Dell touts hefty savings from IT efficiencies

Dell touts hefty savings from IT efficiencies

Summary: Using its internal IT as an example, company aims to help businesses bring maintenance costs down to just half of IT budgets, from the current 80 percent average.

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TOPICS: CXO, IT Employment
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SINGAPORE--As part of its efficient enterprise strategy push, Dell is targeting to help customers convert more of their IT budgets to business innovation, according to company executives.

The new commitment will see businesses bring down the cost of "keeping the lights on" from the typical 80 percent, to just 50 percent of IT spending, the executives said Wednesday at a briefing for media and analysts.

Tan Teng Cheong, Dell's general manager for Singapore, pointed out that innovation is part of a CIO's agenda, but it would be "a pity" if only a tenth of the IT expenditure is dedicated to improving the business. Lowering maintenance costs would allow executives to channel the savings to innovation, he said.

Karen Peck, Dell's director of product solutions marketing for South Asia, noted that globally, US$1.2 trillion is spent annually on IT infrastructure, but the bulk of the money is on labor-intensive areas such as support, operation and deployment.

Citing an October 2009 survey of Dell's local customers, Peck said the Singapore statistic was slightly better, but still high: some 70 percent of businesses spent over 70 percent of their IT budgets on maintenance. The respondents came from 400 Singapore-based companies with over 250 employees.

She pointed out that before Dell's internal IT introduced changes to its environment, the company spent 94 percent of its IT budget on keeping the systems running.

As part of the US firm's makeover, it moved nearly all its systems to x86 platforms, retired some 6,000 servers, reduced applications down to 3,000 from over 10,000, and cut its systems management licenses from 804 to 300. As a result, IT expenditure is now 54 percent, and expected to drop to 50 percent by year-end.

Peck said Dell has a commitment to the industry to churn US$200 billion in annual savings through its strategy of standardization, simplification and automation.

Flexibility in terms of customization will also be a key differentiator for Dell, she added. The U.S. company currently has a "custom factory integration" initiative where PC and server images can be specified at the time of purchase and loaded onto new machines. This removes the need for provisioning at the customer end. Companies procuring servers for cloud environments can also customize the systems for their specific cloud computing use.

Cost savings, fast deployment valued
Also at the briefing was Sui Wee Chong, executive director of e-Cop, a customer of Dell. The managed security services provider has achieved annual savings of S$150,000 (US$106,680) since it adopted Dell equipment in 2006, he said. The company has also since observed a significant reduction in downtime at its customer sites and the ability to meet its SLAs (service level agreements).

The ability to quickly deploy ready Dell servers for Cyclops, e-Cop's security event processing system, was also appreciated by the provider. Sui noted that a financial institution in Taiwan last month insisted on deployment within seven days, which e-Cop was able to accommodate.

Topics: CXO, IT Employment

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