By Aaron LazenBy
Oracle customer Dell runs a broad selection of Oracle software—including Oracle E-Business Suite, Hyperion, and Oracle Fusion Middleware solutions to support service-oriented architecture—as part of the IT infrastructure managed by Dell CIO Robin Johnson.
Johnson has spent significant time with Oracle’s senior management sharing IT strategies. One of his largest IT projects began in 2009 when Dell acquired Perot Systems. The acquisition signaled a shift in business strategy for a company that made its name in consumer and commercial hardware sales with a breakthrough e-commerce platform. Now the company’s consulting services would require a new approach to internal IT.
Johnson, with more than 20 years of IT experience, helped lead a consolidation effort that retired 6,000 internal applications in two years and is on track to save Dell as much as US$350 million—all while improving the effectiveness of internal systems and their support of Dell employees.
Round Rock, Texas
US$52.9 billion in 2010
Profit spoke to Johnson about his approach to IT transformation and how the office of the CIO can contribute to the bottom line.
Profit: What is your vision for managing IT at Dell? Johnson: I don’t see us really in the job of managing IT. I see us in the job of value creation. That means you think about things a little differently and turn that ethos into an operating vision.
If you come to Dell IT, we talk about two things: we talk about stuff we already have, and the stuff that we’re building. The stuff you already have—be that an application or a piece of infrastructure—you have to run it more efficiently, run it better, run it faster. That’s how you help the P&L. You try forever to tune that up and make it better year over year. Then we invest the savings back into projects and try to pick the best projects—but the best projects as defined by, “What’s the return to Dell?”
So we don’t say, “We wrote this application five years ago, therefore it’s just in the running cost of the company.” We are forever reexamining what we’ve done in the past, trying to make it more cost-effective or eliminate inefficiencies, and then take those savings and spend more on developing the new Dell. That’s the mantra, if you will.
Profit: Do you think that perspective is unique?
Johnson: I think it’s happening more, but I still think there’s a long way to go on that journey. If you think of the evolution of IT over 20 years, it used to be back-office processes like financials, bills of materials, requirements, and planning. Well, if you look at IT now, not a Dell salesperson goes into the field without looking at our CRM [customer relationship management] system.
Technology is so pervasive throughout the business; the processes couldn’t run without technology. So I think aligned with that, IT has changed from the guys who run the back office into a key enabler of business efficiency.
You see studies about productivity increase; a lot of that’s related to technology. Therefore, I think the role becomes far less about the technology itself. But it becomes far more about how you use those technologies to create business value.
Profit: Does taking that approach make it harder to build support for IT initiatives?
Johnson: We sit with the business and go through the strategies and point out where we think technology can enable and where it can’t enable. But at the end of the day there’s a business strategy, and my job is to use technology to enable that strategy. So it’s their money and their roadmap, and I think that’s massively important.
Now, we do have a responsibility to make sure we’re maximizing the return across the portfolio. In other words, “Hey, I know you like your project; there’s a better project over here.” And we do have a responsibility to say, “That will never work.”
But I think the key thing is, it’s not about me pushing my initiatives; it’s about me aligning a technology strategy to those business strategies.
Profit: How has Dell’s business evolved significantly during this period, and what role has IT played in that change?
Johnson: I think it’s broadly accepted today, unlike 10 to 15 years ago, that almost any business idea involves technology. That for me is one of the most fascinating things about IT as a career.
It’s hard—I’m expected to know every segment of Dell’s business strategy and to have an opinion and weigh in. If you work in supply chain, you’re expected to know supply chain. If you work in sales, you’re expected to know sales. If you work in IT, you’re expected to know both, and understand the interrelationship between the two, so that the systems will work.
So IT is a wonderful place to look at how the business actually operates, because you see all of those interdependencies. You’re seeing the actual process interaction between departments. I’ll give you a real example. If you go back to 10 years ago, Dell was famous for online sales. Customers could enter standard configurations and then purchase electronically from Dell. We take orders, you save money—it’s a very easy transaction.
Now that kind of transaction is a given, and large companies use global portals to buy anywhere, for anywhere in the world, to be invoiced anywhere else. This sort of evolution, the sophistication of what you can do and the different communities that form around these transactions—it’s just incredible. And it’s nonstop, and your challenge as an IT executive is to keep up.
Profit: How has that evolution paralleled the evolution of Dell’s business?
Johnson: If you go back in time, “configure your own machine”—which we still have today—was very unique. In effect what we said is, “We’ll extract you from understanding whether this card works with that processor, works with that disk, works on that board, and fits into that case, and we’ll give you a very simple, easy-to-use, responsive online tool for you to configure your own machine.”
That technology is probably the most tuned piece of code in Dell today. It’s going through a real manufacturing bill of materials, validating the configuration in real time with subsecond screen response, and abstracting the customer from that entire technical conversation.
We start from the mindset of that online configuration. So why don’t we take the things we do that differentiated us and that we’re very, very good at to create a different value proposition for our customers and apply that to services?
So we’re not playing the solutions game the same way as everybody else. We’re really bringing the latest technology, the latest thinking, to create a different cost position—and therefore a different value proposition for our customers in exactly the same way we did for configuring PCs. Everyone else wants to send you a person and charge you for their time. We start both within the business and IT with that different perspective, because we don’t have the same legacy.
Profit: What do you mean when you talk about “rationalizing the core?”
Johnson: “Rationalize the core” is our big IT strategy around really globalizing on best-of-breed applications. It was about the ability to make an IT change once and have it deploy globally.
Before, Dell was organized by regions. We grew very quickly, and one of the big aspects of growth was geographic expansion. The fastest way for IT to support that kind of growth is to copy code, create an instance, and off you go—you’re in business in a new country. The regions understood their geographies, which was good and noble, and they would tune things for their geographies. And that worked fabulously for us.
Well, over time those systems got tuned 100 different ways. As the company grew, this approach started to inflate our costs. At one point, there were actually five dell.coms, one for each region.
Then you have to start spending money to make the customer experience similar across all five platforms. And then along comes something like PCI [Payment Card Industry] compliance, and you have to go apply changes five different times. Well, we don’t need five; we need one.
As customers have globalized, their requirements have globalized. Look at the time it took to deliver a feature in dell.com three years ago; we would’ve rolled out in the U.S. for a month or so, in western Europe for a month or so, and then probably would have rolled out into the rest of Europe over the following three-month period. By then, we’d be working on something new. Now that code hits the entire world in dell.com land—there are 130 countries—simultaneously. That’s a huge pace difference.
The “rationalize the core” program was aligned with Dell transforming into a solutions company. It did save us a lot of money, and that was great, especially through the recession, but it was really about agility and transforming Dell.
Oracle is a big part of that program. Oracle executives did their own rationalized core a few years back, and we studied that and learned a lot of lessons. I’ve spoken to a number of Oracle execs about it, and that informed our approach. We’re a big company with a lot of diverse needs. So we tend to look for vendors who’ve got a broad range of products where they’ve already done a lot of the integration between those products. That approach tends to work well in a large corporation like Dell.
Profit: Do you have any lessons, tips, or insight into the role IT plays in the acquisition process?
Johnson: We’re on our 11th acquisition now, so we’re starting to get good at this. Each company we acquire comes with a set of systems—for example, an HR system, a set of finance ledgers, an HR training tool. So every time we do an acquisition, we do a mini “rationalize the core.” And in doing so, we’ve learned a few lessons.
Here’s lesson number one: back to my earlier comment about dealing with fixed cost, you’ve got to go deal with the applications as quickly as you can.
The second lesson is to recognize that you’re dealing with a morale issue. It’s very hard when you’re an acquired company. So on Day One, if you’re acquired by Dell and you are connected on our corporate networks, seeing the same stuff we see, on the same e-mail—that is huge for people. People start to feel like they belong somewhere.
Number three is to recognize that acquisitions work two ways: You may be buying a company for the right corporate reasons, but you are also buying IT assets. It’s all too easy to go down to that company and say, “Here’s how we do things.” But I believe it is equally important to learn from what they do, because I’m sure you’ll find things to bring back that will make your business better.
Profit: If you look out 5 years or 10 years, what technology do you see that could have a transformative impact on enterprise computing?
Johnson: I think the concept of the internet in your hand is revolutionary. You used to have to be at your desk or at some wireless point to connect and have access to your corporate systems. Now, I’m on every second of every day, across the globe. That’s a tremendous change that will continue to influence IT strategy.
Technology phenomenon number two is the uncontainable user expectation. I mean, contrast installing an app on a mobile device to how the IT department does it. We have got to bring those experiences closer together.
And number three, the data center. In the next 5 years, I believe that the data center, and the cost of running a data center, will go through more transformation than it has in the last decade.
I think those three things are the big three for corporate IT over the next couple of years. And you know, it’s going to be difficult. Some of those changes will break our current paradigms. But they will also define the winners and the losers. And I have to say, just because of who we are, that’s pretty exciting stuff.
For More Information
Photography by Shutterstock