most: the bottom line. By Anup Varier, Priyanka, Sneha Jha and Varsha Chidambaram Let’s admit it, IT leaders who make an impact on the bottom line get the attention — and respect — of their peers. Sure it’s nice to add a little efficiency here, a little touch of user satisfaction there, but nothing beats coming to a quarterly meeting with a double digit, bottom line busting number. CIOs can do this by making significant cuts in their organization’s operating costs or by beefing up earnings. Vol/5 | ISSUE/05

Either way it’s their contributions to the bottom line that separates them from the nameless crowd. Take for example, Maharashtra’s State Road Transportation Corporation. By bringing down the cost of producing each ticket by 60 percent, its DGM-EDP, S.D. Lubal, is saving the bus operators about Rs 25 lakh — a day. Read on to find out how nine other IT leaders found ways to stay on the right side of the bottom line. REAL CIO WORLD | m a r c h 1 5 , 2 0 1 0

Cover Story | Business Leadership

Bus-ting Costs

If Maharashtra’s 15,000strong bus fleet could reduce the cost of printing every ticket even marginally, it could save a pile of money. But how? Who: MSRTC. It runs the thirdlargest bus fleet in India Challenge: To reduce the cost of producing every ticket and increase overall efficiency Savings: About Rs 25 lakh a day or over Rs 90 crore a year

It services the second-most populated state in the second-most populated country in the world. And you’d know that just by observing Maharashtra’s State Road Transport Corporation. With over 15,000 buses and about 65 lakh passengers a day, the MSRTC isn’t small fry. But because of its post-independence heritage, the bus service with its trademark red-and-white fleet wasn’t run optimally. The MSRTC flagged off its first bus in 1948. By its own admission, most folks didn’t give it more than a couple of years to shut down. Yet 62 years later, it’s still around and caters to a daily audience equal to the population of 34 of the world’s smallest countries. It’s also proudly living by its motto: Where there’s a road, there’s an ST bus. Staying true to that credo, however, forced the Rs 4,000-odd-crore enterprise to run uneconomical routes, which hurt its bottom line. In a report released last year, the Comptroller and Auditor General of India (CAG), showed that the MSRTC had racked up losses worth Rs 1,300 crore between 2002-2007. Admittedly, it’s a track record the MSRTC has improved since, posting a small, but neat, Rs 188 crore profit last year. It still had legacy issues though. Especially with the old-fashioned way it arranged for its tickets. A bus conductor handing out colorful stubs of paper tickets only represents the last stage in an archaic system the MSRTC used. Take for example how the MSRTC printed its own 26

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S.D. Lubal, DGm-EDP, maharashtra State road Transport corporation, tickets — at a press it owned and maintained. lowered the administrative costs This set up also compelled it to create a of producing each bus ticket system to distribute tickets to hundreds of and added about rs 90 crore to bus depots. None of this came cheap. “There mSrTc’s bottom line. are costs associated with everything,” says S. D. Lubal, DGM-EDP, MSRTC. “From owning and maintaining a printing press to handling labor and to paper charges that go into printing tickets. Everything adds to the cost of a ticket.” The costs didn’t stop there. There was a price to pay for the administrative-heavy process (the MSRTC employs over 10,000 people) of maintaining ticket inventories and squaring accounts with thousands of bus conductors at the end of everyday. So following the lead of other state-run bus corporations like the KSRTC (Karnataka State Road Transport Corporation), Lubal supplied its bus conductors with handheld Electronic Ticket Issue Machines (ETIMs) in a bid to cut costs and ensure better monitoring of its buses. By allowing bus conductors to print tickets on the spot using ETIMs, Lubal effectively eliminated many layers of administrative costs. At just over 600 grams, the handheld machines are modernizing MSRTC’s entire system and making ticketing less of a chore. down the price of producing every ticket to 21 Conductors no longer have to make entries paise — a 60 percent drop. This is inclusive on sheets of paper while hanging onto dear of the initial investment and the manpower life or pour over waybills to tally their daily required to run the project. The ETIM project collections. Nor do clerks at depots have currently covers 55 depots and once it goes to worry about adding up the day’s tickets live at all of MSRTC’s 247 depots (with about because they can now update their systems 22,500 machines) — which Lubal is confident by plugging in the ETIMs. can be done well before their November The project, says Lubal, is part of 2010 deadline — the project will save an e-governance initiative that aims to MSRTC about Rs 25 lakh a day or over Rs 90 provide passengers with an online booking crore a year. facility. It’s run in partnership with The ETIMs also allow the bus fleet Trimax IT Infrastructure and Services to circulate memorandums, letters, on a build, operate and transfer (BOT) basis. “That allowed us to put up the best in technology for the least cost,” says Lubal. The ETIM implementation Allergan India created a system that links is based on LAMP promotional expenses and the profits t e c h n o l o g y, an specific promotions rake in. The oneacronym for a solution stack of free, Opento-one correlation reduced allergan’s source software. promotional expenses by 4 percent. On the back of the ETIMs, Lubal brought

StEAL thIS IDEA

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instructions, general standing orders, and notices across the state without getting into tedious paperwork. The larger system attached to the ETIMs also provides an online inventory management module to manage vital and heavy consumption items. Finally, the ETIM solution gives MSRTC’s management a bird’s eye view of their organization, giving it more real-time information, which could help it select more profitable routes. Now maybe the CAG won’t throw the MSRTC under one of its own buses.

Distance Makes Costs Sweeter

Remotely managing the IT needs of Reliance Capital’s huge workforce required guts — but also saved it tons of cash Who: Reliance Capital, a multicompany, financial services giant Vol/5 | ISSUE/05

Challenge: To lower the IT cost of supporting over 25,000 employees Savings: Rs 1.5 crore a year

IT infrastructure support isn’t the first place CIOs turn to in their quest to cut cost. But when you’re the size of Reliance Capital, bringing down the cost of IT support is a full meal by itself. That’s mainly because Reliance Capital is big. It’s made up by a number of group companies including Reliance Mutual Fund, Reliance Life Insurance, Reliance Consumer Finance, Reliance Money, and Reliance General Insurance, among others. Its interests cover almost the entire spectrum of financial solutions from asset management to insurance and from consumer finance to broking and distribution. Not only is it large, it’s also still expanding. Keeping with the population’s higher savings rate (India’s financial savings as a percentage of GDP has been growing 15 percent CAGR), in the last five years, Reliance Capital’s revenues have

grown 14-fold and its workforce’s has swelled 11-fold. The cost of servicing the IT needs of so many more employees (over 25,000 at last count) worried the Rs 5,976-crore company. Over time, it’s outsourced IT helpdesk had bloated to a 200-strong team. About 70 members were located in Mumbai — where most of Reliance Capital’s multiple businesses were headquartered — and the rest were spread out across India. As the team grew up so did associated costs including real estate, transportation and other administrative costs. “Our employees are scattered across the country. And every time there is a complaint, the first thing I have to do is send someone to that location to find out what the issue is. That itself is a cost. It’s a major cost,” says Sandeep Phanasgaonkar, president and group technology officer, Reliance Capital. Phanasgaonkar already knew that most of the issues the support team dealt with were standard ones including password problems, or issues with lotus notes and e-mail configuration. Which made remote infrastructure management a possible solution. “Between 60 and 70 percent of the issues (the IT support team faced) could be looked into remotely,” he says. Remotely managing infrastructure to cut costs is a well-documented approach. Research firms like Gartner and Alsbridge suggest that remote infrastructure management can reduce IT support costs by 25 percent or more. But Reliance Capital went further. It also decided to centralize its helpdesk and move the entire unit to a service provider with offices in Mysore, where the costs of both real estate and talent were considerably lower, earning them big savings. However, getting those savings wasn’t easy. The IT team had to ensure that all their PCs, which were previously connected to an onsite helpdesk, now linked to a helpdesk offsite. Phanasgaonkar says it took them about six months to make the shift. “There are various departments and businesses and we had to watch out against working during their businesscritical timings,” he says. And they also braved what is perhaps one of the biggest challenges in such a maneuver: REAL CIO WORLD | m a r c h 1 5 , 2 0 1 0

dealing with the mindset of a generation of employees used to seeing an engineer attending to their problems in person. The new system required users to take a few more steps to register their problems so that the IT support team could help them. “Most of these teething problems take some time. All we can do is keep educating our users,” says Phanasgaonkar. It’s been worth the challenges. For one, the project brought down the total number of employees needed to run the helpdesk from about 200 to 40 and trimmed downtime. These are benefits that have not gone unnoticed. “We have been able to save Rs. 1.5 to 2crores, and these are huge cost savings in today’s environment,” says Amit Bapna, CFO, Reliance Capital, adding “The turnaround time has also increased and there are now fewer engineers employed.”

Nirwan Biswas, cTO, mid-day, used SOa a to decrease waiting time in the tabloid’s busy news room and introduced productivity gains worth rs 60 lakh.

Daily Savings

P hoto by datta kU mbhar, mI d-day

Laboring to beat the clock before it struck deadline, Mid-day’s editorial staff were galled by the time they wasted waiting around for stories or photos. Help was on the way. Who: Mid-day, a popular tabloid with editions in four cities Challenge: To get stories and photographs to flow smoothly through the publishing process and bump up the productivity of editorial staff Savings: Rs 60 lakh a year

Desks groaning under

the weight of press releases; reporters scribbling frantically as they cradle phones against their heads; copy editors punching away furiously at their keyboards; and editors pulling out their hair in frustration. Everyone has an eye on the clock, watching the minutes tick closer to deadline. That’s life at a newspaper. It’s a pressure cooker. But it doesn’t have to be, not according to Nirwan Biswas, CTO, Mid-day. Owned by a subsidiary of Mid Day Multimedia, which also owns Radio One and 28

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Inqualab Quam (an Urdu daily), the Rs 102crore Mid-day has been a fixture in the lives of Mumbaikars for over 25 years, thanks to its quick-reading format. In the last decade, the paper’s popularity has spread. Today, it has four editions in Mumbai, Bangalore, Delhi and Pune, with a circulation of over three lakh. But for an easy-read paper, it was maddeningly hard to produce. Take for example when the paper’s photographer went abroad for a shoot. Until he got back into office, parts of the paper practically came to a grinding

halt. With no pictures, page layouts were almost impossible to finish. Neither was it possible to e-mail over a GB worth of pictures. Even when the photographer walked into Mid-day’s office, “he needed to burn the pictures on a disc and send it across to the right department. The cost of storing and transferring these pictures and maintaining a warehouse full of discs were all additional expenses,” says Biswas. In a world where speed is of essence, the time spent waiting was galling. And although the editorial team had found a

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Cover Story | Business Leadership way to work around the system for years, it affected their productivity. More than once, editorial staff were forced to either wait for images until the last moment or send pages to the press minus images, which were sent separately. This didn’t leave the people at the press end of things happy because it slowed them down. Aware of the frustration the system built among Mid-day’s 600 staffers and how it affected their productivity, Biswas decided to fix the situation. He created a piece of middleware using SOA (service-oriented architecture) design principles and deployed a system that would provide a looselyintegrated suite of services that could be used by multiple business domains. “With the help of SOA any Mid-day location can access the architecture over the Internet,” he says. While the world is arguing over how Web 2.0 and SOA have significantly different elements and cannot be regarded as ‘parallel philosophies’, Biswas used Web 2.0 technologies as a front-end to an SOA back-end. His user interface used Web 2.0 technologies like RIAs (rich Internet applications), mashups, Ajax, RSS, REST (representational state transfer) to help create a rich and interactive front end to SOA back-end systems. But without an existing implementation he knew about to refer to, Biswas’ work was cut out for him. Business process mapping was a major challenge, he says. And employees across various teams had to be trained to use the new interface effectively. The hard work has reaped rich dividends. Now all a photographer has to do is upload pictures and editorial staff can view them in real time. The same logic applies to stories that different bureaus want to share. Biswas’ system enabled instantaneous access to editorial material and trimmed the man power, time and effort needed to put together the newspaper. In terms of ROI, the Rs 16-lakh project, saves Mid-day close to Rs 60 lakh a year. “More than the cost saving, it has introduced an efficiency factor of 24 percent,” says Biswas. Now that the project is off the ground, Biswas is layering it with an internal messenger service which has cut communication costs by 60 percent. “I made 30

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sure that all communication, including video conferencing, is done at a single node instead of different pipes so that bandwidth is used as per demand,” says Biswas. Today, Mid-day’s editorial team no longer has to envy writer Douglas Adams who had the liberty to say ‘I love deadlines. I like the whooshing sound they make as they fly by.’

Rise and Shine

Sheela Foam’s various departments were pulling it in different directions, hitting its profitability. It needed to wake up and focus on better margins. Who: Sheela Foam, the country’s largest manufacturer of mattresses Challenge: Pull together a widespread organization to improve margins Savings: Lowered Opex by 5 percent Earnings: Turnover up by 45 percent

A few years ago, the manufacturer of one of India’s most popular mattresses

Sleepwell, (and the leading producer of other industrial foam products such as Feather Foam), was having sleeping problems. The Rs 900-crore Sheela Foam was struggling to get the organization to focus on its most important business objective: improving profit margins. That’s not to say Sheela Foam wasn’t doing well. According to industry reports, the manufacturer of polyurethane foam products owns 40 percent of the Indian PU foam market and is well ahead of its competitors. But until recently its very size hobbled it. Sitting in their headquarters in Ghaziabad, Sheela Foam’s management was having the hardest time pointing their 2,000-plus strong organization (with 13 manufacturing plants) in one direction. “Over time, each department developed their own set of performance parameters,” says Pertisth Mankotia, head-IT, Sheela Foam. “We realized that we needed a system that could help us align our performance parameters and achieve an overall business objective.” Another part of the problem was that because the company’s reporting and reviewing mechanism worked on a monthly basis, it made course corrections possible only at a month’s interval, says Mankotia. Which

Get Your Staff to Think Business Joel Schwalbe, SVP & CIO, CNL Financial Group, tells you how he did it.

The IT department, quite simply, is part of the business, and if we don’t think about our role like that, alignment won’t happen. Our Business Sensibility Program is designed to enable this way of thinking. The core of it is a mentor program that every IT employee is strongly encouraged to participate in; metrics for it are integrated into their performance appraisals. I asked our IT Governance Committee, made up of all the C-level executives, to encourage their people to be mentors because an IT group that understands the business can only make the business better. That got their initial support, but more than a year in, they’ve said that they are learning as much from us as we are from them. And we’re learning a lot, gaining intelligence through this less formal interaction to inform project and system initiatives that we would never have had otherwise. We’ve had some terrific experiences, and now we are gathering specific ideas from the mentors — such as suggested books, papers and other readings — to improve the quality of the relationships across the board. — CIO Executive Council

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Cover Story | Business Leadership meant that whatever solution Mankotia came up with needed to allow the company to review its performance at a higher frequency. It is crucial for Sheela Foam to monitor its operating margin because of its high dependency on its primary raw material: polyol. According to a CRISIL analysis of its business, Sheela Foam’s operating margins were under pressure in part because of fluctuations in polyol prices, which are linked to volatile international crude oil prices and foreign exchange rates. To deal with the problem, Sheela Foam’s management adopted an approach called

the Theory of Constraints, made popular by Dr. Eliyahu Goldratt in his book The Goal. “The Theory of Constraints provides focus in a world overloaded with information,” says Mankotia. “It helps organizations by focusing on a few issues: the constraints to ongoing profitability. The Theory of Constraints focuses on the ability of an organization to achieve its goal by improving its single, but most important, constraint.” For Sheela Foam, those constraints boiled down to four parameters. One of these was throughput, the difference between unit sale price and unit variable cost. “We

realized we were not able to keep up with the competition because we could not assess the margin at which our products were sold,” says Mankotia. “This acted as a major constraint because we could not decide which product should be given priority or if pricing needed to be changed.” Aligning the entire organization to focus on margins was the solution. Faced with this challenge, Mankotia could have decided to implement a complex collaboration project, linking various departments and installing a monitoring system. But he settled on a much simpler

P hoto by SrIVatSa ShandIlya

Instead of using an expensive collaboration system, Pertisth Mankotia, head-IT, Sheela Foam, employed SmS technology to bring focus to the company, raising turnover by 45 percent.

Cover Story | Business Leadership and more elegant solution. Using their in-house ERP, the IT team created a system that sent every employee daily and weekly reports via SMS. It included the throughput generated during that week, the company’s growth over last year, material dispatched the previous day, and outstanding orders, among others. Today, the dissemination of that data allows Sheela Foam to make better calls and stay on top of its margins. “The throughput for each transaction is calculated at the order level, so that orders that generate throughput below a defined threshold can be put on hold,” says Rahul Gautam, MD, Sheela Foam. “This helps us take corrective and preventive steps faster.” It also allows management to highlight cases that generated low throughput. And it motivates employees to realign their focus to controlling margins, and thus, the bottom line of the business. “The SMS brings everyone on the same page by providing a clear picture of everything that happened up to yesterday and where we are today,” says Mankotia. “We understood that ‘measures drive behavior’ and thus we aligned all our measures accordingly. These SMSes keep everyone on their toes,” he says. “Today our entire sales staff — and the senior and top management — are updated everyday at 6 AM,” says Gautam. “Some people call it their morning alarm,” adds Mankotia smiling. Introducing a higher level of awareness is bringing in better returns for the business. After the Rs 5-lakh project was implemented, Sheela Foam’s average weekly throughput increased from 101.5 lakh to 272.9 lakh; a 168 percent growth. That drove the company’s turnover up by an impressive 45 percent. The constant monitoring at multiple levels also reduced the company’s operating

expenses by 5 percent and upped its delivery rate from 76 percent to 89 percent. This healthy operating efficiency is one of the reasons credit rating agency CRISIL recently upgraded Sheela Foam’s rating. “Monitoring throughput has enabled us to increase our profits and market share. It has helped us to identify weak areas both in market and product terms, which are now the main focus areas for improvement. We have seen huge growth because of focused weekly monitoring and a strong daily-update mechanism,” says Mankotia.

Lavasa Finds Its Land Legs

With its sales team lost in a wilderness of 50,000 enquiries a month, only a CRM solution could point Lavasa to true north. Who: Lavasa, India’s largest, planned hill-city project Challenge: Satisfy the information needs of thousands of high net-worth clients with a limited sales team Savings: 20 percent in payroll Earnings: 60 percent increase in sales team efficiency

It’s conventional wisdom that customer satisfaction equals business success. But when you’re operating at the scale of the Lavasa project, ensuring customer satisfaction isn’t a walk in the park. Alternatively called free India’s first or largest hill city, the scope of Lavasa city takes your breath away. At 12,500 acres, the planned city is at a scale that’s rarely been attempted. Set seven hills along Cognizant Technology Solutions ensures on the Warasgaon lake, better business continuity by simplifying an hour from Pune, Lavasa city is actually and taking planning online. The system pre-fills certain fields in a place, figures out a family of five towns. Its planners if recovery time objectives are feasible, and have ensured that speeds up plan approval. they provide almost

Steal this idea

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everything a city can need, raising expectations from Lavasa beyond other planned cities and attracting high rollers. Today, the project is still far from complete but one of the towns, Dasve, already has a couple of functioning hotels, and retailers. But by the time the last brick is put in place, Lavasa’s builders expect the city to have a permanent population of three lakh, create 95,000 jobs, and attract about 20 lakh tourists a year. In the meanwhile, all of the buzz around Lavasa is attracting plenty of attention. So much attention that it is swamping Lavasa’s sales staff. At last count Lavasa’s offices were getting between 40,000 to 50,000 inquires a month. It didn’t help that most members of the 45-strong sales team were new and the department’s business processes were not set “The sales team didn’t have properties to sell or book, but enquiries kept pouring in. It was very important for us to keep these enquiries live. We knew we would require them at the time of sale and they had to be well organized,” says Vinod Vyas, VP information systems, Lavasa Corporation. It wasn’t only a numbers problem that overwhelmed the sales team. The class of people making enquiries were also used to a high level of efficiency. “A major chunk of enquiries were from VIPs, HNIs (high networth individuals) and elite personalities. Immediate and appropriate response was key in ensuring that customers were satisfied,” says Vyas. And Lavasa’s clients didn’t like repeating themselves. “Take for example customers who explain their needs to the sales staff at our Mumbai office. Once they visit Lavasa, they are forced to interact with another sales person and have to relate their needs all over again. Customers shouldn’t have to repeat themselves,” says Vyas. Making their jobs even harder was the fact that the sales team needed to cater to the needs of three diverse categories of customers: people who want to buy houses, tourists who are interested in holiday villas and resorts and corporate establishments like retailers, schools, hospitals, hotels and biotech parks. Each set of customers had their own specific requirements. Lavasa’s nascent IT systems were not geared to cope with the avalanche of enquires.

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Cover Story | Business Leadership Typical customer interactions were handled across multiple channels including telephone, e-mail, chat, etcetera. With no CRM solution, the company struggled to optimize customer interactions, and risked turning off buyers. “Communication and collaboration were pain points. An integration problem manifested itself in the form of the absence of updated real time information to respond to customer queries. Not only did this choke employee bandwidth and reduce productivity, the high dependence on manual intervention compromised the accuracy of the information being handed out,” Vyas. Vyas decided to address the problem using a CRM solution. He successfully made a case before senior management and spent a few months evaluating various solutions. He says the final solution won thanks to its ease of use, its robust platform, wide coverage and higher level of collaboration and quick integration. It also had an easy interface with MS office, UC, and Microsoft Office SharePoint server, says Vyas. Despite initial change management challenges, says Vyas, the new CRM’s look and feel (which resembled the excel sheets that the sales staff used), its scalability, and ability to integrate with other systems, won users over. Today, the Rs 2-crore project enables Lavasa’s sales team to be more accurate with information, allows them to track payments from customers and, more importantly, be more flexible. “Now any sales person can take care of any customer. We no longer have to map a certain set of customers to a particular sales person. This has resulted in an optimum use of resources,” says Vyas. He estimates that by streamlining sales operations, Lavasa is saving 20 percent on its payroll costs. The CRM solution also offers a consolidated, 360-degree view of Lavasa’s clients. It helps the sales team manage customers, track leads, and tap new opportunities, driving up foot falls. But more importantly, it helps resolve customers’ queries faster. Where it once took up to five days to close an enquiry, a sales person can now do it within a few hours. That will come handy in 2011, when Lavasa’s management expects to deal with over 70,000 enquiries a month. 36

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Booking Profits

Oxford Bookstore’s ERP solution, delivered SaaS-style, got its cash registers clinking and welcomed its 90th birthday in style. Who: Oxford Bookstore, it stocks over 2 lakh titles Challenge: To align its inventory and POS system Earnings: Bumped up revenues by Rs 3.4 crore

Standing regally in the heart of Calcutta’s Park Street, the Oxford Bookstore has been a haven for book lovers and intellectuals since the 1920’s. A part of Rs 1,500-crore Apeejay Surrendra Group, the iconic bookstore celebrates 90 years in 2010 (it also marks the centenary year of the group). And IT brought a big gift to the party: a Rs 340 lakh boost in revenue. But things weren’t always this good. When Subhasish Saha, CTO, Apeejay Group, joined in April 2008, the bookstore’s IT infrastructure suffered from serious challenges. “There were significant inefficiencies with the point of sale function. And since the inventory management system was not integrated with the POS system, we lacked control over our inventory,” he says. That’s something the group’s head of finance and accounts, Anindya Subhro Biswas, has seen the bookstore battle for a long time. “Traditionally, the book retailing business has been prone to excess purchases, an over-stocking of SKUs, and a pile-up of non-moving or slow-moving inventory.” It’s a problem that all Indian book retailers without IT systems face, given that India produces over 80,000 new titles a year. Oxford, for example, adds about 50,000 new titles a year to the 2 lakh it already maintains. What made it harder for Oxford was its decentralized approach. This allowed a single title to have multiple codes across each of Oxford’s 25-plus stores, making it almost impossible to

get a fix on the number of copies it had of a popular title like, say, Shantaram. Inevitably, this led to high inventories. “With a dispersed retail operation and increased volume of transactions, the challenge was to find a way to regulate processes and manage transactions,” says Biswas. And with over 150 additional SKUs a day, Oxford’s problem wasn’t getting smaller. Despite these challenges, Saha’s bosses in Kolkata gave him a tall order. “We wanted to encash on an early-mover advantage by rapidly expanding our retail operation, both in India and abroad,” says Biswas. “The vision was to operate over 100 bookstores by 2010, the eve of centenary of the Apeejay Surrendra Group.” If the iconic bookstore was going to meet that target, it needed visibility along its entire supply chain, from its supplier to down to its stores — the sort of visibility that an ERP system could provide. The problem was that an SME like the

Subhasish Saha, cTO, apeejay Group, (which owns the Oxford chain of bookstores), introduced a SaaS-based ErP which aligned the organization and earned the book reatailer rs 3.4 crore more in revenues.

Cover Story | Business Leadership because it had heard about security challenges, and had Polaris Software Labs converted all fears about vendor international roaming calls into local calls lock-in. Most of these by using a conferencing facility. By riding issues could be dealt on the company’s cheaper corporate rate, with, if Saha could the idea is saving rs 2 lakh a month. find the right vendor and more research and relationship It also covers the company’s payroll and later, he did. “We decided on a vendor only accounting needs, and Web tools, says Saha. after we were sure they would not just be an The results of the Rs 1.08-crore implementer but a fully-involved business project (which is to be paid in monthly partner,” says Saha. “Now, we have one of installments over five years) is the best the very few full-cycle implementations of gift Oxford could have asked for. Revenues SAP IS retail delivered via a SaaS model and have catapulted a full 20 percent adding a we’re a first-of-its-kind in the book retail whopping Rs 3.4 crore to the bookstore’s industry.” coffers. It also helped increase footfalls Today, the project has centralized all Oxford into Oxford’s bookstores by 25 percent titles across all branches into a single directory and swell bill sizes by 20 percent. Profits controlled by an ERP. Data from here flows have been spectacular on the e-platform to all modules including a store inventory too. Online sales have jumped a full 100 module and the bookstore’s points of sale. percent and revenues have escalated by 50 percent. It’s also made other aspects of running a retail business easier, including managing a CRM, a loyalty program and discount schemes. “We have optimized our merchandising mix, reduced the carrying cost of inventory, and increased our monitoring on non-moving and slowmoving inventory. Also we have managed to regulate discounts and credit limits,” says Biswas. Saha estimates that Oxford will recover the cost of the implementation in four years.

StEAL thIS IDEA

Extending a Customer’s Life

Hamstrung by a lack of a centralized repository of customer data, only 7 percent of Max New York Life Insurance’s revenue came from cross-selling. Slowdown or not, that number just wasn’t good enough. Who: Max New York Life Insurance Challenge: Increase sales from crossselling as a percentage of revenue REAL CIO WORLD | m a r c h 1 5 , 2 0 1 0

P hoto by oxford book StorE

Rs 25-crore Oxford Bookstore didn’t have the deep pockets an ERP implementation called for. It’s a growing problem for India with SMEs upping their contribution to the country’s GDP from 17 percent to 22 percent by 2012, according to Assocham. “Management was looking for a model that would allow Oxford Bookstore to leverage its full IT potential without large one-time IT capital investments or issues of scalability,” says Saha. Theoretically, that’s exactly what a SaaS model offers. And although some solution providers have tested it with industries like apparel, admittedly, the idea remains unconventional in India — and it had almost never been tried in Indian retail before. Also, few providers offered the complete set of services Saha wanted and there was no guarantee that once a deal had been inked Saha’s small account wouldn’t get jostled aside by larger ones. At the same time, Oxford’s management was apprehensive about using a SaaS model

Cover Story | Business Leadership Earnings: Bumped up revenues from cross-selling to 20 percent of total revenue

Studies indicate that it’s seven times more expensive to cultivate a new customer than it is to sell to an existing one. But cross selling isn’t easy. Between multiple business units, conflicting interests and numerous databases, most companies in India haven’t dared to take on cross-selling in an organized fashion. Max New York Life Insurance (MNYL) isn’t one of them. A joint venture between Max India and New York Life, a Fortune 100 company, Max New York Life started operations in April 2001. Today, the private insurer has cast net across 389 cities and 139 rural districts and has over 40 lakh customers. Executives at Max New York Life knew that the size of their customer base could be their greatest strength — if they cross-sell to them — or be their greatest weakness because their very numbers made it hard to retain them. Cross-selling could fix both problems. “We’ve found that the retention probability for a customer goes up 300 percent to 400 percent once they make a second purchase with us,” says Nagaiyan Karthikeyan, head of business intelligence and analytics at Max New York Life. Anisha Motwani, chief marketing officer, Max New York Life Insurance agrees. “Cross-selling is better than coldwalking into a new customer and making a pitch ground-up. It’s one of the most effective ways of increasing your share of wallet and expanding your relationship with customers.” Yet only 1 percent of its customers owned two or more MNYL policies. The

problem was, like many other growing organizations, Max New York Life Insurance was hamstrung by legacy systems which were not geared for a crossselling push. The result? Only measly seven percent of the life insurer’s revenue came from sales to existing customers. Executives at the insurer were determined to grow that number and formulated a strategy: they would create new customer segments (according to their profiles) and introduce products that matched their needs. “If we could analyze customer data and categorize them into tight segments of customers with similar requirements we could create products and policies that suit the needs of that customer segment and run highly-focused campaigns. But in order to design effective marketing campaigns we need to look at the customer closely. We require analytical tools to understand his demographic profile, his insurance priorities, his policy requirements and purchasing patterns,” says Motwani. “But in the absence of an accurate data warehouse we were illequipped to do any of this. We couldn’t even segment our customers accurately.” “Access to business critical information was a problem,” agrees Hitesh Arora, EVP and head-IT, Max New York Life Insurance. “We were not in a position to harvest information to identify revenue opportunities from existing customers.” For that rich harvest Arora knew they needed a centralized repository of customer data. And he decided to invest more time in the project. His focus makes sense. According to studies, a 2 percent increase in customer retention has the same effect on profits as 10 percent worth of cost optimization.

StEAL thIS IDEA Reliance Consumer Finance stuck barcodes to customer forms that needed scanning and created an app that could instruct the scanner, doing away with manual intervention. By saving 20 minutes in the turnaround time of each document and taking the solution to 22 locations, the company expects to save rs 4.5 crore. 38

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MNYL’s management was quick to appreciate the need to accumulate customer data across all its touch points and multiple distribution channels into a unified data warehouse. So they decided to embark on a BI project. After eight months of scouting for a solution, Arora zeroed in on one. “We settled on this one because it has a more structured approach towards analytics. And we found it more suitable for the kind of analytics that we want to run. It gave us a very strong end-to-end integrated piece with analytical support and that clinched the deal,” says Arora. The project took off in the second quarter of 2008 and it brought results quickly. “Not only does it clean data but it also pumps the right information to the right people at the right time. Accurate predictions and forecasts have helped us do away with guesstimate,” says Arora. Today, the project provides increased support to Max New York Life Insurance’s sales force. Earlier sales were dependent on an agent’s understanding of a customer’s demographics. But now the BI tool gives them that data. This means that agents are better prepared when they approach a customer because they understand his needs more closely. That’s left the marketing department very glad. “We now have access to the right data and the right models. Consequently, high-margin revenue from cross-selling has increased three-fold,” says Motwani. In the first quarter post the implementation, revenue from crossselling rose to more than 20 percent of revenues — from 7 percent. The project also improved revenue by nearly 40 percent with shorter sales cycles (since it’s faster to sell to a known customer). And thanks to quicker access to data, building a model now takes two days — from three weeks. That has a tangible effect on the marketing teams. “The frequency of marketing campaigns has increased. Earlier we conducted two, broadly-targeted campaigns each quarter. Now, with rapid modeling, tightly-defined customer segments and accurate data, we’re executing 60 campaigns a month. This has made us more agile,” says Motwani.

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Bringing IT to Life

As animation studio Crest took on more projects like Ice Age, it’s computing needs required about 900 servers. They needed to make do with 450. Who: Crest, a Mumbai-based animation company responsible for the CGI behind Shrek and Ice Age Challenge: To make do with 450 servers, when they needed almost

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double that number Savings: Rs 28.4 crore

Animated films like

Shrek and Ice Age have opened a whole new world of storytelling replete with spectacular imagery and awe-inspiring action, thanks to the evolution of 3D animation and graphics. Unknown to many, some of those fascinating characters were brought to life on workstations at the Crest 3 animation studio in Mumbai. Although Crest started life by providing special effects to Indian movies, it gradually moved into 3D animation. “We were shifting our business model from 2D to 3D to TV series to high-end DVD series

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P hoto by Sr IVatSa ShandIlya

Under the stewardship of EVP and head-IT, hitesh Arora, max New York Life Insurance introduced a business intelligence solution that increased cross-selling by almost three-fold.

to feature films,” explains Shajya Thomas, head-technology, Crest Animation Studio. In 2005, Crest bagged a coveted project to produce the first, indigenously-produced, Indian animated feature film. From there, Crest steadily took on prestigious projects one after another expanding its horizon and garnering awards and recognition. In the meanwhile, however, the company’s 150-server datacenter was beginning to feel the heat. That’s because the process of rendering — integral to creating computer generated imagery or CGI — needs a lot of computing power to convert wire-mesh technology into a viewable format. “We needed at least 900 servers to generate the computing capacity required to support our projects,” says Thomas. “But we neither had the resources nor the buy-in for that kind of an investment.” It wasn’t only server requirements that bogged Crest down, storage and network needs also increased rapidly. It became difficult to analyze peak and non-peak times and schedule resources. “This was crucial because we used to depend on third-party applications for our rendering needs and this made flexibility and optimum resource utilization a challenge.” Fortunately, creativity wasn’t in short supply at Crest. Thomas designed a virtualized datacenter that provided the canvas for all of Crest’s dream projects to take shape. Thomas’s plan is a 1,500 sqft datacenter, which houses 450 servers. The new facility, with the additional servers and the cost of manpower, worked out to about Rs 8.2 crore, says Thomas. The cost of the project could have been much higher if Thomas had not wrung out every last bit of cost from each process. The servers they used, for instance, were configured on Open source relieving Crest of license hassles. The OS and applications were stripped and fine-tuned to achieve maximum performance. The grid and applications were developed and integrated completely in-house. Thomas further integrated about 400 workstations in Crest’s Mumbai office so that during non-working hours they doubled up and added to server capacity. Crest’s 200 TB of storage is the world’s second-largest polyserve-based cluster storage. To support high data travel, Thomas

designed a redundant, load sharing, non-blocking network architecture with 10G/1G interconnects. Where they placed racks, cables and the air-flow mechanisms was designed to reduce any kind of space and resource waste. The entire datacenter is designed with zero over-provisioning and still achieves its goals. And that’s how Thomas got 450 servers to do the work of about 900, saving Crest Rs 28.4 crore. The datacenter also uses 35 percent less electricity, which has helped reduce Opex by 30 percent. When Alpha & Omega, India’s first animation feature film releases in October this year, you’ll know what went into it.

Keshav Samant, VP and head-IT, Financial Technologies, wasn’t going to get in the way of a business that was expanding faster than his datacenter could. he turned to virtualization and is saving about rs 2 crore.

9II

Shrinking to Expand

Caught between a business bursting to expand and a cramped datacenter, Financial Technologies turned to virtualization. They have never looked back.

Photo by f In anCIal tEChno loGIES

Who: Financial Technologies, provides backbone to a number of Indian and international exchanges and is one of the fastest-growing companies in its space Challenge: To give business the computing power it needed without expanding its datacenter Savings: Rs 2 crore over three years

When he started a virtualization project in 2009, Keshav Samant, VP and head-IT of Mumbai-based Financial Technologies was operating in the 10th most-expensive real estate market in the world. So it makes sense that his project saved his company about Rs 2.5 lakh in space. That’s enough dough to fund a couple of new servers. Thing was, Samant wasn’t in the market for new servers. He did however want to help the $1.27 billion (about Rs 5,700 crore) technology provider expand its business. Financial Technologies’ (FTIL) work forms the backbone for a number of international exchanges including Dubai’s Gold and Commodities Exchange and Singapore’s 40

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Mercantile Exchange. In India, it runs the Multi Commodity Exchange (which trades oil seeds, cereal, pulses, etcetera) and online trader Sharekhan, among a number of others. But Financial Technologies wanted to do more. Much more, if it wanted to maintain it’s position as the fastest-growing company in its space. And it could do that by helping exchanges expand by adding new asset classes (like interest rate derivatives) or by creating networks of exchanges. But to do so, it needed to boost its own capacities and it had exhausted all the available space in its datacenter. That’s whe Samant turned to virtualization. “We realized that virtualization could boost

the functional capabilities of our datacenter without a significant impact on operational and infrastructure expenditure,” he says. True to his prediction, his virtualization project not only cleared up 26 sqft of prime real estate, it also brought down the number of physical servers from 78 to two. Now Financial Technologies runs 40 VMs on two physical servers each. Importantly, the rack space and some of the servers Samant saved were used to roll out new mission-critical initiatives and services which could not run on VMs. “There is no discounting the fact that because we went virtual with some of our established initiatives, we were ready with

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Cover Story | Business Leadership space for the newer ones,” says Samant. As for the physical servers he freed up, some were scrapped, and the rest are being used for real-time testing, which Samant prefers not to run on VMs. In the meanwhile, by avoiding buying new servers, Samant saved FTIL over Rs 1 crore in one year. And apart from popular virtualization benefits like the ability to provision new virtual servers in 15 minutes, and reducing recovery time by 90 percent, the project also trims operational expenditure. By cutting down electricity consumption, lowering server AMC costs, trimming manpower needs, FTIL estimates it will save above Rs 1 crore over the next three years. And by adding thin provisioning and data de-duplication into the mix, Samant salvaged almost 2Tb worth of storage. “We have not bought a single disk array box in the last nine months,” he says. Looking at it holistically, Samant says that FTIL’s initial investment — which amounted to just under Rs 1 crore including two servers and VMware licenses — was a reasonable price to pay for the long-term benefits it has received in return. And, of course, there is the comfort of staying put in the financial nerve center of India.

Bailing Out Mail

Aegon Religare’s director of IT doesn’t see why more IT leaders won’t use an Opensource e-mail solution. Who: Aegon Religare, a relatively new life insurer playing catch-up with its larger rivals Challenge: To lower the cost of providing e-mail to its fast-growing employee base Savings: About 40 percent of its e-mail costs

Have you ever done the math on how much companies spend on setting up an e-mail system for its employees? According

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to a recent study by Forrester, the figure’s too large. Tired of people not following up on In fact, the research organization says decisions made at meetings, Wyeth that the cost of created an online tracker system that managing an e-mail sends staffers e-mail reminders, thereby infrastructure is increasing efficiency. beginning to reach a “breaking point” for many companies. Of the large enterprises Forrester spoke to, 49 percent were in the wonder what business value it can offer or process of re-evaluating alternative options the sort of revenue it can generate. It’s just to manage and provide e-mail. a mail box,” he says. That’s a reality Aegon Religare, the 21st The Open Source solution is also scalable. Iyengar says he has tested his system for up to entrant to the Indian life insurance sector, 20,000 users. “And I don’t have to deal with came face to face with. The company, sophisticated or high-class servers,” he says. which launched just under two years ago, The one challenge he says is creating is a joint venture between Aegon, Religare, an address book common to both the and Bennett, Coleman & Company, and is Linux and the MS Exchange users. His determined not to be treated like a small service provider got around the problem player. Which is why the day it launched, by introducing a few scripting changes it synchronized the opening of its branches to the software. They created a global in 25 locations across India. It has also address book which allowed users from hired close to 2,000 employees. As it one group to look into the details of the played catch-up with its peers, it opened other and vice versa. new branches (it now has over 57), which “The integration of the common address implied a steady increase in the number book had a few teething problems, which of e-mail users — and corresponding lasted a month. But it settled down,” says maintenance costs. Iyengar. A repository was created that was But even before it could make the mistake of constantly updated with new details either introducing expensive e-mail infrastructure, from the Linux or the exchange users. And Srinivasan Iyengar, director-IT and change what could have led to half-a-day of work management, Aegon Religare, stepped in. every week — to manually update Linux “We wanted to have an effective e-mail mail boxes with exchange users — was solution that could bring down the cost of fully automated. e-mail per employee,” says Iyengar. About security concerns, Iyengar says it So he proposed implementing a Linux did not concern him or his management. solution for the majority of Aegon “Although we made use of the Linux Religare’s employees. Only about 250 of platform which is free, the solution that its senior executives — those who needed we are using is proprietary.” to stay in touch with the parent company Today, Iyengar’s management team is (Religare) in Netherlands — were given pleased about the project. “We are always access to Microsoft exchange. trying to explore ways to manage costs The implementation resulted in efficiently,” says Rajeev Chugh, financial impressive savings of between 40 and controller at Aegon Religare. “And this has 50 percent. “The results are way beyond been one of the significant projects that we our expectations,” says Iyengar. Which is have undertaken to cut costs.” CIO why Iyengar doesn’t see the reason more organizations don’t follow his approach given that mailboxes are a commodity. “By default you don’t expect much from a mailbox because unlike an app you don’t Send feedback on this feature to editor@cio.in

StEAL thIS IDEA

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Money

Making Moves IT is a great resource for competitive advantage. But to get that edge, CIOs and their teams need to learn to play the business game. By Diann Daniel Think Like a CEO and a CFO Without technology, you wouldn’t have a business. And yet, At the top of every CEO’s and CFO’s mind is the fact that for every information technology staffs often do not have an integrated view of dollar coming in the front door, a portion is going out the back in the how technology enables their company to make money. form of costs. Studying that equation can help you discover ways to Getting that knowledge and providing it to your staff should be save and generate revenue. a priority, says Todd Davis, vice president of property systems Potts also advises thinking ahead. Ask yourself not just how IT development and administration for Choice Hotels International, the contributes to today’s business model, but how that will change in franchiser of such brands as Comfort Inn, Clarion and Econolodge. the future. When your staff knows where the money comes from and where Choice Hotels’ Davis makes a point to focus on the importance of it goes, they are better able to see opportunities to differentiate the the bottom line by bringing in the finance group to talk with his team company from the competition. about how the company earns revenue, where the profit goes and While it’s true that some IT departments are content in playing the where excess cash may be invested. Such information “helps focus traditional role of service provider, the majority needs to play a larger employees’ thought processes around innovation,” he says. role in facilitating corporate innovation and growth, says Chris Potts, “If you understand areas where we’re growing in, you can director of the IT consultancy Dominic Barrow. potentially come up with new ideas or different ways to do things The key, says Potts, is to get beyond mere IT-business alignment that will bring a competitive advantage,” he says. — which implies that IT and the business are These ideas may range from a function on a website separate entities. Instead, IT leaders advise, shoot to improvements in customer service to changes in for a higher degree of IT-business integration Reader ROI: internal processes. through which IT is embedded in almost all how biz-IT alignment Finance education — along with a job-shadowing business decisions. leads to innovative program that created opportunities for the IT team To accomplish that integration, everyone in cost cutting to observe the interaction between hotel systems, the IT has to learn how the business makes money Why IT needs to learn front desk associates and hotel guests — helped the and how to use that information to generate new how business makes company get incremental revenue from members innovations and revenue opportunities. Doing so money of its Choice Privileges loyalty program. Front desk helps you to increase IT’s value in the organization. system enhancements improved recognition of Choice Here are three ways to make that happen. 42

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Privileges members, who are offered such promotions as the fall special, “Stay 2 times. Earn a free night.” Efforts, such as these, help drive loyalty and increase stays at Choice-franchised hotels. Connect IT and Business Operations At Accenture, all new employees — from entry level to seasoned pros — get extensive orientations to learn about Accenture’s mission, priorities and its business practices. They also learn how IT is organized and run, as well as the ways IT interacts with the business to understand its needs and priorities and then translates these into IT initiatives. The corporate orientation is reinforced periodically through memos from Accenture leaders and executive blogs. Employees are also encouraged to listen to quarterly investor calls which discuss the company’s performance and key plans, as well as attend periodic companywide meetings that cover Accenture’s strategy and competitive position. Robert Kress, Accenture’s senior director of business operations (who reports to CIO Frank Modruson), says these meetings are crucial for his IT team because they provide context for what is happening within Accenture. Such deep understanding of what makes the business tick has led to money- and time-saving innovations, including one recent project to improve personnel scheduling. Finding the right people for each engagement at the right time is critical for Accenture’s consultancy business. But this was a problem area: Kress knew, from the data he collected about the total cost of ownership for every application, that he was spending too much on the existing scheduling application. Internal surveys told him that end users were unhappy with it. One criticism: “The application was not as intuitive as our customers wanted,” Kress says. Kress’s group worked closely with HR to develop the new personnel scheduling system, which reduced the time it took to make assignments by one-third. The new process also costs 50 percent less to run. “The fact that we understood key metrics, such as the time it takes to get people scheduled, enabled us to provide innovations,” he says. The job-shadowing program at Choice Hotels provides hands-on, cross-functional internships to employees throughout the company. The company’s organizational development and learning department enables any corporate group to create a job-shadowing opportunity. Employees can also request that an opportunity be created or accept an opening that is already available. Despite the word shadowing, “this is not just watching someone do their job; these are interactive experiences,” says Davis. For the duration of the assignment, employees do the work of a front desk or marketing employee,

for example. And so, a software developer who is working on an application can get a firsthand understanding of how his application will be used and how it might be improved. Software development teams bring the knowledge gained through job-shadowing back into the software development cycle, where it sparks ideas on, for instance, how to improve user interfaces for a more streamlined business process flow. Map IT Functions to Business Processes When Sreelakshmi Kolli took the job of director of global IT operations for Align Technology two years ago, she was often awakened at night because system administrators could not understand what they should be looking for to fix a user’s problem. The company, which makes Invisalign clear braces, relies heavily on IT to produce its products; customer-facing applications are tightly integrated with the ERP and manufacturing systems. But the help desk didn’t understand how all of the systems and manufacturing machines were integrated to scan and manufacture a 3D dental impression — a highly intricate process. Kolli decided that the solution to better IT support and a good night’s sleep lay in fostering a more integrated view of business processes and IT operations. To start, she sent many of her employees out to the manufacturing sites to learn about the equipment and systems they were servicing from the user’s point of view. But she also wanted to document that business-centric view. To do this, she had her staff map out the company’s business processes to each application and the machines they run on and show how each connected to the others. The map is a powerful illustration of how the employees who create and service each system contribute to Align’s top line. It also works as a tool to show which systems impact revenue the most and which processes needed infrastructure improvements. Today, the map is used as a training tool for new employees in IT to help understand high-level business process and systems flow. Kolli, who is currently the director of business performance improvement at Align, now spends her days looking for constraints in the company’s end-to-end business processes in order to create improvements. “Understanding the relationship between how the business makes money and the work we do everyday helps the engineers appreciate the purpose behind their jobs and have a perspective and an appreciation of the business users’ requests,” says Kolli. “This in turn helps us create better partnerships with the business users.”

Everyone in IT has to learn how the business makes money and how to use that information to generate new innovations and revenue opportunities. Doing so helps you to increase IT’s value in the organization.

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Send feedback on this feature to editor@cio.in

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Cloud Computing

arly adopters of private clouds are thrilled with its features. It's efficient, cost-effective and unlike public clouds, keeps data within boundaries. But is there a downside?

Private clouds — where companies use their own infrastructure and provision virtualized services to end users via automated tools — are gaining ground among IT leaders who want to deliver advanced services at lower costs. However, as with any new approach to computing, private clouds today fall short on manageability, and some users worry about the risk of vendor lock-in, particularly with virtualization and other tools that make cloud computing possible. Further, the fuzzy nature of just what private cloud computing means could slow the adoption of internal cloud setups. That lack of definition doesn’t bother Geir Ramleth, CIO at San Francisco-based Bechtel, one of the world’s largest engineering and construction firms. In fact, he

says, the lack of a precise definition is a good thing, because looking at the private cloud too narrowly would “limit what it can do for us. You’re talking philosophy here.” Alan Boehme, senior vice president and head of IT strategy at ING Financial 46

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Services in San Francisco, adds that a private cloud requires new ways of thinking about systems architecture. “It’s not just servers, storage or networks; it’s every component,” he says. Meanwhile, Bob Zukis, an IT strategy and operations consultant at PricewaterhouseCoopers, says, “The private cloud is less about technology than it is a rallying cry for IT.”

Reader ROI:

Why private clouds are more attractive than public clouds Why hybrid clouds could be a possibility Benefits of going private

shops will spend more than half of their cloud dollars on private cloud services because of improvements in cost and management efficiency.

Going Private Ramleth has heard the call of cloud computing, and he has seen dramatic

l Hal t t E vEr rk E a M By

That rallying cry is producing a real market. According to Gartner estimates, enterprises spending on public and private cloud infrastructure services was in the area of $3.2 billion (about Rs 14,400 crore) this year, up 28 percent from $2.5 billion (about Rs 11,200 crore) in 2008. Spending in the public sphere accounts for the vast majority of those dollars. However, the market researcher expects that by 2012, IT

results from Bechtel’s private cloud platform, a standards-based setup that features virtualization technology and automated provisioning. In 2005, more than 2,000 IT employees staffed approximately 20 datacenters, where server utilization reached 2 percent to 3 percent. Today, a much leaner Bechtel IT department, numbering 1,100 employees, operates just three datacenters, where server utilization averages 60 percent to 70 percent. At Bechtel, 44,000 employees across the globe have access to 230 applications. The IT department has already shifted about

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Cloud Computing

60 percent of those applications into the company’s private cloud. The rest will be moved to the cloud by the beginning of 2010, says Ramleth. Such a “transformation,” as Ramleth calls it, takes years. CIOs definitely need to move carefully, he says, “because you don’t want to move the sins of the past into your new datacenters.” Before 2005, Bechtel had an IT-centric attitude about delivering services to users, Ramleth says. It had no set standards and provisioned resources manually. Now the company embraces a collaborative model of computing, one built on strict standards and guidelines that permit policy-driven access to provisioned resources. For example, Bechtel standardized on HP dual- and quadcore BladeSystem servers. And because the services are separated from servers and other infrastructure elements that could change as hardware evolves, existing or future applications and services could easily run on new servers, storage systems and networks. Ramleth also shifted IT’s security standards from topology-specific to policyoriented ones. And he has standardized the way IT prices its services to users. Where pricing used to vary based on application and user location, he says, it’s now a flat per-user fee worldwide. Adopting a collaborative model is the philosophical shift CIOs need to make in order for their cloud initiatives to be successful, says Ramleth. Ultimately, evolving to a hybrid publicprivate cloud scenario will even allow him to eliminate capacity planning from his IT responsibilities, he says. CIOs should build private clouds for normal workloads

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and then buy into the public cloud for peaks, he argues. ING’s Boehme agrees. He predicts that a policy-based, hybrid cloud approach is IT’s future. “It doesn’t matter where the assets and applications are running,” he contends with conviction. On the face of it, a private cloud appears much like other in-house datacenters, where applications run on machines that get plugged into outlets. As Cheryl Doninger, research and development director of enterprise computing infrastructure at SAS Institute says, “We license the software, and we own the hardware.” But that’s where the similarity to oldline computing ends, she adds. At SAS, users access a self-service portal to reserve resources on the company’s private cloud, much like customers of Amazon.com’s EC2 do with that public cloud service. For automatic provisioning, SAS uses a tool called the Infrastructure Sharing Facility from Platform Computing. With Platform’s ISF tool, SAS builds policy-based provisioning templates that help prevent chaos in the cloud, Doninger says. For example, testers in SAS’s quality assurance department can reserve baremetal machines for a few weeks, or engineers in the field can snag predefined servers, storage and software for a couple of days. ISF prevents scheduling conflicts and releases systems back to the available pool after they are no longer in use. While some IT leaders are comfortable with automating the entire resource reservation and provisioning process, others are more cautious. Sinochem Group, No. 170 on Fortune’s Global 500 list, is one example. Through a translator, Jinsong Peng, IT general manager at the Beijingbased industrial conglomerate, described how the company carried out a full SAP upgrade for its 200 subsidiaries by using a private cloud during the testing and deployment cycles. “In the traditional model,

we would have needed to replicate multiple systems throughout the development and testing processes,” Peng says. However, because his team could share private cloud resources, Sinochem needed to add only 10 percent more capacity to the company’s IBM AIX server infrastructure. As is the case at SAS, testers at Sinochem requested systems in various configurations, which IBM’s CloudBurst service management tools dynamically allocated. But Sinochem instituted policies

Three Reasons to Go Private A private cloud has the advantage of delivering some of the benefits of the public cloud without sacrificing the protections provided by internal IT processes and procedures. In a Forrester Research report, analyst James Staten identified several advantages of private clouds: Improved cost-effectiveness. A large telecommunications company has an internal cloud with about 25,000 virtual servers. Its cloud is 30 percent more efficient than the traditional IT infrastructure, and it takes fewer people to manage it. Faster time-to-market with new applications. With an internal cloud, a new IT infrastructure can be deployed within 24 hours. Better protection of customer information. Few public cloud providers have track records that would satisfy chief security officers or regulatory agencies.

—Mitch Betts REAL CIO WORLD | m a r c h 1 5 , 2 0 1 0

Cloud Computing

that also routed each resource request through a systems administrator for approval, Peng says. Even with that conservative, humanin-the-middle approach, the automated provisioning process helped Sinochem complete its full SAP upgrade in seven months. That’s remarkable, given that such projects can take years to complete. For example, Shane, a Colorado-based retail jewelry chain, cited in bankruptcy filings that its SAP upgrade took two and a half years. As a result of the success of the cloudbased approach at Sinochem, Peng says, cloud technology will remain a permanent part of the company’s IT testing infrastructure.

Limited Tools At ING, which has a few private-cloud pilot projects in the works, a seamless hybrid setup is years away, Boehme says. In part, that’s because of the limits of today’s management tools. “You want a single pane of glass for management,” which doesn’t exist today for hybrid

platforms, he says. For example, if IT pushed workloads into public cloud computing services today, in-house administrators would not be able to manage the workloads in those external datacenters. Those workloads would run wherever the service provider’s policies deemed it appropriate. Cross-cloud policy management doesn’t exist. Paul Burns, an analyst at Neovise LLC, a research firm specializing in cloud computing, echoes Boehme’s view. Private clouds will dominate inside corporate IT for the foreseeable future because of classic business concerns about governance, security and, mostly, control, he says. “Although there is a trend toward invisible infrastructure, people still want to touch it today,” Burns says. For good reason, too, Burns adds. He points to a common problem in most datacenters: performance degradation of an application. Today’s monitoring and management tools would not be able to diagnose a problem’s source if the application were running in a hybrid cloud environment.

SoURcE: An dERS loFgREn, ThEIn Fo PRo, n EW YoRk, SEPT EMBER 2009

IT Leaders Lean Toward Internal Clouds Among IT leaders who are interested in cloud computing, the private cloud is getting the most attention. Are you using, evaluating or planning to use cloud computing? 43 percent 57 percent Base: 122 IT decision-makers in charge of servers Which type of cloud computing are you using, evaluating or planning to use? Internal cloud External cloud Both Base: 50 IT decision-makers in charge of servers and interested in cloud computing

YES

Beyond concerns about manageability, Boehme raises the specter of a move to cloud computing leading to vendor lock-in. For the most part, CIOs abhor vendor lock-in. Reliance on a single vendor can be costly and can keep a company from making necessary infrastructure changes. But Boehme worries that IT is risking “hypervisor lock-in” because of the lack of deep interoperability between the various virtual machine managers on the market. For example, if one hypervisor leapfrogged others in terms of performance, security or features, a company that used a different hypervisor might not be able to switch and take advantage of the new functionality because the cost of switching might prove prohibitive. Also, in the event of a merger or acquisition, integrating the two companies’ operations could prove difficult if each used a hypervisor that was incompatible with the other’s. But many enterprise IT leaders are finding that the benefits of cloud computing far outweigh the limitations. The biggest factor, of course, is money, specially with tight budgets at this postslowdown time. Still, IT has to continue delivering services to the business, though it has to do so while spending much less money. A private cloud lets IT get immediate dividends through self-service, automated provisioning and improved system utilization — all of which can lower IT operations costs, which chew up as much as 70 percent of a CIO’s budget, according to PwC. As Vinod Baya, director of the center for technology and innovation at PwC, observes, “IT has done great automating everyone but itself.” Now, he says, is the right time to start. CIO

54% 16% Bob Lewis is president of IT catalysts, Inc., an

30%

independent consultancy specializing in IT organizational effectiveness and strategic alignment. Send feedback to editor@cio.in

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VIEW

from the TOP

View from the top is a series of interviews with CEOs and other C-level executives about the role of IT in their companies and what they expect from their CIOs.

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Pursuit of

Wisdom By Sneha Jha and Shardha Subramanian

It wasn’t long ago when education for all seemed like a distant dream or just another political party’s forgotten promise. But today, there’s a lot of interest — and money — in the space, judging by the recent spate of educational institutions funding TV commercials. And there seems to be good reason for entrepreneurs to invest in the sector. The HRD ministry recently put a price to educating the whole country: Rs 171,000 crore. It’s a huge market. Investors are not the only ones causing a stir. Be it proposals to make tech colleges autonomous to getting rid of nightmarish board exams, the government, too, is getting into the act. More encouragingly, the government is acknowledging the importance of technology in distance education; in its 11th Five-year Plan, it allocated Rs 6,000 crore to ICT initiatives. To find out more about the new interest in the sector, we spoke to Anand Sudarshan, MD and CEO of the Rs 1,000-crore Manipal Education and former co-founder of Microland. With over 15 years in heading IT companies, he answers important questions about the growth sector including this one: does distance education really work?

What is the size of the higher-education market? And where does distance education fit? Anand Sudarshan:

Only 11 percent of students in India get higher education compared to 60 percent in developed nations.

Distance education can provide an important alternative. It addresses the needs of a large segment of our society who want to continue to learn in a structured fashion. Because of the expansion in distance education, a lot of people come into the mainstream. Distance learning has started questioning some weakly-held beliefs about education, teaching and learning. And that’s thanks

Ph oto by Srivatsa Sh an dilya

Anand Sudarshan, MD and CEO, Manipal Education, says IT can play a transformational role as the fast-growing educational sector opens up new frontiers.

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Anand Sudarshan expects IT to: Deliver quality Aid innovation Develop fearlessness for disruptive growth

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to technology. Today’s generation is affected by the electronic media and technology in a manner that’s very different from its predecessors. If we do not incorporate technology in their everyday learning, we would be missing the bus. Distance education is subsumed under the broader umbrella of the role of technology in education.

What changes are occurring in the space? These are exciting times for the education sector. Two or three decades ago, education had a laissez-faire approach. But, over the last couple of years I’ve seen a groundswell, especially from the youth, demanding something better. And that groundswell is becoming bigger. It’s like a tsunami that’s approaching the shore. At the same time, I am seeing an acknowledged willingness to question the status quo. There is a stronger recognition of the fact that youth and education represent a core resource of the country for a long time to come. Therefore, our leadership in the global scheme of things is really dependent on that.

How does your project, EduNxt, meet that demand? EduNxt is a new distant learning course that includes mentoring, virtual classrooms, simulation, interactive content, recorded presentations, shared browsing, and access to over one million online books and journals. It is an overall technology umbrella that covers many things. EduNxt represents an architecture that can help us use technology in all spheres of education: from campus learning to distributed learning and vocational education.

But does distance learning really work? Isn’t there a stigma attached to it? Ten years ago, I wanted to read a newspaper in the morning but today I read

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comparing it with formal education otherwise we will miss the forest for the trees. Some day it will come closer to the effectiveness of formal education.

"Only 11 percent of students in India get higher education. IT can play a significant role in increasing that number." — Anand Sudarshan

news on the Internet. Of course I read the newspaper, but I do not depend on it to get my daily dose of news. Distance education is not meant to replace a classical chalk-and-talk kind of classroom structure. A classroom structure gives students a chance to engage with the peer group that they miss out in distance learning. There is certain expansiveness to formal education of the conventional kind. We are not talking about replacement; we are talking about an enhancement of the learning experience through many different media. Also, in our country, higher education is evaluated by the exclusivity of an institution. We tend to associate pride with the educational institutions we studied in. But there is a vast majority that cannot go to such institutions. It is important to provide them with quality education in a manner that is consistent with the environment they operate in. That’s where I feel distance education is highly applicable. We should not get lost in

Let’s rewind a little. You went from Microland to Manipal. That’s quite a jump. There are a lot of similarities between the technological sector and the educational sector including an engagement with young people and bright minds. Ushering in change is also a characteristic feature of both sectors. The IT sector brings in a change in the way enterprises conduct business. The education sector aims to bring a change not only in society but also at the individual level. Both sectors are reflective of the immense potential India has. Even when I was in the technology sector, I was very keen on higher education. I spent a considerable amount of time in delivering lectures at institutions of higher education. My core engagement with higher education was always there. My propensity towards higher education can be attributed to the fact that my mother is a teacher. The foundation was laid at a very early stage of my life. When I shifted to the education sector, two or three years ago, the opportunity in the sector was great. I think the sector has tremendous potential and strategic value. Since my core interest was in education all along and the timing was just right, I decided to make the shift. The journey has been very exciting because I am doing something that is very close to my heart. I look at my role as a gardener. And, as a gardener I have to make sure that my plants are growing well. I need to ensure that they are watered and nurtured well.

How has your background in IT helped you? IT is close to innovation and process orientation. IT also represents fearlessness

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View from the Top

for innovation that can result in disruptive growth. Exposure to all of this makes a big difference. Having been in a sector like IT that has demonstrated all this in abundance, I have the ability to understand that innovation is at the core of business. I can accept and embrace disruptive growth. These to my mind are very valuable experiences. Exposure to the IT sector has given me the capability to ask relevant questions, seek answers, and take decisions directly towards implementation and execution.

Can education be treated as a business? When you run an educational entity with the rigor of an enterprise there are a few things that come to the fore. You bring in accountability that exists in enterprises. You adopt a goal-oriented approach. You also bring in orientation towards operational excellence. This results in the generation of a certain energy, verve, and drive that exists in business enterprises. Education can become self-consuming, possibly because of the intellectual rigor and strain it exerts. And also because of the feeling — bordering on over-confidence — among members of the educational sector that they are doing good (for society). And therefore the ability to look at ourselves critically normally gets given the go by. But when you bring in an enterprise focus, it leads to self-examination, critiquing, innovation and energy. If you can blend the wisdom and intellectual rigor that characterizes the education sector and combine that with the youth’s energy and goal-orientation you can harness a tremendous opportunity.

You acquired three companies in 18 months. What is that about? There is both organic and inorganic growth and what we have done is an acknowledgement of that strategy. We

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SNAPSHOT Manipal acquired a skill assessment investment in training is not Education and testing firm, MeritTrac. In the right approach. December 2008, we acquired Established: the entire shareholding of How does IT help 1953 American University of you deliver quality? Headquarters: Antigua (AUA) from New Manipal York-based Greater Caribbean From a pure quality Revenue: Learning Resources and perspective it does two or Rs 1,000 crore entered into a strategic three things. IT allows for partnership with TutorVista. consistency of execution. No. of Institutions: 20 com. We also acquired U21 That is something that IT has Global, an online varsity. demonstrated time and again. These universities are very committed to the It also allows people to define processes expansion of non-traditional media. and makes them more process-centric. We will continue to expand through But there is a flipside to IT. It can give you inorganic growth. We will look at enterprises so much information that sometimes you that satisfy the base criteria, adhere to our keep waiting for information to flow in and core values including transparency and do not take timely decisions. You think you commitment to higher education for effective don’t have adequate information and you social transformation. keep on granularizing the areas in which you want information. This could lead to information paralysis. Was education affected by

the slowdown? The education sector was probably much less affected than other markets by the slowdown. That’s because education is a slightly different sector. Compare it to the consumer sector, for example. You’d say that obviously most of the consumer sector is consumer-based. Education is also a consumer sector, but it is investment-based. An individual invests in his education so that he can mould his career for the future. Now compare that against the consumer sector which is driven by consumer expenditure, which can be curtailed. However, that does not mean that we were not impacted by the slowdown at all. Companies that were investing in training people to make them more productive certainly slashed their training budgets. And that comes as a disappointment to me because this is the time when companies should invest in their people and make them more productive. I understand that in a downturn, the first thing that gets cut is advertising, training and travel. However, I do feel cutting down on the

Finally, with more players in education, how do you differentiate Manipal Education? Manipal has been around for a very long time. Its name has become synonymous with quality education. In the education sector, differentiation comes from two things and they are interconnected with each other. First is recognizing the perception of the value of the brand. What do students think of Manipal? Second, you should define what your core values are and constantly keep renewing yourself. For example, at Manipal our core values are innovation, doing things that others have not done so far. We also want to expand our footprint beyond India. CIO

Sneha Jha is correspondent. Send feedback on this interview to sneha_jha@idgindia.com

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Reader ROI:

how to increase your awareness of IT’s problems The different guises IT’s enemies take What you can do to deal with them

By Dan Tynan

How to spot — and take down — the six most nefarious adversaries of IT. The list includes yourself. Everybody keeps a list of the people who make their jobs and lives more difficult, even if they never write it down. It’s a safe bet that IT pros’ lists are longer than most. You might think IT’s greatest enemies are cyber criminals and malware authors. But far worse are those who make the lives of these evildoers that much easier. In fact, the greatest enemies of IT are members of the community IT serves: from clueless suits to annoying power users, from miserly managers to those friends and family members who are always hitting you up for free tech support. Any one of them can keep you from doing your best — or getting anything done at all.

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IT Management Making an enemies list is not just a cathartic exercise but also a useful one, says Mark Kadrich, CEO of The Security Consortium. “Though they often curse the user community, most IT pros don’t spend the time to identify good users from the bad ones,” he says. “You ask most of them how many users have administrative access to their systems, and the answer is usually either ‘I don’t know’ or ‘all of them.’ I think they need to take more time to classify their user communities.” Here are the classic enemies of IT, how to recognize them, and what you can do to keep them at bay.

The Penny Pincher Whether it’s an enterprise-level CFO or a small-business owner, a penny-wise pound-foolish manager can stand in the way of necessary IT investments — making your job much harder. Penny-pinching CFOs are among the biggest enemies of IT, says Nancee Melby, director of product marketing at Shavlik Technologies. “Any CFO who thinks the free patching solutions from Microsoft are good enough needs to find a new job — or get out of IT’s business. Leaving your keys in the car and only locking the driver’s door will keep out only the stupid criminals.” Granted, IT can be a bottomless pit, notes Peter Marsack, director of business development for Vision Computer Solutions, an IT services firm for SMBs. But that can often lead to an irrational fear of all spending. “The beauty of technology is you can dump a virtually limitless amount of capital at it and still have problems in your technical infrastructure,” he says. “Because of this, getting purchasing requests approved can be a tedious process even if the cause is just.” Marsack points to medical companies that refuse to become HIPAA-compliant — despite the security benefits and the penalties non-compliance might incur — simply because upgrading all their equipment costs too much. “I have clients who refuse to replace their seven-year-old computers because ‘they still work’ even though their staff burns through 10 hours a week just waiting on slow machines,” he adds. “Most people think they can just purchase computers, put a network in place, set it, and forget it. We have to explain to them these machines need to be maintained and supported.” Recognizing the enemy: Though you might garner clues from threadbare office furniture or those Windows 98 machines running in the reception area, the only way to know for sure is to ask pointed questions about how the o r g a n i z at i o n allocates resources for t e c h n o l o g y, says Marsack. “If they answer, ‘We never do that,’ or, ‘We get things as we

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need them,’ that’s a red flag. If they say they devote X amount or allocate money on a regular schedule, they’re more likely to invest the money required.” Your best defense: Gather intelligence. Find an incident where the organization’s lack of IT investment hurt its bottom line — say, a server that crashed or a backup that failed, leaving customers in the lurch — and exploit it. “These are the kinds of things that happen when you’re not allocating appropriate resources to technology,” Marsack says. (Also ready 4 Ways to Win Over Your CFO) Still, he adds, defeating this enemy isn’t easy. “I’ve not met many people who enjoy writing a check for any amount budgeted for technology, even though their entire company runs on it,” he says. “The person with the checkbook is the hardest person to please in the business.”

The Power User Every IT pro has stories about plebes who suck the lifeblood from the help desk with questions about their PC’s ‘any’ key. But the real threat is posed by users who know just enough to be dangerous. “For me the biggest enemy is not the clueless user, but the clued-in user who doesn’t have the whole picture,” says Kevin Thompson, information security manager for Minnesota State University at Mankato. “This is the guy that thinks he is helping by running pre-release software he downloaded from BitTorrent. This guy has all the passwords of the other users in his office and acts as the un-appointed first line of technical support. Instead, he frequently breaks things.” Not only do power users cause support and management headaches, they can be walking, talking security nightmares, says The Security Consortium’s Mark Kadrich. “They’re usually engineering types or Ph.D.s who firmly believe they know more about the computer and network than you do,” he says. “They insist on having admin/root access so they can ‘configure’ their custom applications or memory, and believe firewalls are for the unwashed masses. They’re ‘savvy’ and can outwit any hacker on the planet. Besides, they ‘don’t have anything that a hacker would want,’ so why should they worry? Their naiveté borders on the criminal.” Recognizing the enemy: They might be wearing Armani or T-shirts and flip-flops, but they’re carrying a jailbroken iPhone in one hand, a Palm Pre in the other, and two laptops in their bag. Also: Anyone with a ‘Dr.’ in his or her title. Your best defense: PsychOps. The only way to get a power user’s attention is to scare the hell out of them, then gradually bring them over to your side, says Kadrich. The exact approach depends on the position they hold in the corporate ranks.“Executives don’t give a damn about security, but they do REAL CIO WORLD | m a r c h 1 5 , 2 0 1 0

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IT Management care about their brand,” he says. “You tell them, ‘What you just did caused a huge number of e-mails to go out proving how screwed up our brand is.’ That generally gets their attention.” For lesser tribe members, Kadrich makes the threat personal. Thanks to the power users’ meathead behavior, their personal financial information has been compromised; now they have to call their bank and cancel all their accounts. The second prong of attack? Training and awareness. Low-key regular luncheon sessions talking about the latest security breaches is the most effective way to alter people’s behavior, he adds. “You want to make the people in your organization security ambassadors,” he says. “Taking the enemies of IT and converting them into true believers is the best approach.”

seeing the trade-offs — even when the trade-offs are things that can ruin the business,” he says. Your best defense: Seek air support from high command. “You need a data governance plan that spans the entire organization, which means getting a CXO type to step in and say, ‘This is the way it’s going to be,’” says DataFlux’s Teachey. “They’re the only ones with the will, the persuasiveness, and most importantly the budget to get it done.” But what if there’s no one to give support from above? “Then you’re between a rock and a hard spot,” notes ESET’s Abrams. “The best you can do is hope to educate them. Figure out the best way to state your case so that it makes sense. Come up with a good analogy that’s relevant to them. Knowledge can be power, but only if it’s shared.”

The Ostrich

The Politico

The biggest enemy of many IT leaders: bosses who bury their heads in the sand when it comes to technology, yet are still empowered to make critical IT decisions. Business people become the enemy when they refuse to acknowledge they have a role to play in how IT operates, says Daniel Teachey, senior director of marketing for data-quality specialists DataFlux. “Even if it’s something as simple as defining what the term ‘customer’ means to their business,” he says. “Data informs every action the business takes, and unless the business side takes some role in the management of data, IT will be left holding the bag and getting all the blame.” Even worse, upper management types that don’t understand concepts like network security, yet override critical decisions of their network admins, says Randy Abrams, director of technical education for security vendor ESET. “If you are in charge of network security but have no power to make decisions, then your job is to take the blame when things go wrong,” he adds. The classic example: e-mail attachments. “Several years ago IT had an incredibly hard time getting management to allow them to block executable attachments in e-mail ,” says Abrams. “There was rarely a case when an executable file actually needed to be e-mailed, and the security advantages of blocking far outweighed the potential business costs of having these files blocked. Eventually the blocking of executables was built into Outlook, but it was a mindless battle of the clued vs. the powerful clueless for a long time.” Recognizing the enemy: That glazed-over look when confronted with technical questions, or the moment they open their mouths, says Abrams. “They tend to say no first without ever understanding the problem or

As technology rises in importance across virtually e ve r y organization, office politicians will be looking to surf the IT wave into the executive suite — even if they have to ride on your back to do it. That’s why IT leaders who play politics can be their own worst enemies, says Steven Levy, CEO of Lexician Consulting. “These CIOs don’t understand the businesses they serve, and they’ll say or do anything to get ‘a seat at the table.’” In the long run, says Levy, they end up undermining the value of IT to the enterprise. “When they talk about reducing complexity, they mean cutting the number of applications IT has to support, not simplifying the life of the business customers they serve,” he says. “They talk about IT being up-to-date and then can’t figure out how to roll out a new version of Windows or Office until three years after it shipped. They hire bureaucrats that they think are technocrats, but the technologists in IT laugh at their skills. And they’re terrified by the idea that departments and business teams might develop their own applications, seeing that as a threat to their fiefdoms rather than as a way to help the business support itself.” Recognizing the enemy: Look for people who’ve mastered the art of talking out of both sides of their mouths at the same time, says Levy. Your best defense: Dig a trench and try to outlast them. Effective CEOs are veterans at spotting those playing office politics, and the CIO honeymoon period may be short, notes Levy. Or make allies with high command to shield yourself from radioactive fallout when things implode. “The best solution is to get the business leaders in the C-suite or with highly respected voices to laud your work and talk up your solutions, thus covering your back in a way that the CIO can’t effectively undermine,” says Levy.

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IT Management

The Freeloader If you’ve been an IT leader long enough, you’ve surely encountered this time-and patiencesapping foe. A ‘simple’ question about computers morphs into demands for free 24/7 tech help when you have actual paying customers to support. “The absolute worst offenders are people who assume that they can pick up the phone and call you anytime they have even the most minor computer problems,” says Dan Nainan, a comedian and ‘computer genius’. “Having been a senior engineer with Intel and a computer nerd for my entire adult life, I am beset on all sides by people who think they can just pick up the phone and call me anytime with a computer question. Haven’t these people ever heard of Google?”

4 Ways to Win Over Your CFO How often have you walked away from a conversation with your CFo with a feeling that they simply don’t get IT? But some of the problem belongs with us — we don’t communicate in the language of the CFo. Here are a few ways to get them to listen to you: 1. Think TCO, not ROI: Most IT projects — no matter how compelling — don’t bring ‘return’ to the organization like an additional sales person or a new product launch. Discuss projects with CFos in terms of TCo. Repeat it until you are blue in the face — IT projects are overheads. You get over this by demonstrating fiscal stewardship by showing that you are providing the lowest cost. To do that, you must provide options, comparisons, case studies, and examples. 2. Clouds: CFos like what they hear about cloud computing as a cost saver. Don’t fight them on it. You can leverage what they are hearing in order to steer cloud spending on the right IT projects. 3. Virtualize, Virtualize and Virtualize: There are three key virtualization targets — servers, desktop and storage. But again, the key here is how to justify and how not to justify.Server virtualization is the easiest to justify TCo-wise. The challenge is to provide accurate savings estimates up-front. Desktop virtualization projects usually require a multi-year business case. Check into the new wave of storage virtualization products. They can lower capital spending by up to 90 percent. 4. Proactive Cost Reduction: When DuPont did a three-year internal study of document discovery requests, they learned that 50 percent of documents that were reviewed were kept beyond their required retention period. And the cost of reviewing documents past their retention periods was $12 million (about Rs 54 crore). For this particular example, ‘e-mail archiving’ is a good way to demonstrate to CFos that IT can be proactive in cutting costs. Always be on the lookout for these kinds of projects. —By Irwin Teodoro.

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Clueless and greedy users are the enemy, agrees Howard Sherman, founder of on-demand tech support site RoyalGeeks. “They don’t have a clue, don’t want a clue, and don’t even know what a clue is, yet they expect you to answer each and every question they have.” Recognizing the enemy: When they find out what you do for a living they immediately (a) ask for your card, (b) start flirting shamelessly, or (c) launch into a tale of technical woe. Your best defense: If possible, retreat. “When you spot a user like this just start running down the hall screaming,” suggests Sherman. Unfortunately, since you’re often related to these people, you will eventually run into them at weddings and funerals. Dan Nainan keeps a short list of those who deserve tier-one support — like his agent or the superintendent of his apartment building. The rest he sends to voice mail or redirects to actual tech support lines. “I find if you wait 24 hours the problem solves itself — or they’ve found some other sucker to fix it for them,” he says.

You/Me/Us We have met the enemy and he is us, to quote Pogo’s Walt Kelly. When things go wrong with technology, IT people often have no one to blame but themselves. “I’d say human nature is the primary ‘enemy’ of IT people,” says Vladimir Chernavsky, president of DeviceLock, provider of data leak prevention software. “We can be reckless beings who don’t feel the need to follow protocols at all times. We can take things for granted, which will result in doing wrong or stupid things, creating havoc and annoyance for people working in IT.” Scott Dunlap, author of The Dung Beetle Manager says IT people can be their own worst enemies, in part due to both an excess of optimism and overconfidence in their own abilities. “IT people want to say yes and they want to impress,” he says. “But what ends up happening is that, each time they try to circumvent normal procedures for deploying enterprise IT, they end up taking some shortcuts around some hard but necessary steps. Just like you can’t make a baby in four months, you can’t make IT work without following the right processes.” Recognizing the enemy: Look in the mirror. Your best defense: Return to boot camp. Discipline and training help IT pros avoid succumbing to their weaker natures, says Chernavsky. However, no matter how well trained you and your IT colleagues may be, you’ll still have to deal with users who aren’t, he adds. “Adopt a disciplined process and hold to it as much as the physics and politics of your systems will allow,” advises Dunlap. CIO

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everything you wanted to know and more

Tomorrow’s Datacenter

Illustration by unn ikrish nan av

With ever more computing power being crammed into datacenters, problems are starting to crop up everywhere. Here’s how you can simplify your datacenter.

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What’s Inside Deep Dive Features Notes from a Datacenter Overhaul �� 60 Datacenter Density Hits the Wall ��72 Case Study A Sweet Deal ��68 Column Pulling a Stunt ��78

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Deep Dive | datacenter

By Brian Chee and Curtis Franklin Junior What are the three most important ingredients of a successful project? Planning, planning, planning. For our datacenter makeover at the University of Hawaiiâ&#x20AC;&#x2122;s School of Ocean and Earth Science and Technology, we planned early and often, and still got bit by last-minute surprises and devilish details that cost us time and money. Weâ&#x20AC;&#x2122;ll do it a little different next time. You too can learn from our mistakes. Our little room in the Hawaii Institute of Geophysics, HIG 319, was no stranger to servers, though it only had a casual acquaintance with them. When we started the project, the room had six racks installed, one with an 80kW APC InfraStruXure UPS being used at 40kW capacity, and most of the rest of the racks only partially 60

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notes from a

Datacenter Overhaul A painfully honest account of a datacenter makeover has an important lesson: it takes more than just a perfect plan to pull off. populated with servers for the various SOEST departments. SOEST needed the new datacenter to house a number of new server clusters for use by the research labs. An initial estimate would add three clusters comprised of a mix of traditional servers and blade servers housed in new racks. Managing this upgrade would require doubling HIG 319’s square footage, adding an additional 250 amps of electrical power on a new breaker panel, and completely revamping the cooling system, which at the beginning of the project consisted of three wall-mounted window-style air conditioners that were already giving their all, to little effect. Although HIG 319 had some drawbacks in terms of location, the tight deadline precluded any more political wrangling for a more favorable position on the building’s

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ground floor, which was occupied by several research labs. Besides, the maintenance corridor directly behind the room was a welcome advantage, and the room directly next to HIG 319 was a littleused storage room exactly the same size. Combining the rooms would give us the square footage we needed. We drew a deep breath and took the plunge.

Hard Lesson 1: Give Physical Space a Good Physical A basic task list was fleshed out and work began immediately, temporarily moving HIG 319’s existing servers, removing whatever artifacts were being stored in HIG 319a, knocking down the wall separating the two rooms, and gutting everything else. A sexy new tile floor had been installed, the walls painted, and new lighting wired up when the campus

facilities management department threw us the first curve ball. Because the SOEST building is almost 50 years old, it’s standard UH practice to have a structural engineer vet the room before anything as heavy as a new datacenter is installed — we just didn’t find out about that little detail until it was too late to go anywhere else. Further, because the building’s original structural records had long since disappeared into Hawaii’s tropical ether, the engineer had to start from scratch with his calculations. This effectively paralyzed the project for a solid month, since nothing could happen until the engineer rendered his verdict. Four weeks later the engineer announced the floor stable…barely. While REAL CIO WORLD | m a r c h 1 5 , 2 0 1 0

Deep Dive | Datacenters the two rooms could house a datacenter, it would have to be a lightweight datacenter because most of the racks would be limited to a 363 kilos maximum load, the few exceptions being certain areas over the support beams. That was a nasty kick in the nethers, given that a fully loaded cluster-running rack can weigh as much as 907 kilos and we had planned on using six of the 12 racks in the new datacenter for Beowulf clusters. Strike one — back to the drawing board. A flurry of tropical meetings later and we had what looked like an effective workaround. The four server clusters would move to another location, while the HIG datacenter would now house departmental servers from the various SOEST departments in 12 APC InfraStruXure racks. This would effectively make HIG 319 the central datacenter for all these departments while freeing up space for the clusters at the other locations. Not an optimal solution, but a necessary move if the college intended to install the new server clusters it wanted.

Hard Lesson 2: Don’t Skimp on Professional Services Work on gutting and remodeling HIG 319 resumed and we made our first official contacts with APC for power and cooling solutions and rack requirements. The information we received took into account our square footage, the current electrical and cooling specs of the two rooms, and our intended server and rack load. APC ran all these figures through its datacenter planning tool and sent back a series of PDFs that gave us an initial floor plan, the names and model numbers of the power and cooling solutions they recommended, and a basic blueprint of every rack in the new datacenter. Initially this looked great, but later we found we’d made a critical mistake. APC was kind enough to volunteer not only the equipment, but also manpower for the project. Understandably, the company wanted to save as much money as it could here, so our project was run using the cost-savings model rather than the full-on professional service model of APC datacenter design. The deluxe model would 62

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What to Watch Out For When giving your datacenter a makeover remember that… There’s no substitute for expert guidance. So: Spend money on full professional services consulting with a core vendor. Don’t follow your instincts. So: Have a structural engineer vet the room before anything as heavy as a new datacenter is installed. The devil is in the details. So: Make sure that a dedicated, detailoriented project manager is at the top of the budget list. Count on things to go wrong. So: Plan for the unexpected by getting an early jump when you can and building time for unexpected delays. Vendors can trip you up. So: Watch them like a hawk. Don’t let them leave unfinished business behind. The project leader can’t be everyone’s friend if you want your project to succeed. So: Guide your team and your vendors with a firm hand, and throw a completion party to smooth over any bruised egos.

have required more manpower in the form of a project manager on APC’s side. For readers embarking on their own datacenter project, we can’t overrecommend spending the money on full professional services consulting with a core vendor such as APC. Had we the good sense to solicit the service, UH reps say they would have tried to come up with the money somewhere, because trying to save cash by running without such help is very risky — as we were about to find out. Even at this early planning stage, an APC project manager would have gone over every detail in a conference call, whereas

we simply received PDF-laden e-mails; he also would have given recommendations for installing the wiring, piping, and other prerequisites. Opting for the unroyal treatment, we were simply referred to a reference page on APC’s website that showed piping specs for a variety of different cooling solutions. Left to our own devices — and the recommendation of a UH air-conditioning engineer who misunderstood some specifications — we made the wrong choice. In short, there’s no substitute for expert guidance. An APC project manager would have made this selection for us and simply told us what to install. The right piping would have been a no-brainer from the start, instead of a last-minute correction, and nearly a costly rip-out-and-replace exercise.

Hard Lesson 3: Saddle a Project Team Member with Detail Duty We did get some good advice from APC on our cooling solution, though even here a consultant would have helped. APC consultant or no, it would have been a good move to assign one of our project team to detail duty. We had a project lead coordinating activity and making sure the work was getting done. But we had no one tracking those critical little details — product specifications, order status, supporting documentation — that set us back time and again. The order for our cooling solution was a case in point. Originally, we’d hoped to use the building’s chill-water cooling, because that’s typically the most costeffective choice for small datacenters like this one. However, the chill water capacity was already taken up cooling existing labs. We’d have to use something else. APC’s product engineers put their heads together and recommended the InRow RP, a solution that uses two roof-mounted condensers matched to two APC SX rackmounted compressors and evaporator assemblies. The InRow RP was the next-best thing to chill-water from a cost standpoint, and installation promised to be straightforward. Install the appropriate mounting brackets on the roof and run the

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Deep Dive | Datacenters right piping to HIG 319-319a through the pipe chase behind the room, and we’d be good to go. The best part is that the InRow solution is significantly more efficient than traditional datacenter cooling units, so we’re banking on significant energy savings as well. After the adventure with the just-intime structural inspection, SOEST’s lead facilities manager, Phil Rapoza, insisted on proceeding with extreme care. Phil flatly refused to begin construction on the condenser roof mounts until the condensers actually arrived. A good thing, too, because the two multi-ton condenser units we received were somewhat different than the unit described in APC’s submittal drawings — different enough that the mounting brackets originally

spec’d would have been useless. One last condenser problem came to light only shortly before the units were ready to ship. Our project team assumed that APC’s sales team would know to coat the condensers with outdoor sealant for Hawaii’s highly salty, rust-inducing atmosphere. But without an APC project manager on the job, or any of us minding the order, the APC sales people weren’t even consulted. As a result, immediately upon arrival the condensers had to be moved from the shipping company’s truck onto a university truck and taken to a weather coating professional elsewhere on the island. This at considerable additional expense to SOEST, and the additional cost of a five-day delay during the construction phase of the project.

Datacenter Staffing Tips

hanks to technology, it doesn’t take a whole lot of people to run a datacenter. With new remote-management and automation capabilities, you need fewer datacenter staffers. For instance, Microsoft will staff its 500,000-square-foot Chicago datacenter with only 35 people. And at Virgin America CIO Bill Maguire is using an India-based remote infrastructure provider to manage his operations during overnight hours — and he’s doing it at a big cost savings. Maguire says the full-time annual salaries of network, database and applications administrators to manage those systems overnight in the US could run as high as $90,000 (about Rs 40 lakh). Instead, he pays $17 to $20 (between Rs 750 and Rs 900) an hour per person to have his systems run remotely. The US staff handles operations during the day.But there is one area of expertise that is in high demand in US datacenters: virtualization technology skills. Over the past year, the number of active advertisements on the Dice.com job site seeking people with skills in VMware virtualization tools has gone from a few hundred to more than 1,500, says Tom Silver, Dice’s senior VP of marketing and customer support. “This is among the fastest [growth] we have ever seen” for a specific skill, he says. Some virtualization help-wanted ads seek people with three to five years of experience in a technology that five years ago was still rare. The pool of experienced administrators is still relatively small. Consequently, while pay appears to start at $60,000 (Rs 27 lakh) for a systems administrator with some VMware experience, salaries of $80,000 to $100,000 (between Rs 36 lakh and Rs 45 lakh) are also being advertised. When recruiting people with virtualization expertise, it may help to prove that your company cares about ecofriendly technology. Six months ago, Enterprise Rent-A-Car set up a green IT committee to explore ways to save energy. Among those on the committee was a representative of the human resources department, says Jim Miller, assistant vice president for IT. “One of the things that we found as we recruit IT folks is that there’s an interest in what we what we are doing to preserve the environment,” says Miller. — By Patrick Thibodeau 64

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Putting a project team member in charge of tracking order details and other minutia likely would have avoided these difficulties. Weather-proofing would have been included in the original condenser order. Changes to the condenser models would have been noted long before they arrived, eliminating confusion over the mounting brackets. If you’re diving into a datacenter project, you’ll want to make sure that a dedicated, detail-oriented project manager is at the top of the budget list. Trust us when we say that the position will more than pay for itself as the project moves along.

Hard Lesson 4: Hold Your Team Close, and Your Vendors Closer One area for a project manager’s special attention is the vendors. There are plenty of places a vendor can trip you up. Watch them like a hawk. One example was our shipping experience with APC. The sheer volume of gear that APC shipped us for this project was staggering. We wound up using an entire 40 foot container truck to deliver our goods — and it was stuffed. That gets shipped via ground and sea by a contractor other than APC. And that’s where the trouble starts. Naturally, we simply took APC’s word that the shipment was en route as ordered — and they, in turn, were taking the shipping company’s word for it. It turned out, however, that our stuff was ordered and consequently shipped later than we’d thought. That became an issue right around the time we realized the cooling condensers had to be weather coated. Because the project deadline loomed just two weeks away, adding a week or so of weather coating into the schedule was a big problem. But when APC tried to find our goods in the shipping company’s records to see if we could either halt the condenser delivery so APC could coat them, or speed it up so we wouldn’t be so crunched for time, the shipping company couldn’t give us an exact location. By the time it could, the condensers were bobbing across the Pacific. We couldn’t even get the shipping Vol/5 | ISSUE/05

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company to prioritize our container so it would get dropped on the dock early Monday morning. We ended up having to shift project deadlines and travel schedules. Staying on top of your vendor’s shipping process may be a pain, but it will serve up golden dividends of efficiency on project day. Another important part of vendor watching is staying on top of equipment orders. We weren’t nearly careful enough here. Don’t just place the order and assume they’re shipping what you want. We did and it hurt. Even the best vendors with the best intentions can make critical mistakes when filling orders. Only the caution of Phil Rapoza, our facilities manager, saved us from APC’s condenser spec-and-switch. We also had a full cable management system spec’d out and ordered, but suddenly the vendor (who shall remain nameless) backed out, claiming resource problems. Here again, Phil Rapoza and his band of merry men saved the day, fabricating cable ladders customized for the room when an alternative supplier couldn’t be found in time. Your project’s problems might have different root causes , but in an industry that moves as fast as ours companies can go out of business, shift direction, or be acquired over the course of a weekend, leaving customers holding the bag when orders disappear into the ether. Count on orders and shipments to go wrong. Plan for the unexpected by getting an early jump when you can and building time for unexpected delays into your project schedule.

Hard Lesson 5: Make a Migration Checklist and Check it Twice Finally, moving day arrived. To make our migration easier, we’d contacted the boisterous folks at Silverback Migration Solutions, an outfit that specializes in helping companies perform datacenter migrations and build-outs. Where a general IT staff might take days to put racks together, add shelving and other accessories, slide the servers in on new

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Finding a New Home for Your Datacenter

f datacenter location mattered, the San Francisco Bay Area wouldn’t have one of the highest concentrations of datacenters in the world. Some companies have the ability to build datacenters in areas that are geologically stable, are hurricane- and tornado-free, and have low-cost power and skilled labor available. In short, they can behave just like Google and build a datacenter wherever they want to. But for most IT leaders, pulling out a map to pick the best spot is akin to playing fantasy football. The job of most IT leaders is to make the best of whatever environment they must run their datacenters in, because they might have no say in picking. But if the choice is yours, co-location is a good option. Proximity to headquarters plays a major role in a datacenter location decision. Consider, for instance, IT leaders who use co-location services. Co-location firms offer datacenter space and can manage the customer’s physical equipment; meanwhile, the customer can manage its servers remotely. A customer might own its own equipment, or lease it and contract for management services. Whatever the setup, its users can access the systems from any location, giving the customer a lot of geographic flexibility. Alex Bitoun, CIO at Houston-based health care provider Diabetes America, uses the co-location services of CyrusOne Networks LLC. CyrusOne’s facilities are only a 10-minute drive from his office, and that’s the way he likes it. Bitoun turned to a co-location provider because the cost of building, managing and securing a datacenter was too high. From a technical point of view, the distance to the co-location facility shouldn’t matter, says Bitoun. “We can pretty much do everything remotely,” he says. And CyrusOne technicians can address any physical problems that his servers may have. “But there is something comforting about knowing that it’s just a few miles away,” says Bitoun. Proximity to the co-location provider mitigates risk by giving his technicians the ability to easily check on equipment. It also allows him to have face-to-face meetings with the provider. — By Patrick Thibodeau

rails, and test functionality end-to-end, Silverback cranks through these tasks in record time, sometimes installing 30 or 40 full racks of servers in a single day. But while Silverback’s on-site reps were willing, our planning was weak. Though we’d had months to do the prep work, we’d slipped into complacency and simply assumed certain things would work out as desired. Murphy gleefully proved us wrong. Using APC’s datacenter planning software, we’d created the necessary blueprint of our new physical layout, but instead of fleshing that out we let it go and assumed that auto-generated floor maps were enough. A conversation with Silverback and Rackwise reps cured us of

that notion, sending us back to the drawing board to fill in some important gaps. APC’s rack maps were a good start, but they’re not designed to take into account customized weights of individual pieces of infrastructure — they use reference weights from a vendor database in order to provide ballpark figures. So the standard weight APC provides for a Dell PowerEdge 1650, for example, might reflect a configuration with two hard drives, whereas our servers might have four. Not a big difference for one server, but when you multiply by dozens per rack, and you’re facing an 363 kilos weight limit, the true weight becomes important. We were forced to make several rack reconfiguration decisions on the fly. A second important omission REAL CIO WORLD | M a r c h 1 5 , 2 0 1 0

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green IT

Mini Tools Max Gain Find cost savings by reducing equipment and increasing space.

he first step in building a datacenter is learning to deal with sticker shock. New datacenter space costs at least $1,500 (about Rs 67,500) per square foot to start, according to IDC. That means IT leaders will first be asked this ROI question: Are you getting all that you can out of the datacenter space that you have? There’s a lot of technology available that can help you pack more equipment into a seemingly shrinking datacenter. But if an inadequate datacenter is impeding business growth, “that becomes a much greater cost than anything you can outlay on building a new datacenter,” says Michelle Bailey, an analyst at market research firm IDC. Once a decision is made to build, the IT leader must negotiate with vendors to get the best deal. And the old rules apply: The more you’re buying, the more leverage you have. And new datacenters mean a lot of new equipment. Another important thing to keep in mind is to minimize equipment. Denser equipment that takes maximum advantage of computing power can “in many cases dramatically reduce the footprint required to support the applications [a company maintains] today,” says Lee Kirby, vice president and general manager of Lee Technologies a datacenter development and management firm. “A smaller footprint equates to less maintenance and cost of ownership,” says Kirby. Yet, even with new construction, the battle to control cost and maximize the investment is never-ending. Sam Segran, CIO at Texas Tech University in Lubbock, is finishing a 1,000-square-foot datacenter expansion and is already worried that it won’t be enough to meet the university’s needs in six or seven years. “We have two diametrically opposed things happening,” says Segran. “On one side, we are getting crunched by cost issues of providing [cooling and power], and on the other, we’re needing to double what we do for the researchers.” The university is looking at technologies that provide more computing power using less energy. One is IBM’s iDataPlex, which includes 84 servers built into a 42U rack (1U is equal to 1.75 in.). The iDataPlex is a dense system that cuts power use in several ways. For example, using servers of less depth lessens the workload of cooling fans. Preliminary research by the university’s IT department found that the system might be able to provide 30 percent more computing capacity using the same amount of power as a current system. At Denver-based Cimarex Energy, datacenter project manager Rodney McPearson focused on improving his IT systems after the company decided to run a series of small, distributed datacenters. Last year, Cimarex installed an American Power Conversion in-row cooler system that creates an enclosed area for servers. McPearson says it costs roughly $1,000 (about Rs 45,000) a month for the system to cool about 90 servers. In contrast, a conventional cooling system in another room chills a similar number of servers for $2,500 (about Rs 1, 12,500) a month. At Virgin America, CIO Bill Maguire says he maximizes the use of space and saves money through a variety of means, including eliminating raised floors and using water-cooling systems from Liebert that cool from above instead of blowing air up from below. He says his choice of energy-efficient blade technology from Verari Systems was critical as well. This approach has cut his energy cost by about 27 percent, Maguire says.

Deep Dive | Datacenters was failing to gather full technical documentation for the equipment being migrated. Because the HIG 319 datacenter was to serve as a co-location facility for a number of SOEST departments, we would be re-racking, rewiring, and reassembling systems from all around campus. Detailed notes — and aha, admin passwords! — would be needed to put them all back together again. Yes, we not only lacked detailed information on how some of that equipment was configured, we even failed to collect the admin passwords for six servers we moved from another building. That meant we couldn’t bring them up for testing until their research administrators could be found. Like most server migrations, ours was performed during off-hours, so not having the passwords wound up pushing the final equipment testing part of our plan well into production hours on the following day. A migration day typically leaves little room for error or indecision. Before that day comes, you should have a punch list — a list of detailed, step by step instructions — that will guide everyone’s actions from start to completion. We suggest that all team members keep notes on loose ends and to do’s, and provide them to the team leader in time to create the punch list before any vendors go home. Don’t let your solutions providers leave unfinished business behind. It will only be harder to finish without their help. Finally, the project leader can’t expect to be everyone’s friend if you want your project to succeed. Guide your team and your vendors with a firm hand, and throw a completion party to smooth over any bruised egos. And be sure to schedule a wrap-up meeting to discuss what went right and what went wrong. Someday you might have to do this again. CIO

Brian Chee is a senior contributing editor to the

InfoWorld Test Center (a sister publication of CIO) and the founder and manager of the Advanced Network Computing Laboratory at the University of Hawai’i School of Ocean and Earth Science and Technology. Curtis Franklin Jr. is a senior contributing editor to the

— By Patrick Thibodeau 66

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InfoWorld Test Center. Send feedback on this feature to

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Deep Dive | Datacenters

A Sweet Deal By Todd R. Weiss

How Tasty Baking moved its datacenter in 13 hours.

Il lustrat io n by MM Sh an it h

ometimes, waiting for a long time can make the result all the sweeter. That’s been the case at Tasty Baking, when it moved out of its cramped factory building and into a new state-of-the-art datacenter and bakery facilities across town. There are no more unidentifiable, spaghetti-like, ancient coaxial, Ethernet and telephone cables and wires running who-knows-where through the ceilings and floors in the datacenter. The IT staff is no longer crunched together in a small, windowless room in the midst of the noisy, server-filled space in an old brick factory building, which was always freezing cold regardless of the season. And the new space even has new gear, because, in 2007, while still in the old 68

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datacenter, the IT staff replaced all the computing and networking equipment. Now, in the new facility, overdue IT upgrades can also finally be possible because no further compromises have to be made to fit inside an old factory that was never meant to house a datacenter when it was built. All of those improvements and more happened in April 2008, when the datacenter and business offices of the snackcakes bakery led the move from the crowded building in the city’s North Philadelphia section to a new site at what was the US Navy Yard at the southern tip of the city. The bakery began moving some product lines into the new building in November, with the final relocations of all product lines expected by next summer. Being able to start from scratch meant that many existing

problems could be solved all at once, from finding more space for the staff to improving power, cooling and maintenance for the IT equipment, says Brendan H. O’Malley, vice president and CIO. Key to the experience: “We had great lead time,” O’Malley says. IT started the whole relocation project more than two years ahead of the actual move, as part of a regularly scheduled server refresh. In May 2007, just as the refresh project was beginning, the company announced its plans to move to its new location. That meant that the IT department, which typically leases all of its servers and other equipment, had plenty of time to make preparations and obtain new

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Deep Dive | Datacenters

hardware for its all-new datacenter before construction even began. The staff brought the new hardware into the existing old datacenter and used it. Right before the move, though, Tasty invested in new disaster-recovery and networking gear that was brought into the old building, assembled and tested. Then the goal became to take it all apart and move it to the new datacenter when the time came. “The move and the relocation became a key component of all of our thinking,” O’Malley says. A request for proposals went out, product selection took place and brand-new servers and storage equipment were brought in to the old datacenter by late 2007, and was up and running. To make the actual move seamless, the key was ultra-detailed preparation, O’Malley says. The IT team had plenty of input when the new datacenter was being planned and built, says Greg Plover, the company’s infrastructure manager. When it was time to move in, all the complex cabling and wiring was pre-installed and waiting for the IT hardware to be brought in. And before the new hardware was even actually packed up and moved, the IT team did three dress rehearsals between January and March, running through the procedures on how to shut down and then restart the systems once they were moved across the city.

No More “What the Hell is That?” Tasty Baking, which churns out millions of popular snack-sized cakes and pies called Tastykakes, was founded in 1914 and built and moved into its six-storey bakery

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on Hunting Park Avenue in 1922. “When we were in the old facility, every time you looked at something new to adopt, you never had a clean slate” on which to build it out in the datacenter room, O’Malley says. The IT crew would pull up flooring and find decades-old cables and wires that were often not easily identifiable. “’What the hell is that?’” was a common refrain among IT workers, O’Malley says with a smile. The original area cordoned off for the IT department never really served effectively as a datacenter. In the old bakery building, the infrastructure team members — roughly half of the 16 IT workers — were all crunched into a central, noisy and cold office area within the old 10,000-square-foot datacenter. The other IT staffers, making up the development team, were in a nearby area but were separated from their co-workers.

Not Everything Was Ancient The company had moved to ERP applications from SAP in 2004 to modernize its business operations, replacing an old ERP system called Renaissance CS from the former Ross Systems. This was done in preparation for the eventual relocation project. The company had also moved in a big way to virtualization, using software from VMware — it consolidated about 45 servers into 15 servers to make its IT operations more efficient. Old or new, the day finally arrived when all the equipment and services would make their way across town.

Moving Day: A 13-hour Haul On Friday, April 17 — moving day — the IT team shut down the IT systems in the old datacenter by 2 pm, then helped pack up the 15 physical servers and multiple storage systems and other gear into a

24-foot-long box truck. A professional moving company then transported it all to the new datacenter. Thirteen hours later, by 3 am the next day, all of the servers, storage and networking gear were reconnected and running properly, as the Tasty IT staffers had practiced in their moving drills. Because it was done over the weekend while the administrative office workers were off, the IT staff had plenty of time to get the move completed and all the systems back into operation smoothly, O’Malley says. “I would say it went extremely quickly. I’m really proud of the systems we put in here.”

Screwdrivers to the Rescue A datacenter move in less than 24 hours is certainly no picnic, even with the best preparations, says Plover, the company’s infrastructure manager. And sometimes a low-tech tool can come in mighty handy, even to a bunch of geeks. “One of the best investments we made during the move was a screw gun — actually two Makita screw guns,” Plover says. “They took hours off our work. They’ve got lights in them and everything.” It may sound crazy, he says, but they were a huge help in hooking up literally hundreds if not thousands of cables, parts and connectors. The team had also conducted a related dry run for the move last fall, Plover says, when they designed, configured and built a true disaster-recovery set-up to replace a very basic disaster recovery system. The new disaster recovery system was first assembled in the old datacenter side-by-side with the existing servers and storage, carefully tested and then moved to a remote location about 80 miles away. That experience provided good practice for the big datacenter move to come, Plover says. The modern computerized baking equipment that’s being installed inside the new building is connected through an IP-based link to the company’s new datacenter in its nearby office building using Cat-6 cabling for voice and data. “We

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Deep Dive | Datacenters wanted to simplify things,” he says. IT needs to be connected to the bakery to monitor production, real-time ingredients delivery, product shipping and all other production and distribution components. That means that in some cases Tasty will be able to measure productivity and troubleshoot problems before any equipment actually fails, due to the computerized notifications that connect the bakery and the IT systems. All of these improvements and modifications are helping the company increase efficiency and operations through its IT renaissance. “We came from a cable spaghetti mess that you wouldn’t believe,” Plover says of the old datacenter. “Anytime you wanted to add something, you’d just find a port and plug it in.” Now, the IT department has implemented a cable management system that is wellmarked and keeps everything in its place for ease of maintenance and expansion.

A New Start for IT One other thing the new datacenter and modern facility also brings, O’Malley says, is a higher level of accountability for the IT team. There are no technological shortcomings that can be held up as patsies if problems arise. “We can’t blame it on anyone else anymore,” he says. “There are no legacy issues anymore. If something is messed up, it’s us.” The new datacenter is a far cry from the old one it replaces. At 1,300 square feet, it’s just a little more than onetenth the size of the room it replaces. The company has cut back from 50 2RU to 4RU servers down to 10 1RU servers, and requires only three 3-ton Liebert air conditioning systems, compared to five 20-ton Liebert units in the old datacenter. But there’s still enough space inside for future expansion of the server and storage components. It’s inside a LEED-certified green building, which will help the company save on power and cooling costs. Plover says he doesn’t have exact energy savings figures yet, but estimates that the server consolidation and air conditioning reductions save plenty of power. “You can do the math,” Plover says. “It’s hard to 72

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Making the Right Move If you’re moving to a new datacenter, make sure it’s future-proofed.

When building your next datacenter, your best bet is to be flexible and keep an eye on your company’s future needs. Here are some goals to keep in mind. Equipment must be configured in a way that is efficient to operate and maintain, says Jeff Monroe, EVP of strategy and business development at DuPont Fabros Technology, a datacenter provider. “Space plans must allow for the efficient deployment of servers such that the end user can consume as much of the available power as possible while still optimizing heat transfer and rejection,” he says. Raised floors and efficient cooling and heat flow are helping with power efficiency. Managed hosting provider Rackspace Hosting builds its new datacenters with raised floors so cool air under the floor can be pulled up through the room and hot air can exit from the ceiling. Overhead air conditioning ducts require larger fans and water pumps and, consequently, use more energy. “We forecast as much as a 10 percent to 15 percent efficiency improvement by moving to an under-floor model,” says Troy Toman, VP of operations at Rackspace. Pod designs will also help stay flexible. Rackspace has a 65,000-square-foot facility opening in London this year. But only a 20,000-square-foot portion of the datacenter — or one pod — will open initially, he says. “Keep flexibility in the system so you don’t lock yourself in,” Toman adds. “You’re talking about a datacenter that you’re hoping is going to be around for 20 to 30 years.” Your next datacenter should also feature power-saving technologies. DC power is one option to consider. DC is an efficient alternative to AC power, but several issues have kept it from being widely adopted. Among other things, DC power is potentially more dangerous than AC power because the voltage remains high instead of alternating, says Joshua Aaron, president of the consultancy firm Business Technology Partners. It’s also expensive to implement. Although Aaron believes it will come down with time. Datacenter designers are also weighing the benefits of flywheels vs. batteries as sources of backup power. “Flywheel is much greener — you’re not disposing of batteries, and it has a clear ROI for not having to do battery replacement,” Toman says. One drawback is that today’s flywheels provide less than a minute of power. “If everything works as designed, that’s enough time for you to power the equipment to bring on the generator,” he says. “But if it doesn’t, you just lost the whole backup computer.” Toman suggests re-evaluating flywheels as the technology improves. And at all times, continually weigh the benefits of smaller footprints vs. cheap real estate, and power costs vs. alternative energy sources. Too much of a good thing can diminish efficiency returns, experts caution. “I really do not see this as a destination but more of a journey,” Monroe says. “As technologies change, we continually look for opportunities to refine the datacenter.” — By Stacy Collett

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measure the savings because we never had our datacenter power on a separate grid in the old building.” Another plus: The 16 IT workers all now have modern offices that are separate from the locked-down datacenter room. “Moving down here has been unbelievable. We’ve moved into a great environment,” O’Malley says. “I didn’t have a staff member who had a window in the old building.” “People’s spirits are bolstered,” O’Malley continues. “The experience of coming to work today at a place that’s more comfortable,” and the ability to quickly communicate because they are in the same location is game-changing, he says. “Team collaboration is at an alltime high,” he says. It is convenient to be “working with team members who are a few feet away from you. We also now have a small conference room in the IT area that helps with small team meetings.”

lessons learned: e-mail Proved tricky “The only thing I would do differently if I had to do it again tomorrow, I would have set up failover for my Exchange server,” Plover says. During the actual move, about 50 corporate e-mail messages were lost between the time the servers were unplugged and then reconnected early the next morning, he says. “Some were never received and [some] were dropped,” he says. “I think the fact that we publicized the move and performed it on a Friday night made it less painful than it otherwise may have been.” One other step was very important for the corporate users who are served by the IT department. As part of the move, the company invited them to come in to visit the new digs on the Sunday after the IT move was finished so everyone could be prepared for business as usual on Monday morning. All 430 corporate users showed up that Sunday. “They came in and plugged in their phones and it all worked,” Plover says. “They turned on their computers and they had e-mail and connectivity to the Internet, the same way it was when they turned them off Friday at the old building.”

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Tips When Making the Move strive for Zero Downtime With the cost of bandwidth becoming more affordable, “we can build a new datacenter in parallel” with the old center, aaron says. “We’re designing a network in the datacenter, and we’re migrating applications between equipment in the new datacenter, then doing a cutover where there’s no disruption,” he says. that’s possible because of the speed with which data can be moved without someone having to physically pick up equipment and relocate it, aaron adds. “there still is a chunk of equipment that gets relocated,” he says, “but those tend to be systems that are backed up — things that are not production or customer-facing.”

t take time for Improvements Moving a datacenter is also a good time for cable upgrades — an inexpensive way to improve the performance of existing systems, Jamaca says. “a lot of companies go from Cat 5 to Cat 6, or to 10 Gb cabling from 1 Gb cabling,” he says. that’s where planning comes in. a good migration takes months of planning for hours of work — not only to determine the most efficient setup, but to find out how proposed upgrades will affect the datacenter from an operational and cost perspective.

seek eek Professional Help If you need to move datacenter equipment, Jamaca recommends hiring professionals who have the proper gear for handling fragile electronic equipment. ass for the loading zone, he has this advice: “ask “ the facility to put cones out [at the end of the day], or have your guys park their cars in the zone beforehand.”

— by Stacy Collett

Outsiders seem pretty impressed by how Tasty handled the move. “It sounds as if Tasty Baking really had a plan in place and tested it out before they actually made the move, which is absolutely critical in the process as you plan a datacenter migration,” says Cindy Borovick, an analyst with IDC. “It is cost effective for companies to build a new datacenter, particularly if they’re able to bring in new servers that consume less power, [do] server virtualization and if they can architect the new services to increase server utilization rates and bandwidth optimization. It sounds as if the new move may have gotten them there.” Steve Schuchart, an analyst with Current Analysis says that the phased-in approach, by bringing in and setting up the new hardware and software in the old datacenter ahead of time and then moving it over once it was tested and set up properly, was a great idea.

“If you can do it that way, it’s obviously the best way to do it,” Schuchart says. “Then you just cut over when the time comes. That kind of meticulous planning to minimize business disruption, is beautiful, but I think most businesses lack the staffing and time to make a move like that. Obviously, Tasty Baking sees its IT department as a core asset instead of just relegating it to a cost function. Many companies treat IT as nothing more than as a cost center, or as a necessary evil.” CIO

Todd r. Weiss is an award-winning technology journalist and freelance writer. Send feedback on this feature to editor@cio.in

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Deep Dive | Datacenters

Datacenter Density

By Robert L. Mitchell

Hits the Wall Why the era of packing more servers into the same space may have to end.

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Industrial Light & Magic has been replacing its servers with the hottest new IBM BladeCenters — literally, the hottest. For every new rack ILM brings in, it cuts overall power use in the datacenter by a whopping 140 kW — a staggering 84 percent drop in overall energy use.

But power density in the new racks is much higher: Each consumes 28 kW of electricity, versus 24 kW for the previous generation. Every watt of power consumed is transformed into heat that must be removed from each rack — and from the datacenter. The new racks are equipped with 84 server blades, each with two quad-core processors Vol/5 | ISSUE/05

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and 32GB of RAM. They are powerful enough to displace seven racks of older BladeCenter servers that the special effects company purchased about three years ago for its image-processing farm. To cool each 42U rack, ILM’s airconditioning system must remove more heat than would be produced by nine household ovens running at the highest temperature setting. This is the power density of the new infrastructure that ILM is slowly building out across its raised floor. These days, most new datacenters have been designed to support an average density of 100 to 200 watts per square foot, and the typical cabinet is about 4 kW, says Peter Gross, VP and GM of HP Critical Facilities Services. A datacenter designed for 200W per square foot can support an average rack density of about 5 kW. With carefully engineered airflow optimizations, a room air-conditioning system can support some racks at up to 25 kW, he says. At 28 kW per rack, ILM is at the upper limit of what can be cooled with today’s computer room air-conditioning systems, says Roger Schmidt, IBM fellow and chief engineer for datacenter efficiency. “You’re hitting the extreme at 30 kW. It would be a struggle to go a whole lot further,” he says.

Illustration by MM Shanit h

The Sustainability Question The question is: what happens next? “In the future are watts going up so high that clients can’t put that box anywhere in their datacenters and cope with the power and cooling? We’re wrestling with that now,” Schmidt says. The future of high-density computing beyond 30 kW will have to rely on water-based cooling, he says. But datacenter economics may make it cheaper for many to spread out servers rather than concentrate them in racks with ever-higher energy densities, other experts say. Kevin Clark, director of information technologies at ILM, likes the gains in processing power and energy efficiency he has achieved with the new BladeCenters, which have followed industry trends to deliver more bang for the buck. According to 76

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Temperatures Rising

Maximum operating temperatures for datacenter gear Before 2004: 72 degrees F (22 degrees C) 2004: 77 degrees F (25 degrees C) 2008: 81 degrees F (27 degrees C)

IDC, the average server price since 2004 has dropped 18 percent, while the cost per core has dropped by 70 percent, to $715 (about Rs 32,000). But Clark wonders whether doubling compute density again, as he has in the past, is sustainable. “If you double the density on our current infrastructure, from a cooling perspective, it’s going to be difficult to manage,” he says. He’s not the only one expressing concerns. Many engineers and datacenter designers have begun to question whether whether it will be economical to run large numbers of extremely high-density server racks in modern datacenters. The newest equipment concentrates more power into a smaller footprint on the raised floor, but the electromechanical infrastructure needed to support every square foot of high-density compute space — from cooling systems to power distribution equipment, UPSs and generators — is getting larger. Datacenter managers are taking notice. According to a 2009 IDC survey, 21 percent ranked power and cooling as the No. 1 datacenter challenge. Nearly half (43 percent) reported increased operational costs, and one-third had experienced server downtime as a direct result of power and cooling issues. Christian Belady is the lead infrastructure architect for Microsoft’s Global Foundation Services group, which designed and operates the company’s newest datacenter. He says the cost per square foot of a raised floor is too high. In the datacenter, he says, those costs accounted for 82 percent of the total project.

“We’re beyond the point where more density is better,” Belady says. “The minute you double compute density, you double the footprint in the back room.” HP’s Gross has designed large datacenters for both enterprises and Internet-based businesses like Google’s or Yahoo’s. Internetbased datacenters consist of large farms of Web servers and associated equipment. Gross thinks Belady’s costs are about average. Electromechanical infrastructure typically makes up about 80 percent of the cost of a new Tier 4 enterprise datacenter’s cost, regardless of the size of the facility. That number is generally 65 percent to 70 percent for Internet-based datacenters, he says. Those numbers haven’t increased much as power densities have increased in recent years, he adds. As compute density per square foot increases, overall electromechanical costs tend to stay about the same, Gross says. But because power density also increases, the ratio of electromechanical floor space needed to support a square foot of high-density compute floor space also goes up. IBM’s Schmidt says the cost per watt, not the cost per square foot, remains the biggest construction cost for new datacenters. “Do you hit a power wall down the road where you can’t keep going up this steep slope? The total cost of ownership is the bottom line here,” he says. Those costs have for the first time pushed some large datacenter construction projects past the $1 billion mark (about Rs 4,500 crore). “The C-suites that hear these numbers get scared to death because the cost is exorbitant,” he says. Ever-higher energy densities are “not sustainable from an energy use, says Rakesh Kumar, analyst at Gartner. Fortunately, most enterprises still have a ways to go before they see average per-rack loads in the same range as ILM’s. Some 40 percent of Gartner’s enterprise customers are pushing beyond the 8 to 10 kW per rack range, and some are as high as 12 to 15 kW per rack. However, those numbers continue to grow. In response, some enterprise datacenters, and managed services providers like

Source: AS HRAE Technica l Committee 9. 9

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Terremark are starting to monitor power use and factor it into their fees. “We’re moving toward a power model for larger customers,” says Ben Stewart, senior vice president of engineering at Terremark. “You tell us how much power, and we’ll tell you how much space we’ll give you.”

Containment: The Last Frontier IBM’s Schmidt thinks further power-density increases are possible, but the methods by which datacenters cool those racks will need to change. ILM’s datacenter, completed in 2005, was designed to support an average load of 200W per square foot. The design has plenty of power and cooling capacity overall. It just doesn’t have a method for efficiently cooling high-density racks. ILM uses a hot aisle/cold aisle design, and the staff has successfully adjusted the number and position of perforated tiles in

the cold aisles to optimize airflow around the carefully sealed BladeCenter racks. But to avoid hot spots, the room air conditioning system is cooling the entire 13,500-squarefoot raised floor space to a chilly 65 degrees (18 degrees Celsius). Clark knows it’s inefficient; today’s IT equipment is designed to run at temperatures as high as 81 degrees (27 degrees Celsius), so he’s looking at a technique called cold-aisle containment. Other datacenters are already experimenting with containment — highdensity zones on the floor where doors seal off the ends of either the hot or cold aisles. Barriers may also be placed along the top of each row of cabinets to prevent hot and cold air from mixing near the ceiling. In other cases, cold air may be routed directly into the bottom of each cabinet, pushed up to the top and funneled into the return-air space in the ceiling plenum, creating a closed-loop system that doesn’t mix with room air at all. “The hot/cold aisle approach is traditional

Energy-efficiency Tips Refresh your servers. Each new generation of servers delivers more processing power per square foot — and per unit of power consumed. For every new BladeCenter rack Industrial Light & Magic is installing, it has been able to retire seven racks of older blade technology. Total power savings: 140 kW. Charge users for power, not just space.You can be more efficient if you’re getting a power consumption model along with square-footage cost. Use hot aisle/cold aisle designs. Good designs, including careful placement of perforated tiles to focus airflows, can help data centers keep cabinets cooler and turn the thermostat up. Look for the most efficiently designed servers. Hardware that meets the EPA’s Energy Star specification offers features such as power management, energy-saving power supplies and variable-speed cooling fans. The upfront price may be slightly higher but is typically offset by lower operating costs over the product’s lifecycle. Consider cold-aisle containment. Once you have a hot aisle/cold aisle design, the next step for cabinets exceeding about 4 kW is to use cold-aisle containment techniques to keep high-density server cabinets cool. This may involve closing off the ends of aisles with doors, using ducting to target cold air and installing barriers atop rows to prevent hot air from circulating over the tops of racks. Use variable-speed fans. Computer room air-conditioning systems rely on fans, or air handlers, to push cold air in and remove hot air from the space. A reduction in fan speed of 12.5 percent cuts power use in half. — Robert L. Mitchell

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but not optimal,” says Rocky Bonecutter, datacenter technology and operations manager at Accenture. “The move now is to go to containment.” Using such techniques, HP’s Gross estimates that datacenters can support up to about 25 kW per rack using a computer room air conditioning system. “It requires careful segregation of cold and hot, eliminating mixing, optimizing the airflow. These are becoming routine exercises,” he says.

Liquid Makes Its Entrance While redesigning datacenters to modern standards has helped reduce power and cooling problems, the newest blade servers are already exceeding 25 kW per rack. IT has already tightened up racks, cleaned out raised floor spaces and optimized air flows. The low-hanging fruit is gone in terms of energy efficiency gains. If densities continue to rise, containment will be the last gasp for computer-room air cooling. Some datacenters have already begun to move to liquid cooling to address highdensity hot spots. The most common technique, called closely coupled cooling, involves piping chilled liquid, usually water or glycol, into the middle of the raised floor space to supply air-to-water heat exchangers within a row or rack. Kumar estimates that 20 percent of Gartner’s corporate clients use this type of liquid cooling for at least some high-density racks. These closely coupled cooling devices may be installed in a cabinet in the middle of a row of server racks, as APC does with its InRow Chilled Water units, or they can attach directly onto each cabinet, as IBM does with its Rear Door Heat eXchanger. Closely coupled cooling may work well for addressing a few hot spots, but it is a supplemental solution and doesn’t scale well in a distributed computing environment, says Gross. IBM’s Rear Door Heat eXchanger, which can cool up to 50,000 BTUs — or 15 kW — can remove about half of the waste heat from ILM’s 28-kW racks. But Clark would still need to rely on room air conditioners to remove REAL CIO WORLD | M a r c h 1 5 , 2 0 1 0

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Deep Dive | Datacenters

the remaining BTUs. Closely coupled cooling also requires building out a new infrastructure. “Water is expensive and adds weight and complexity,” Gross says. It’s one thing to run water to a few mainframes. But the network of plumbing required to supply chilled water to hundreds of cabinets across a raised floor is something most datacenter managers would rather avoid. “The general mood out there is, as long as I can stay with conventional cooling using air, I’d rather do that,” he says. “In the distributed model, where they use 1U or 2U servers, the power needed to support thousands of these nodes may not be sustainable,” Schmidt says. He thinks datacenters will have to scale up the hardware beyond 1U or 2U distributed x86-class servers to a centralized model using virtual servers running on a mainframe or high-performance computing infrastructure. One way to greatly improve heattransfer efficiency is through direct-liquid cooling. This involves piping chilled water through specialized cold plates that make direct contact with the processor. This is important because as processor temperatures rise, transistors suffer from an increase in leakage current. Leakage is a phenomenon in which a small amount of current continues to flow through each transistor, even when the transistor is off. Using cold plates reduces processor leakage problems by keeping the silicon cooler, allowing servers to run faster — and hotter. In a test of a System p 575 supercomputer, Schmidt says IBM used direct-liquid cooling to improve performance by one-third while keeping an 85 kW cabinet cool. Approximately 70 percent of the system was water-cooled. Few datacenter managers can envision moving most of their server workloads onto expensive, specialized supercomputers or mainframes. But IBM’s Bradicich says incremental improvements such as low-power chips or variable-speed fans aren’t going to solve the problem alone. Architectural improvements 78

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Can Datacenters Be Hotter? Raising the operating temperature of servers and other datacenter gear doesn’t always save on cooling costs. Most IT manufacturers increase fan speeds for servers and other equipment as temperatures exceed about 77 degrees F (25 degrees C) to keep the processor and other component temperatures constant, says IBM fellow Roger Schmidt. At temperatures above 77 degrees, the speed of fans in most servers sold today increases significantly and processors suffer higher leakage currents. Power consumption increases as the cube of the fan speed — so if speed increases by 10 percent that means a 33 percent increase in power. At temperatures above 81 F (27 degrees C), datacenter managers may think they’re saving energy when in fact servers are increasing power usage at a faster rate. Bottom line: You would still save energy overall if you raised the temperature to 27 degrees C, but going higher presents challenges to systems and component designers. Schmidt says. “Manufacturers will have to come together to determine whether we should recommend a higher limit that will save energy at the datacenter level.” — Robert L. Mitchell to the fundamental x86 server platform will be needed.

Cost, Convergence and Economies of Scale Like HP and other vendors, IBM is working on what Bradicich calls “operational integration” — a converged infrastructure that combines compute, storage and networking in a single package. While the

primary goal of converged infrastructure is to make systems management easier, Bradicich sees power and cooling as part of that package. In IBM’s view, the x86 platform will evolve into highly scalable, and perhaps somewhat more proprietary, symmetric multiprocessing systems designed to dramatically increase the workloads supported per server — and per rack. Such systems would require bringing chilled water to the rack to meet cooling needs. But HP’s Gross says things may be going the other direction. “Datacenters are going bigger in footprint, and people are attempting to distribute them,” he says. “Why would anyone spend the kind of money needed to achieve these superhigh densities?” he asks — particularly when they may require special cooling. IBM’s Schmidt says datacenters with room-based cooling — especially those that have moved to larger air handlers to cope with higher heat densities — could save considerable energy by moving to water. But Microsoft’s Belady thinks liquid cooling’s appeal will be limited to a single niche: high-performance computing. “Once you bring liquid cooling to the chip, costs start going up,” he says. “Sooner or later, someone is going to ask: Why am I paying so much more for this approach?” The best way to take the momentum away from ever-increasing power density is to change the chargeback method for datacenter use, says Belady. Microsoft changed its cost allocation strategy and started billing users based on power consumption as a portion of the total power footprint of the datacenter, rather than basing it on floor space and rack utilization. After that, he says, “the whole discussion changed overnight.” Power consumption per rack started to dip. “The whole density thing gets less interesting when your costs are allocated based on power consumed,” he says. Once Microsoft began charging for power, its users’ focus changed from getting the most processing power in the smallest possible space to getting the most performance per watt. That may or may not lead to higherdensity choices — it depends on the overall Vol/5 | ISSUE/05

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Deep Dive | Datacenters

energy efficiency of the proposed solutions. On the other hand, Belady says, “if you’re charging for space, the motivation is 100 percent about density.” Today, vendors design for the highest density, and most users select high-density servers to save on space. Users may pay more for a higher-density server infrastructure to save on floor space charges, even when performance per watt is higher due to extra power distribution and cooling needs. But on the back end, 80 percent of operating costs scale with electricity use — and the electromechanical infrastructure needed to deliver power and cool the equipment.

Run ‘em Hard, Run ‘em Hot Belady, who previously worked on server designs as a distinguished engineer at HP, argues that IT equipment should be designed to work reliably at higher temperatures. Current equipment is designed to operate at a maximum temperature of 81 degrees (27 degrees Celsius). That’s up from 2004, when the official specification, set by the ASHRAE Technical Committee 9.9, was 72 degrees (22 degrees Celsius). But Belady says running datacenter gear even hotter than 81 degrees could result in enormous efficiency gains. “Once you start going to higher temperatures, you open up new opportunities to use outside air and you can eliminate a lot of the chillers ... but you can’t go as dense,” he says. Some parts of the US already turn off chillers in the winter and use economizers, which use outside air and air-to-air or air-to-water heat exchangers, to provide ‘free cooling’ to the datacenter. If IT equipment could operate at 95 degrees(35 degrees Celsius), most datacenters in the US could be cooled with air-side economizers almost year-round, he argues. And, he adds, “if I could operate at 120 degrees (49 degrees Celsius)... I could run anywhere in the world with no AC requirements. That would completely change the game.” Unfortunately, there are a few roadblocks to getting there. (See Can Datacenters Be Hotter?)

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More Energy-efficiency Tips Turn on power management. Most servers ship with energy-saving technologies that do things like control cooling-fan speeds and step down CPU power during idle times, but it’s not turned on by default — and many datacenters still don’t enable it. Consider enabling it by default, except in environments where high availability and fast response times are mission-critical. Create zones. Break the datacenter floor into autonomous zones, where each block of racks has its own dedicated power and cooling resources. Zoning involves careful separation of hot and cold air but usually doesn’t require that an area be physically partitioned off. Douse hot spots with closely coupled cooling. A series of high power-density racks can create a hot spot that the room air-conditioning system can’t handle, or that forces IT to overcool the entire room to address a few cabinets. In those cases, consider supplemental spot-cooling systems. These require liquid cooling. Retrofit for efficiency. While new datacenter designs are optimized for cooling efficiency, many older ones still have issues. If you haven’t done the basics, optimizing perforated-tile placements in the cold aisle or putting blankets over cabling in the floor space are good places to start. Turn up the heat. The key to raising efficiency is your intake temperatures on the cabinets. The higher the intake temperature, the more energy-efficient the datacenter. While you probably can’t cool an entire cabinet with the room set at 81 degrees (27 degrees C) at the intake, you probably don’t need to be setting the temperature as low as 65 (18 degrees C), either. — Robert L. Mitchell Belady wants equipment to be tougher, but he also thinks servers are more resilient than most people realize. He believes that the industry needs to rethink the kinds of highly-controlled environments in which distributed computing systems are hosted. The ideal strategy, he says, is to develop systems that optimize each rack for a specific power density and manage workloads to ensure that each cabinet hits that number all the time. In this way, both power and cooling resources would be used efficiently, with no waste from underor over-utilization. “If you don’t utilize your infrastructure, that’s actually a bigger problem from a sustainability standpoint than over-utilization,” he says.

What’s Next Belady sees a bifurcation coming in the market. High-performance computing will go to waterbased cooling while the rest of the enterprise datacenter — and Internet-based datacenters like Microsoft’s — will stay with air but move

into locations where space and power costs are cheaper so they can scale out. Paul Prince, CTO of the enterprise product group at Dell, doesn’t think most datacenters will hit the power-density wall anytime soon. The average power density per rack is still manageable with room air, and he says hot aisle/cold aisle designs and containment systems that create “super-aggressive cooling zones” will help datacenters keep up. Yes, densities will continue their gradual upward arc. But, he says, it will be incremental. “I don’t see it falling off a cliff.” At ILM, Clark sees the move to water, in the form of closely coupled cooling, as inevitable. Clark admits that he, and most of his peers, are uncomfortable with the idea of bringing water into the datacenter. But he thinks that high-performance datacenters like have to adapt. “We’re going to get pushed out of our comfort zone,” he says. “But we’re going to get over that pretty quickly.” CIO Send feedback on this feature to editor@cio.in

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By Frank hayes

Deep Dive | Datacenters

Pulling a stunt sTaFF ManageMenT | Recently the IT staff at Purdue University built a supercomputer. A world-class supercomputer. Out of PCs. Using just local IT talent. (OK, a team from Indiana University also helped.) And it was done in less than a day. A stunt? Certainly. A real IT project? Yes, just as certainly. In fact, it was the epitome of a real IT project. It was funded by the departments that will use the machine.

scientific-computing clusters had been taken offline five days earlier, and academic researchers needed the hardware up and running fast. When was the last time you did something like that? Something splashy and flashy, something to make users say, “Wow, this is really great stuff”? It’s a good idea, doing a stunt now and then to show off. It’s good for morale and for IT’s reputation in your company. But you

configuration and bulletproof software installation. Everything that can be done before zero hour should be done. So, no halfbaked plans, no seat-of-the-pants navigation, no individuals doing it their own way — just a smoothly executed delivery that makes users happy and makes your IT staffers look brilliant. And there’s one other advantage: Stunt IT is fun. For most of the IT staffers involved, it’s a burst of hard work followed by an enormous feeling of accomplishment

there’s something about stunts that gets attention, that gets applause. Maybe you should try it, it worked for Purdue University. It was designed so the right technology can solve problems, and planned so that it would come together cleanly and effectively. And it went operational on budget and ahead of schedule. How many of your real IT projects can make all those claims? Of course, it was also a stunt. The new supercomputer was given a catchy name, ‘Steele’ (after retired Purdue computer center director John Steele). The project was announced with a YouTube video made to look like a movie preview. More than 800 off-the-shelf commercial PCs were delivered, unboxed and rackmounted all at once, just to show it could be done. And it was assembled and working in one day. That wasn’t just because it made a better stunt. The school’s three existing 80

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wouldn’t want to do it with every rollout. Or even with every major rollout. See, a stunt has to work. It’s intentionally high-profile. The point is to have everyone watching as you look good doing what you do. You really can’t afford to fail. That means the flashy stunt rollout has to be planned with extraordinary care and executed with extraordinary discipline. Everyone has to know exactly what’s supposed to happen. Each IT person — there were more than 200 involved in the Purdue rollout — has to know his task and be prepared for whatever might go awry. And as with any good magic trick, everything has to be prepared in advance to minimize failure. That requires lots of advance testing, well-practiced hardware

and plenty of admiration from the rest of the organization. There’s really just one downside. No, not the chance of failure — with the right preparation, you can do this. The downside is that once users see your IT shop deliver a crisp, disciplined, well-planned and well-prepared rollout, they’ll expect that level of quality from IT all the time. Then again, if you have the skills and discipline necessary for stunt IT, you should be able to apply them to all your other projects. They might not be flashy and splashy, but they’d be the sharp, effective, real IT work your business needs. That really would be some stunt. CIO Frank hayes is a senior columnist for computerWorld (a sister publication of cIO magazine). Send feedback on this column to editor@cio.in

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Leadership Summit

Leading Growth Snapshots from the second season of CIO's Leadership Summit.

‘Things are looking up …’ We’ve seen enough signs, heard enough experts and read enough papers to know that that statement is more than just feel-good. The pace at which the economy has picked up, at least in India, has put organizations on their toes. And grabbing opportunities that the upturn is throwing up — before a competitor reaches for them — is an imperative. Organizations have realized that to sustain this growth, they have to — more than ever — turn to IT. Be it flexibility, agility, reducing complexity or bringing in the money, CIOs are increasingly becoming the go-to guys. But to accelerate business growth and provide it with competitive advantage, IT leaders need to be pushed in the right direction. The second season of the CIO Leadership Summit set out to do just that.

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Finding Common Vision Arpit Agarwal, Bajaj Financial Solutions

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The Art of Influence Ashank Desai, Mastek

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Science of Persuasion Karthi Marshan, Kotak Group

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Streamlining Operations Raja Ramana Macha, Geometric

Page 81 Call Waiting Unified Communication

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Fully Loaded Workload Management

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Complexity Tax Managed Services

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Towards Agility Datacenters

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Leadership Summit I CXO Vision

Common Vision Arpit Agarwal, CEO Bajaj Financial Solutions, on management’s role in IT project failure. CIOs are entrusted with the huge responsibility of delivering value to a business. In response they try to keep their companies ahead of the curve by undertaking projects that offer enduring competitive advantages. However, there are times when some projects fail and then CIOs are held solely responsible by their managements. In my opinion, this is a very erroneous approach. Admittedly, this is a departure from the more conventional approach but I feel that business must also shoulder the responsibility of project failure. Management is at fault because they failed to articulate their vision and imperatives before IT. If an organization’s management is not closely involved with enterprisewide IT initiatives, the risks of project failure increases manifold. Also, they need to make a conscious effort to involve their CIOs in the process of strategy formulation On their end, CIOs should be intimately involved with a business to avoid project failure. The back and front office have to be aligned to have a laser sharp focus on the strategic objectives of the organization. Modern day CIOs are not outright technologists; they are gearing up to don the mantle of business strategists. They have to train their

Art of Influence Ashank Desai, founder, ex-chairman and director of Mastek, says that modern day IT leaders need to talk business with business.

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sights on business outcomes and not merely on the implementation of a technology. For this, it is important for managements to create learning opportunities for the CIO. A CIO who has managed diverse business functions can read the pulse of his management and interpret the needs of business more accurately. But to do that managements must create a favorable atmosphere where CIOs can chase their career dreams and nurture the strategic vision of his organization.

Strategic management has always been a challenge for CIOs. Most CEOs or business heads don’t look at CIOs as strategic leaders. But we can’t blame CIOs alone, both parties are responsible for the gridlock we have today. CIOs should adopt a changed demeanor and learn the art of influencing the businesses, management, boards and specifically CEOs. CIOs should wear a CEO’s hat while presenting themselves to managing councils and boards. It’s a CIO’s responsibility to change the management’s perception of IT from being a department that maintains the house to a division that alleviates organization’s pain and help run business. IT leaders should maintain two budgets — a ‘change budget’ for undertaking new initiatives to help their organizations grow, and ‘keep-the-lights-on’ budget to ensure seamless reliability. Modern day CIOs should have the courage to take risks and communicate in a language that CEOs understand. An IT leader’s role is to make himself clearly understood. IT leaders should strive to give their businesses unparalleled advantages over competition. They should challenge their own position in the organization and take up the responsibility of effectuating ‘change’. It’s a fact that CIOs rarely address the boards. But that’s going to change. With increased traction between CIOs and management councils, boards will eventually invite and absorb CIOs in a more meaningful way.

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Leadership Summit I CXO Vision

Streamlining OpERATIONs

Raja Ramana Macha, COO, Geometric, talks about waste and how to prevent it.

Science of persuasion Karthi Marshan, the Kotak Group’s head of marketing, tells you how to get people to listen to you. Nature equips each creature with the skills needed to survive in its environment. Take the cicada for example. Years of evolution has taught it to emerge from its underground abode only during its prime years in order to escape its predators. That kind of adaptability helps all creatures — including humans — to achieve their goals. In the cicada’s case, that goal is to stay alive. As members of a competitive corporate world, CIOs have to learn certain skills to meet their goals. The principles of persuasion — likeability, reciprocity, consistency, social proof, authority and scarcity — can be applied in any organization to achieve career goals and other work objectives. But more importantly, CIOs must remember to have a specific goal in mind because that helps create strategy. Take for example, the CIO who wants to gain entry into his organization’s strategic planning group. He needs to draw attention to his achievements, tabulate them and share them with the powers that be. Show them not a CRM implementation but the outcome deltas, not TAT but growth in revenues attributable to TAT, not wire frames but pictures. Look at the mayfly. It only lives to mate. And since it has only 24 hours to live, evolution has ensured that it doesn’t even have a stomach. That’s what it means to be focused on an objective. Like the mayfly, CIOs have to have single-minded focus on what their objective is. CIOs have to be recognized for what they are and to do that they have to engage in business conversations with the end customer. A CIO’s objective is to cover business benefits and the best way for IT leaders to do that is to aim for a higher and more strategic position within their organizations.

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In a system or infrastructure, anything that a user or customer is not willing to pay for is a waste. Among the most obvious wastes in software and development are defects (the effort involved in inspecting and fixing defects), over-production (making more than what is needed, or making it earlier than it’s needed), transportation (moving products further than required), waiting (products waiting on the next production step, or people waiting for work), inventory (having more inventory than required) and motion (people moving or walking more than required). An intelligent way of tackling waste is to introduce little changes in processes and systems. Ensuring the acceptance of exception-based management, portal-based operations, and standardization are the foundation for improvement. It is also important to remember that in any given system only experts should be allowed to break rules — because they can re-write them. At the same time, it's important to keep usage simple, even for complex apps. And in all cases, identifying ‘data’ as distinct from 'information’ is vital. Higher computing power also conceals a lot of waste. Waiting for data processing, or information duplication wastes time and lengthy processes for data collection or sorting adds to waste too. Proper knowledge management can prevent this type of waste. Resources can be used more optimally if companies could avoid a stop-and-go task allocation procedure. Concept-based management and the availability of real-time information can lead to proper elimination of waste. Visible data leads to clear information flows, which can help prevent duplication and resource waste. Eliminating waste from a system should be a part of the production processes design. Whether it's a waste of time, resources or computing power, a waste is a drain on finances. Ideally, this should have more priority in organizations.

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Leadership Summit I CIO Discussions

Call Waiting

For unified communications to take off, interoperability is key. till then, Indian CIos are taking it easy.

Ph otoS by Sr IVatSa ShandIlya

nified communications (UC) has been touted as a breakthrough technology that is likely to dictate how 21st century employees communicate. It has the potential to increase efficiency and save time for knowledge workers. According to In-Stat Senior Analyst David Lemelin, the three top benefits of a UC environment are: Real, tangible and measurable cost savings related to productivity gains and time savings by employees; control over business processes involving collaboration and communications internally as well as externally; and integration with mobility needs. In other words, UC can transform an employee’s handheld device, for example, into a universal ‘inbox’ for all communications. Wireline and wireless voicemails, e-mail, instant messenges, text messages, and locationbased services ensuring real-time, anywhere presence of a user are its major benefits. Also, dual-mode handsets can take advantage of cellular and wi-fi networks for both voice 84

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and data access. Although CIOs acknowledge its importance, only a handful of Indian organizations have deployed more than a part of the entire unified communications stack. At a recent CIO roundtable on the subject, IT leaders aired their opinions on their approach to UC. Laxman Badiga, CIO, Wipro Technologies felt that UC is not ready yet. “There’s a long way to go and a lot needs to be done in terms of adopting and leveraging such solutions so that the best benefits can be gained,” he said. Alok Kumar, vice president and global headinternal IT, Tata Consultancy Services, stressed on the fact that CIOs should develop an adequate matrix to record both soft (in terms of productivity gains) and hard (in terms of cost savings) ROI figures to make a strong business case to their managements. But the biggest problem with UC isn't ROI, they said. Most CIOs agreed that the UC ecosystem suffers from a lack of interoperability. Getting multiple stacks from different solution providers to talk to each other is a major pain area for CIOs today. And deriving maximum benefits on end-to-end UC stacks from a single provider is still in its evolutionary stages. IT leaders believed that if a majority of such pain points are alleviated, UC can then be leveraged more holistically and will catalyze an amazing picture of the future with an always on, always reachable, any device, any where scenario.

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Leadership Summit I CIO Discussions

Fully Loaded

Ph otoS by Sr IVatSa ShandIlya

With a sea of data, organizations are finding it difficult to manage It effectively. but cloud computing and virtualization have made intelligent workload management a reality.

t’s being said that we are now in the nascent stages of yet another technology lifecycle. This lifecycle promises to reduce opex and increase flexibility and agility. With technologies like virtualization and cloud computing, CIOs can dis-aggregate their IT workloads from their physical infrastructures that are required to run them. However, recent industry studies suggest that only 16 percent of computing

workloads have been virtualized, even though virtualization has gone mainstream. And, while the conversation around cloud computing is heating up, its adoption is not. Studies suggest that only about one percent of all computing workloads are hosted on clouds today. In a recent IDC survey, CXOs identified three core issues and concerns mitigating widespread adoption of these promising platforms: Security, management and availability. CIOs want the flexibility to move their IT workloads across physical, virtual and cloud environments to maximize efficiencies and make the most of their existing IT resources. But they also believe that workloads need to be secure, easy to manage and support various organizational policies and regulatory compliance requirements. Tamal Chakravorty, CIO, Ericsson India, pointed out that making workloads intelligent depends on an organization’s architecture, maturity and its ability to leverage Making IT work as one. It’s what sets us apart. investments inAt Novell, ensuring efficient cohesiveness IT, person, we’re taking interoperability to a whole new level.among We believe every every partner and every piece of your mixed IT world should work as one. Our Enterprisebusiness processes and people. wide Linux, Identity and Security Management, Systems Management, and Collaboration solutions CIO, easily integrate almost&any IT infrastructure. Thatintelligent way, you can lower cost, V. Subramaniam, Otis with India Gulf, felt that complexity and risk on virtually any platform and make your IT work as one. workload management is an intersection of dynamic infrastructure, virtualization and identity management. Deeper end-user involvement is necessary to ensure intelligent workload management across hybrid computing environments. IT leaders say that management and optimization of computing resources in a secure and compliant manner is pertinent to efficiently deliver business services to end-customers.

Making IT work as one. It’s what sets us apart. At Novell, we’re taking interoperability to a whole new level. We believe every person, every partner and every piece of your mixed IT world should work as one. Our Enterprisewide Linux, Identity and Security Management, Systems Management, and Collaboration solutions easily integrate with almost any IT infrastructure. That way, you can lower cost, complexity and risk on virtually any platform and make your IT work as one.

www.novell.com Making IT Work As One™

For more information please contact indiamarketing@novell.com or call us at 080 - 40022300

REAL CIO WORLD | M a r c h 1 5 , 2 0 1 0 Copyright © 2009 Novell, Inc. All rights reserved. Novell and the Novell logo are registered trademarks and Making IT Work As One is a trademark of Novell, Inc. in the United States and other countries.

Leadership Summit I CIO Discussions

Complexity Tax businesses want to tap every opportunity, even at the cost of complex It infrastructure. Is it worth the price?

P hotoS by Sr IVatSa Shan dIlya

ith the bewildering increase in the number of gadgets that are plugged into enterprises’ systems, complexity tax could be one of the biggest costs CIOs will have to face. Complexity tax is the cost that CIOs have to pay to supply their enterprises with well-integrated, secure and reliable infrastructure despite the number of disparate applications businesses desire. But as enterprises come face to face with the new realities of a post-recession world, agility has become key. Businesses want the ability to leverage every opportunity — even at the cost of cluttered and possibly frail IT infrastructure. At a recent CIO roundtable, a number of leading Indian CIOs debated how they could meet the needs of their business — but not at the cost of unmanageable complexity. They started at ground zero and even debated whether integration really added as much value as people claimed and whether, with new growth, complexity was unavoidable. Sudesh Agarwal, VP-IT of the Rs 830-crore Lifestyle International commented, “Every company starts with some legacy and new devices are constantly coming up, so complexity will increase.” The question before most CIOs, especially the businessoriented ones, is: what’s the alternative? And how will 86

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those potential solutions impact delivery? Today, the legacy problem that most companies have to deal with is compounded by end users who want an almost endless supply of IT power. And often end users demand apps that are used sparingly and these only add to an enterprise’s complexity. Yet CIOs are expected to be business-centered and make complexity a secondary issue. But some CIOs believed that if the business is willing to pay complexity tax, who are IT leaders to stand in the way? “If your end user is satisfied, a complexity tax is worth paying,” said R.K. Upadhyay, DGM-IT and BD, BSNL. Others said that to meet the demands of growing complexity, a way out could be to future-proof systems by building in flexibility and scalability. Everyone, however, agreed that as long as the user was satisfied, ways could be found to handle complexity. brought to you by:

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Leadership Summit I CIO Discussions

Towards Agility Simplify, automate, centralize — there are many paths that lead to agility. Which one are you taking?

understanding the core requirements of internal customers and meeting their needs with agile applications. “I’ve taken the backend of my supply chain and standardized it on a platform and kept that modular in nature. The competitive edge comes from the front-end so my department works in collaboration with the management to make applications that impact the front end. We concentrate on simplifying the platform,” said Gopla Shukla, CIO, Coca Cola. Another way to attain agility, said Ravishankar Subramanian, director-IT, ING Life, is centralization. He felt that it helps keep processes simple augmenting agility. “It depends on how much you plan to centralize and how much you plan to decentralize. When you move to a centralized approach it makes your infrastructure simple and therefore more agile,” he said.

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P hotoS by Sr IVatSa Shan dIlya

hat makes one organization different from the other is it’s ability to quickly react to the dynamics of business. Be it staying ahead of competition or creating a niche for itself, organizations need to be agile. Acknowledging its importance, IT leaders across verticals discussed the various implications of agility and shared their insights on different ways of infusing agility within their organizations at a recent CIO roundtable on the subject. Tamal Chakraborty, CIO, Ericsson India, felt that the challenge lies in meeting the various needs of the business and managing infrastructure effectively. As a company's business priorities and imperatives change, the CIOs IT roadmap also changes. Citing an instance from his own organization he said, “When I joined Ericsson it was a product company. But over the years it has become a service company. So, I had to change my IT roadmap in tune with business priorities. Hence, I think the need for agility changes as your company’s business priorities and imperatives change. You have to re-design your IT roadmap in accordance with them.” But agility means different things to different people. For some IT executives it goes beyond IT. It implies

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y o u r l i f e & c a r e e r pa t h

Don't Get Blogged Down By Kristin Burnham n e t w o r k i n g Jack MacKay, CIO of the American Hospital Association (AHA), acknowledges he's "slow to adopt" social media tools, but he has opened Facebook, LinkedIn and Twitter accounts to "at least become knowledgeable in the areas." Maintaining a presence on these sites has proved more difficult. "With Twitter, for example, we don't have any products we'd want to announce since we're a healthcare company, and if we wanted to find out what people are saying about it, we can pick up any newspaper in America," he says. "Plus, I have very little free time to stay on top of things. I know social media is growing and is going to be around for a while, so I'm trying to get better about it." And then there's Chuck Musciano, CIO of Martin Marietta Materials, a producer of construction goods. Musciano tweets several times a day on two separate accounts — one personal, one professional — maintains a blog and frequently connects with others via Facebook and LinkedIn. There's no doubt that the popularity of social media sites has increased. But while some CIOs, like Musciano, have embraced these platforms, others, like MacKay, are more hesitant. What they do agree on, though, is that jumping onto the social media bandwagon puts your time management

social

IllUSt ratI o n by M M Shan Ith

thrive

It’s tough to refute social media’s hold on the workplace, but for some CIOs,playing is a challenge.

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There's no doubt that the popularity of social media sites has increased. But while some CIOs have embraced these platforms, others are more hesitant.

threeminute coach Help ! How do I avoid getting totally burned out? David Cottrell, President and CEO of Cornerstone Leadership Institute, is an internationally known management consultant and author of Monday Morning Mentoring, Monday Morning Choices and Monday Morning Motivation

Always: Understand that burnout is created by stress — a constant flow of stress, in some cases. If this is happening to you, it can be devastating to your job performance but, more importantly, it can destroy your physical health at the same time. Your first action should be to evaluate the facts: Is this problem a long-term challenge or merely a short-term inconvenience? Next step: Talk to someone about it. Holding the stress inside creates more stress. Sharing your situation with someone you trust will help you discover that something can be done. Third step, if you are in a rut, start digging yourself out. Read something positive, get rest and don't take yourself so seriously. Sometimes: You need to take another look at your personal goals. If the burnout is prolonged, you may find now is the perfect time to move in a different direction. Before you do, though, take the time to thoroughly understand why you are burned out and make sure the same will not happen at your next opportunity. Never: Over-react. When you are in burnout mode, everything is exaggerated. So, it's probably not the right time to just "take this job and shove it." In times of stress and/or ambiguity, never make long-term, life-changing decisions. However this is also not the time to just sit there and hope things improve. Never, in the history of mankind, has any situation improved on it's own while you sit there, doing nothing. CIO

thrive

skills to the test. Matthew Cornell, a productivity expert, understands why some are overwhelmed by social media. "When you sign up for something like Facebook or Twitter, implicitly or explicitly you're making a commitment to it, and that can be a lot of pressure" he says. Conversely, losing track of time when browsing social media sites can happen easily if you're not disciplined. Musciano's time-management breakthrough occurred when he realized that you can't "drink a river." "You reach that moment where you realize: a) I can't keep up with every update and b) I don't want to," Musciano says. "You learn to skim — the same way you'd skim a headline in a newspaper or glance through 50 e-mails in your inbox." Musciano sorts his followers for easy scanning with the TweetDeck app. And by linking his Facebook and Twitter accounts, one update appears in both places. "You can waste a lot of time if you don't have the right tools," he says. Cornell suggests very active social media users establish boundaries. "Limit the amount of time you spend on the sites — build it into your calendar if you have to." For those like MacKay, who may be struggling to understand the value of time spent on social media sites, Cornell recommends treating each source like an experiment. "You're not sure when you start something how much value there is in it. Find some metrics — like how you are we going to measure the value — and then reevaluate it a little bit down the road." Knowing when it's time to walk away from a site that's not serving your needs is also important. "We don't block sites like Facebook and Twitter, but I have a lot of concerns about how much bandwidth is being gobbled up and the amount of socializing going on in the workplace," says MacKay. "I think there's a little more value with LinkedIn and other business networking sites." And the value he derived from dabbling has even transferred over to his workplace: MacKay is currently working on developing an internal social network for the AHA's members. CIO

David Cottrell has more than 25 years of business experience including senior management positions with FedEx and Xerox. Send queries you might have to Send feedback on this feature to editor@cio.in

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vijay_r@cio.in

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Insights from Members of the CIO Governing Council

Sanjay Jain

The CIO and Head-Delivery Global Transformation Practice, WNS Global Services, Jain joined the company in April 2005 as senior vice president of Travel Consulting. He moved up and was appointed CIO in January of 2008. Among other responsibilities, he supervises program management and supports IT solution design. Today, he also heads the Global Transformation Practice, a vision to create outsourcing solutions for WNS clients.

Recipe for Success

Photos by Srivatsa Shandilya

It took one ERP implementation and a series of crises for Sanjay Jain to realize the secrets of project success. project management | It goes without saying that project management is complex. One way to master it is to learn these lessons in the course of a project to get a sound understanding of the best practices of project management and ensure you implement them. A few years ago, I was in-charge of an ERP implementation, which confronted one crisis after another. We managed to rise to the occasion every time, and were able to deliver on time despite routine delays. But later we undertook a root-cause analysis and tried to understand why the project was thwarted more than once. We boiled it down to four reasons. Understanding these four factors that lead to successful project management can help you avoid project management failure. Bring in a governance structure: We realized that many users were dissatisfied because what we delivered did not meet what was promised to them. This was largely because we did not have a proper governance structure in place. So, we decided to make a few changes. We set up a governance structure, which clearly defined the responsibilities of every individual and entity involved. Second, we made sure that users were directly involved in defining the objective of the project. In hindsight, we realized that the technology team, that was setting project objectives, was not the end-user of the ERP system. That piece of change was inevitable. Control change: We observed that the project and its course would change many times during the implementation. That was because users changed their requirements as the business needs fluctuated. Every time we re-looked at the project, we found that the baseline 90

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requirements changed. At the same time, project managers were not monitoring the impact these changes had on the overall cost of the project, and how it affected the delivery time line. Our entire focus was displaced because most of the time we were busy fixing changes in requirements. We rectified this by having a change control process in place, which analyzes the impact of changes in requirements in terms of costs and resources. We followed a strong program management methodology, named ‘Enable’, which trains project managers to deliver efficiently. Since then, only certified professionals are allowed to manage projects. Beware of a lack of communication: This is perhaps one of the most under-rated reasons why projects stray off the straight and narrow. We found that our stakeholders, the users and the governance body, all became restless because they were not constantly updated on the progress of the ERP project. We realized that reporting the status of the project was extremely relevant to successful project management.

A lack of communication is one of the most underrated reasons why projects stray off their targets. Ensure strong risk management: Creating a proper risk management and risk mitigation process is one of the prime tasks of a project manager. Primarily, this involves identifying the potential risks of a project and creating a contingency plan to deal with them. When thinking about possible threats remember that they can arise from the users or stakeholders. And when this happens an ‘issue escalation management’ plan must be in place. After the root-cause analysis, we put the ERP roll-out back in track, and none of the implementations that followed faced similar challenges. The technology team and clients clearly know the deliverables of a project. And if there are any changes in the scope of the project, both the groups will know its impact on the project. CIO As told to Priyanka Send feedback on this column to editor@cio.in

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3/8/2010 6:53:18 PM