The intersection and fusion of business insight and technological innovation is the key to creating successful new business models, said AMD Chief Information Officer Ahmed Mahmoud today in the keynote of Wharton Business School's 13th annual business technology conference, "Future Unleashed," in Philadelphia.
In a "fireside chat" with IBM Global Business Services global lead partner Saul Berman, Mahmoud said IT professionals must master each facet of their company to fully understand the business.
“Business acumen is absolutely the most critical skill that people need to develop – through hard times or whatever,” Mahmoud said. "Whether you’re opening up a restaurant or running an IT department. It is very necessary for the IT professional to know HR, finance, engineering.”
Mahmoud said IT is essential to manage projects in a corporation today, no matter what department that project originates in.
“You're looking for someone with business acumen and project management skills," Mahmoud said. "The amount of money you're spending is extremely valuable, even at a low-cost center. IT is everywhere in our lives…when was the last time you actually saw a memo on paper that comes to your [physical] inbox?"
"Sometimes I feel like IT is the Army. There is a job for you – it doesn’t matter what you do…every facet of the business, we need your expertise to finish the job."
The ubiquity of IT makes it easy for "efficiencies" such as virtualization to get out of hand and become less efficient, Mahmoud said.
"People are beginning to say, when we moved away from the mainframes years ago, that was the VMware of the past," he said. "We felt it was sort of constraining, and each of us bought our own servers, and they bred like rabbits. We had data centers overflowing and the utilization per server was under 10 percent! Now we're driving to…10 percent? Can I put 10 to 15 applications on it and solve multiple problems? Manageability? Building space? Power use? Virtualization is this whole concept of server consolidation. Teams still don't have to talk to each other, because the virtualization does it for them."
Add the cloud to the mix, and problems can multiply, Mahmoud said.
“[Now] you're not just virtualizing between departments and applications, you’re virtualizing between enterprises," he said. "Everyone knows how to e-mail in the cloud. But what other apps, what is the new framework to take advantage of a richer set of apps in the cloud? Sometimes, the apps don't lend themselves to the cloud."
Mahmoud said he uses the cloud strategically at AMD.
"[At AMD] my average utilization on the 30,000 servers I have is 96 percent. So I've created my own internal cloud. I think of it as leasing – I might use the cloud for peaks that I might have."
But problems can creep up from solutions originally conceived as efficiencies, Mahmoud said.
"Offshoring, outsourcing, it's all part of the toolbox that an IT shop has," he said. "It is a standard method of operation. The trick is, how do we make it more effective?” Offshore, you're playing a labor arbitrage game...after awhile, you run out of places to go."
"Now there's a trend of people considering a near-shore experience – Mexico, Argentina, Brazil, rather than India or China. But there’s a time zone issue. It’s not lack of talent – it’s the logistics of waking up at 6 a.m. for a conference call and staying up until 11 p.m. for another call. Timezones turned out to be one of the most [important] indicators to show effectiveness."
The economic crisis is an opportunity in disguise, Mahmoud said.
"When the economy is tough, in certain situations it’s the best thing for IT. What’s critical is how you can sustain efficiency. During these economic times, IT is being looked at as a way to optimize the whole business."
Which means other departments look to IT for project management, he said.
"One of the things IT does is projects; managing projects. Some companies are asking IT dept to manage project" irrelevant of tech issues, he said.
"[At AMD] I help drive the corporate strategy. I'm sort of the cattle herder of corporate strategy for AMD. Do we get invited to the table? I'm probably the one scheduling the meetings.
"They still say" that IT is always late on projects, Mahmoud said, "but now we're invited to the table."
THE STIMULUS EFFECT
There are opportunities in the economic stimulus for IT departments, such as Internet access in rural America, the 'smart' grid and renewable energy incentives to make data centers more efficient, Mahmoud said.
"There's a lot of opportunity," he said. "We just need to see which of these [initiatives] take root and move forward. When they're talking about infrastructure, they're talking about electricity, Internet, data center efficiencies, medical records in a common format, et cetera."
But IT professionals have to shape up their own ship first, he said.
"It is critical to figure out how to optimize your business function – your department and the whole company," he said. "That is the level of thinking that we are looking for people to come to us with. It doesn't matter what department they're in. They need to start thinking in a very horizontal fashion versus a vertical fashion. 'This might not be good for my area but it’s good for the whole company.' "
"You might improve one department, but you make 10,000 people less productive. You see it all the time in a siloed fashion – I call it 'micro-optimizing.' The future is to think about macro-optimization."
One of the challenges is bringing down the price of the bill, Mahmoud said.
"Artificial cost reduction – I call it 'cost transformation,' " he said. "The fully landed price hasn't changed. True transformation is to ask how you can create a more efficient supply chain so you can reduce the total cost. Not not paying for freight, but reducing the need for freight. People have not focused on cost destruction, instead of left pocket, right pocket."
Mahmoud said he used his physics background -- both his bachelors and masters degrees are in theoretical physics -- to understand his value as an IT professional.
"[Physics] work was kind of hard," he said. "It was hard work, and they don't pay you very much, and it takes two or three years to find out if you’ve ever solved anything." After taking a programming job at an IT shop, "they doubled my pay and the work was so much easier. It's been that way ever since. Every job is easier and they pay you more," he said with a laugh.
“I’ve always looked at myself as a business professional rather than an IT professional," he said. "[When he was in charge of Dell's IT arm], I sort of ran e-commerce…I became a supply chain expert."
IT pros must focus on understanding the business problem versus the tech problem, Mahmoud said.
"Solve and optimize the business problem," he said. "Sometimes it requires technology, and sometimes it doesn't.
"Every single company does something completely different. Selling houses, websites, collecting garbage – technology is a critical part of how they function. That's the world we live in today -- small shops, large shops – it's a common set of problems and the technology we're bringing to the forefront will help solve those problems."
"If you have to talk in business terms, it comes down to the bottom line. What are we doing, and how will this technology help the bottom line – or drive the top line."
HOW AMD FITS IN
"In x86 architecture, there's Intel and there's AMD," Mahmoud said. "In GPUs, there's NVIDIA and AMD. AMD is the only one that does both. It's pretty much at the pinnacle of technology. The company has been around for 40 years -- things like the first dual-core processors were AMD. 64-bit in the x86 market was AMD. You just don't hear about it because we're a much smaller player."
Mahmoud said the company sees its future in the convergence of the CPU and GPU spaces.
"How do we create this fusion of the GPU-CPU?" Mahmoud asked. "Nvidia says the CPU doesn't matter. Intel says the GPU doesn't matter. It's the melding of these two technologies that will give us efficiencies in the future. You need to have a well balanced answer to that. The future will be based on end-user needs."
Internally, the area for AMD that's "the most ripe" for improvement is project engineering, Mahmoud said.
"You have 10,000 engineers that think of themselves as IT professionals in their own right," he said. "There's a lot of ideas there, but they're extremely fragmented. We don't have a great mechanism to make it enterprise ready. Every engineer optimizes his life a little bit, but you don't have something that's ready" for prime time.
"All the engineers love standards. They just want you to use their standards."
It's a matter of addressing the inefficiency and not just the tech, Mahmoud said.
"In the past, when people thought of solutions, they thought of an IT implementation," he said. "But now, I'm thinking [about] operational excellence. I need to make sure the technology is in place and the whole problem is solved…before, the job was 'your mess, for less.' That's not really an optimization; it's still a mess. You just put it in a computer and did it a lot faster."
IT professionals must keep cost destruction in mind within the framework of the entire company, he said. It's not just having a seat at the table, but setting it with strategic implementation, he said.
"Technologists are just as stubborn as non-technologists, and vice-versa," he said. "One of the biggest [successes] is Walmart. They have truly brought technology to the forefront of how they run their business model. It has nothing to do with whether they’re technologists or not. They brought the RFID thing to the forefront. One of the key measures to their success is due to their technology implementation."
Success has more to do with organizing people, Mahmoud said. Getting technology to work is the easy part -- even if that means taking advantage of the cloud.
"For us to take full advantage of the virtualization and cloud computing, the APIs and technology needs to be there…there's a lot of work to be done. Google has done a tremendous job....I don't want anyone to think that you can run every app in the cloud and it's easy. That’s just not reality. Some of it is reality, but more work needs to be done."