So, this isn’t really an HPC article, and I’ll keep it short. It’s the sheer scale of the accomplishment that interests me. Timothy Prickett Morgan writes at The Register about the success of HP’s new CIO and his IT transformation project:
When Mott took over as HP’s CIO, the company had 85 data centers, and over the past three years, it has consolidated all of its operations down to a “six pack” of three redundant, highly virtualized data centers. The goal when Mott started was to move from 25,000 servers sprawled across those 85 data centers to around 14,000 machines in those three mirrored data centers. HP also chucked two-thirds of its 6,000-strong application portfolio, a legacy of the many companies it has acquired and disparate divisions.
…HP did not provide a final server count as the IT project finished, but did say today that it has cut the number of servers in use at the company by 40 per cent while boosting the processing power in its iron by 250 per cent (that means by a factor of 3.5). A 40 per cent reduction in the servers would mean it has around 15,000 boxes today. The company also said that it has cut its networking costs by 50 per cent over the three years while tripling network bandwidth. (Keeping CPU capacity and network bandwidth more or less in balance makes sense.)
Why bother? Two reasons: money now, and money later
But here’s the bottom line – in fact, two of them. The changes that HP has done have removed $1 billion in costs out of the company, and that is real money. In fact, internal IT spending will drop from about 4 per cent of fiscal 2005’s $86.7bn revenue to a projected under 2 percent of fiscal 2009’s revenue. HP is projecting revenues for fiscal 2009 to be in the range of $127.5bn to $130bn, thanks in large part to its acquisition this year of outsourcer Electronic Data Systems. Cutting IT spending was obviously low-hanging fruit in terms of cost cutting at the company, particularly considering the low-cost of experts, hardware, and software.
…But the IT effort is undoubtedly being used as a training mechanism for future HP engagements with its customer base to transform their inefficient IT operations. And that is where the six-pack data centers and massive application and server consolidation will pay off on the bottom line a second time for HP.