Lights-on spending is so yesterday: Dell

Summary:If you're working in IT and you haven't simplified your infrastructure yet, you should be, and quick smart too, according to the managing director of Dell Australia, Joe Kremer.

If you're working in IT and you haven't simplified your infrastructure yet, you should be, and quick smart too, according to the managing director of Dell Australia, Joe Kremer.

"A lot of businesses either are [simplifying their IT] or they should be," Kremer told ZDNet Australia.

According to Kremer, CIOs are judged on new IT projects delivered under their leadership. He believed that spending the IT budget on keeping the lights on isn't the way forward.

"Most customers will tell you if they really go through their data, they find that 70 to 90 per cent of the IT budget is going on just keeping things working, and hardly any is going towards innovation."

"If you're spending all your money keeping old stuff working, you can't be doing new things," he said.

Between 2002 and 2008, Dell worked on a strategy to simplify its global IT operations through server virtualisation and datacentre automation to free up maintenance costs. This spare cash was then put towards new projects through the innovation department.

Dell's long-term cost-cutting project saw the company virtualise thousands of servers and shut down hundreds of unused applications. Since 2009, Dell has been able to shut down 9000 servers using virtualisation.

Given that success, Kremer looked to duplicate the strategy within Australia. "We've really lined up here with what we've done globally and it's been very successful," he said.

"We arrived at a point where 60 to 70 per cent of our IT budget was in maintenance. Now we're in a place where over 50 per cent of that budget is spent on innovation. It's all because we've taken so much cost out of the back and return it as savings," Kremer said.

"It's making all of our jobs easier."

Dell's simplification strategy is in line with Frost & Sullivan predictions, which said that desktop support and server maintenance staff will lose out to automated processes. Yet, instead of making staff redundant because of automated code, Dell made the decision to shuffle staff about internally.

"It didn't result in exiting anyone; if anything, every year we've grown. So now, instead of working on some maintenance thing that can be automated, they're working on something that can benefit the customer or on some new initiative," he said.

Staff are encouraged to draw on their past experience for the benefit of new innovation projects.

"For example, we've stood up a number of new service desks for customers and these people have been very helpful in terms of designing it," Kremer said.

Kremer said that Dell had hired several hundred staff over the last two years as a result of its acquisitions and innovation projects.

Topics: CXO, Dell, Software

About

A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

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