How Do You Manage Servers In The Big Leagues? HP Shows One WayHow Do You Manage Servers In The Big Leagues? HP Shows One Way

A recent presentation by the CIO of Hewlett-Packard shows that a scientific approach can save bigespecially in HP's situation.Randy Mott, HP's CIO, recently gave a presentation about how he consolidated HP's servers into three data centers. He did away with 85 official data centers, plus another 400 unofficial locations that were found to harbor servers, totalling about 700 "data marts" as he called them. By using more powerful machines and virtualization, he was able to cut the number of servers HP used by 40 percent. Networking costs were cut in half and energy costs went down 60 percent.

On the whole, Hewlett-Packard cut IT spending from 4 percent of revenue three years ago to less than 2 percent today. With revenues of slightly more than $100 million billion, this should save it an extra couple of billion yearly. But to get to that level they had to undertake a sort of surge, spending 2 percent of one year's revenue on hardware upgrades.

Among other interesting moves, HP's IT operation decided to take on fewer projects but to committ more resources (i.e., people) to them and gave them shorter deadlines. They cut the number of IT professionals they were paying by almost half. Originally half were contractors, but afterwards 90 percent were staffers.

But the big news is that, now, 30 percent of the staff time is spend on maintenance and 70 percent is spent on new development, with a goal of making the ratio 80-20. The standard situation is the other way around: 20 percent on new development and 80 percent on maintenance.

But while HP's example may provide some interesting performance metrics, there is no guarantee that its methods would be transferable to another company, even another $100 billion firm. After all, HP is a highly visible high-tech firm who would want its internal IT operation to be a showcase. Consequently, its CIO could count on full management support.

Also, HP's planning was based on scientific cost-benefit analyses that assigned revenue to IT investments. For an SMB organization, the benefit of an IT investment is, typically, that it performs a function that cannot be performed manually (such as e-commerce) and without which the enterprise cannot exist. Cost-benefit analyses are simple: it costs what it costs (although cost-cutting is always desirable) and the benefit is that you can stay in business.

And adopting someone else's methods because they worked for them smacks too much of Enron's adoption of "rank and yank" personnel management policies on the strength of the fact that they worked well for the fighter forces of the Royal Air Force during the Battle of Britain. The latter organization was using a starkly simple metric (survival) and it was experiencing losses of 50 percent a month. There was no assurance the same methods would work in another situationand in Enron's situation, they ultimately didn't.

So HP's achievement should be seen a just that, HP's achievement, rather than a benchmark.

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