For the past couple months, I have been working to understand Intel IT's innovation model ... specifically, how do we create business value with IT investment.  I have come across many approaches, opinions, projects, programs and more.

One of the key answers and best practices that I have found sits within a small team of Intel IT employees that is led by Martin Curley, Director of IT and co-founder of the Innovation Value Institute (IVI).

The IVI and Martin's role and goal in developing the IVI was written up in an article online at InnovationManagement.se, titled "intel Initiative Aims for More IT Enabled Innovation"

This article does a nice job summarizing one of the core IT governance tools we use internally inside Intel IT to drive innovation for the purpose of creating business value.  Originally formed through a strong link between NUI Maynooth and Intel, the consortium’s more than 30 members are among the world’s leading companies such as Chevron, Google, SAP, BP, Ernst & Young, and BCG.  While Intel IT has been using this model (the IT Capability Maturity Framework) ourselves for a few years we are not alone.  I'm told that over 200 companies utilize the resources and framework developed by the IVI in helping create more value through IT investment.

Learn more about the Innovation Value Institute

What tools does your IT organization use to create business value?

Chris

As I started my transition into a new job within Intel IT a few months ago, I discovered that one our internal IT strategic imperatives was “Partnership”.  I have to admit that at first I dismissed this a simply one of many standard business leadership terms that any organization could choose to operate on (I hope Diane Bryant, Intel CIO, is not reading this ).  However, I’m learning how critical partnerships are for a high functioning and value driven IT organization, both within the IT organization and between IT and the business groups they support.

With much of the focus these days on the lack of capital budgets limiting IT investment and innovation, I’m learning that a larger underlying barrier for IT organizations to enhance and maximize value inside their businesses, centers around the themes of trust, alignment and ultimately, partnership.  Organizational Silos inside any business create natural barriers to innovation.  Some silos exist naturally and others are self imposed.

Let’s look inside a typical IT organization where you are likely to find three functional areas: Architecture, Engineering, Operations.  These functions exist naturally inside most IT organizations.  Recently, I had an opportunity to talk about the inner workings of these functions inside an IT organization with Gregg Wyant, Intel IT CTO and Chief Architect.  These groups are designed to fulfill very unique roles in the IT organization and designed to create an expertise in these functional areas to maximize effectiveness within their chartered goals (chart below). However, if partnership (or at least an understanding of these different roles and goals) doesn’t exist across these groups the credibility of the IT organization can be at risk and the value IT delivers to the business undermined.

Imagine if the architecture group creates a vision that can not be implemented by engineering or was is cost prohibitive in the manpower or solutions needed to implement it operationally.  IT’s costs would rise dramatically and/or the architecture design efforts would simply be wasted.  Or imagine if IT never challenged the status quo operational processes and just continued to operate “the way it has always been done”.  If this happens, we would never improve business processes.  Obviously there is a balance required here and partnership across these disciplines can help an organization operate at a higher level of delivered business value and IT efficiency.  After completing a recent job coverage rotation himself, Gregg articulated to me the importance of IT to IT partnership across these disciplines and cross functional job rotations within IT.  The benefits help an IT organization maximize operational cost savings and service levels, react quickly to changing business and technical conditions while balancing and prioritizing investments for the good of the overall business - versus optimizing any one individual discipline or organization.

If we look outside the walls of the IT organization, we can also see how silos can negatively affect the business – this brings me to the subject of Server Huggers. 

A Server Hugger is someone who currently has or is demanding to IT that they have a physical server (or many servers) dedicated to their business function or department --> they want to touch it, know it is theirs and know that they don’t have to share it with anyone else (either in IT or another business unit).  Server Huggers can be individuals or business groups.  And in a world where most servers still run an average of 5-10% utilization, it is easy to see how these silo-oriented “server huggers” can create inefficiency in the business. To deploy virtualization (or accelerate the rate of virtualization adoption) inside any business, the business teams and IT often need to breakdown this silo’d approach and find ways to delivered required or higher service levels while running on shared, virtualized hardware resources. 

This was at the heart of a discussion I recently had around Intel IT’s strategy to accelerate virtualization inside our Office and Enterprise computing environments.  The first step in executing this strategy is to identify the target servers, document who owns them (if IT doesn’t – in many cases we don’t), size the new environment and convince the business owners that virtualizing is OK.  With demonstrated proof of concept virtualization ratios at up to 20:1 using the latest Intel Xeon 5500 based servers, our opportunity for savings is dramatic if we can rid our organization of server hugger behavior.  With tops down support from IT management and an environment of partnership already established with our business customers, I believe we have a clear path to success.

Partnerships inside Intel IT can be seen in how we create and measure business value with our business partners, how our own IT organization encourages IT rotation and how we strategically align our IT planning efforts with our business plans. 

It is clear to me that our Intel IT Strategic Imperative of Partnership is much more than management lip-service … it is at the heart of our IT operational philosophy … and for good reason.

Good bye Silos!  Good bye Server Huggers!  … we have no use for you any more.

Chris Peters, Intel IT

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Last week I had the opportunity to attend the CIO Forum held in conjunction with the Insight 2009 Annual Conference in Orlando, FL.  While being held adjacent to Disney’s theme park, the theme of this event was appropriately titled “Vision Voice Value”.




I spent two days discussing best practices, sharing lessons learned from Intel IT and comparing notes and strategies with leading CIOs, IT Directors, Managers and Administrators in the Health Care profession.  Our focus? ways to deliver and articulate the business value of IT. I had the opportunity to:



• participate in a roundtable discussion of ~15 Health Care CIOs titled “The value of IT in improving financial performance”
  
• present to 50-60 CIOs on the business value of server refresh
  
• present to 20-30 IT Directors and Administrators on using the Xeon ROI tool as a way to justify server investment




One of the most thought provoking questions at the CIO roundtable that has stuck with me is … “How does your CEO (or your business customers) view IT?”  … as a cost center (necessary evil) or as a value center (strategic enabler).  While no one directly answered this rhetorical question, it was clear that our collective mission is to migrate IT from cost center to value center.  This migration will not be immediate.  It happens over time.




To enable this transformation from cost center to value center, we concluded that the accountability remains with IT, as IT professionals and CIOs must individually and collectively demonstrate business value through our investments and establish are relationship of IT predictability, trust and credibility with our business partners.   These are core themes I have seen very visibly inside Intel IT as I began my journey to the center of IT a few short months ago.




My second observation from this event reinforces some personal experiences I have had working with many other IT professionals in the past several months.  With the global recession and it’s impacts to capital funding, the need to justify IT investment is greater than ever – and the competition internally for capital $ is very high.  We may never go back to the way it was.  We have seen this inside Intel IT’ organization as well and as a result, created at server refresh savings estimator tool to share what we learned in justifying our investment a proactive server refresh strategy in 2007 and staying committed to that investment in 2009.




I demonstrated the server refresh savings estimator tool at the event to both the CIOs and IT Directors / Administrators and the feedback was very positive (“session was well worth my time”).   Prior to the event, I also had the opportunity to work with Deborah Gash (CIO for Saint Luke’s Health Services) and her staff.  Debe provided a glowing endorsement of the tool (Thanks Debe !!) after demonstrating the business value from a project already completed and the in intent to use it for several future projects. I invite you to learn more about why we created this tool and how to use it.  If you have a question or want to give us feedback on how to enhance it – just let me know with a comment on this blog.




My final thought comes from a blog written by Don Sears at eweek.  Don discusses about the need for IT to be right, accurate, credible and trustworthy is so important whether you are working inside IT or with IT.  Credibility and Trust is something that is hard to gain and easy to lose … so it is easy to understand why being right is key to working with IT.  Getting it wrong can have huge consequences.




Join us at IT@Intel and share your insights on our shared journey to transform IT from a cost center to a value center for business.  I look forward to hearing from you.





Thanks, Chris

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I hate fixing the roof.  In fact, I have been postponing a roof repair over my garage for about 2 years now.  I recently read an article by Peter Kretzmen titled “IT, The CIO, and the Business Need for Roof Projects” and realized that while I can put off my roof repair, IT may not be able to postpone routine upgrades. 

For businesses, technology refresh is a standard business process (ie a roof fix).  The question for IT often boils down to WHEN I should upgrade, not IF. Why? … because hardware technology ages, maintenance costs rise, and software solutions can become unresponsive or obsolete as business needs change, user needs evolve and new technology and software become available. In this economy, cost is king and reducing IT costs has clearly become a critical imperative.

My colleagues in Intel IT recently conducted two separate and independent studies on how frequent we should refresh our PC fleet and data center servers.

PC Fleet Management:  John Mahvi and Avi Zarfaty from Intel IT recently wrote a paper titled “Using TCO to Determine PC Upgrade Cycles”.  The conclusion of this analysis showed that a 3.5 year refresh rate was optimal for total cost management in our IT environment.  Despite the fact that delaying PC refresh this year was initially seen as a cash conservation approach, the analysis showed that not refreshing older PCs increased the business’s overall costs.  As a beneficiary of PC refresh (I got a new laptop a month ago ), I can also personally attest that my productivity has gone up.

Data Center Efficiency:  Matt Beckert and Diane Boyington of Intel IT recently published a paper titled “Realizing Data Center Savings with an Accelerated Server Refresh Strategy”.  This paper discusses Intel IT’s movement to a proactive 4-year server refresh cadence in 2007 and illustrates both the long term savings (up to $250M over eight years) and immediate benefit to the corporate bottom line ($45M saved in 2008). After plans to refresh our servers was slowed earlier this year to preserve capital funds, a re-assessment was done that showed that Intel IT could save $19M by refreshing now vrs waiting until 2010.

Just like you shouldn’t sleep in a house with a leaking roof … it is prudent to not let old hardware create a hole in your IT budget. In today’s economic environment, Intel IT can’t afford a leaky roof and so we are moving forward with proactive business client PC and Server refresh, proven approaches to reduce TCO and boost business value.

Chris Peters, Intel IT

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