Wednesday, December 12, 2018

Inside Story: How HP Inc. Moved from a Rigid Legacy to Data Center Transformation

Transcript of a discussion on how a massive corporate split led to the re-architecting and modernizing of IT to allow for the right data center choices at the right price over time.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Hewlett Packard Enterprise.

Dana Gardner: Hello, and welcome to the next edition of the BriefingsDirect Voice of the Customer podcast series. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator for this ongoing discussion on digital transformation success stories.

Gardner
Our next data center architecture modernization journey interview explores how HP Inc. (HPI) has rapidly separated and modernized a set of data centers as part of its splitting off from what has become Hewlett Packard Enterprise (HPE).

We will now learn how HP Inc. has taken four shared data centers and transitioned to two agile ones, with higher performance, lower costs, and an obsolescence-resistant and strategic infrastructure design.

Here to help us define the data center of the future are Sharon Bottome, Vice President and Head of Infrastructure Services at HPI, and Piyush Agarwal, Senior Director of Infrastructure Services, also at HPI. Welcome to you both.

Piyush Agarwal: Thank you.

Sharon Bottome: Thank you.

Gardner: We all know the story of HP Inc. splitting off into a separate company from HPE in 2015. Yet, it remains unusual. Most IT modernization efforts combine -- or at the least replicate -- data centers. You had to split off and modernize your massive infrastructures at the same time, and you are still in the process of doing that.

Sharon, what have been the guiding principles as you created new IT choices from a combined corporate legacy?

Split-second reaction 

Bottome: When the split happened, leadership had to make a lot of decisions around speed and agility just to get the split done. A new underlying IT infrastructure wasn’t necessarily the key decision maker for how the split went.

Bottome
We therefore ended up on shared infrastructure in four data centers, which then ended up being shared again as HPE split off assets to Micro Focus and DXC Technology in 2017. We ended up in a situation of having four data centers with shared infrastructure across four newly separated companies.

As you can imagine, we have a different imperative now that we are a new and separate company. HPI is very aggressive and wants to be very fast and agile. So we really need to continue and finish what was an initial separation of all of the infrastructure.

Gardner: Is it fair to say, Piyush, that this has been an unprecedented affair at such scale and complexity?

Agarwal: Yes, that is true. If you look at what some of the other organizations and companies have done, there have been a $5 billion and $10 billion company that have undertaken such data center transformations. But the old Hewlett-Packard as a joint company was a $100 billion company, so separating the data centers for a $100 billion company is a huge effort.

So, yes, companies have done this in the past, but the amount of time they had -- versus the amount of time we are seeking to do the separation makes this totally unthinkable. We are still on that journey.


Gardner: What is new in 2018 IT that allows you to more aggressively go at something like this? What has helped you to do this that was not available just a few years ago?

Bottome: First, the driver for us is we really want to be independent. We want to truly transform our services. That means it's much more about the experiences -- and not just the technology.

We have embarked predominantly on HPE gear. We architected the new data centers using the newest technologies, whether it’s 3PAR, HPE Synergy, and some of the other hardware. That allows us to take about 800 applications and 22,000 operating systems instances and migrate those. It's just a huge undertaking.
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But by using a lot of the new technology and hardware, we have to then transform our own processes and all the services to go along with that.

Gardner: Piyush, what have you learned in terms of the underlying architecture? One of my favorite sayings is, “Architecture is destiny.” If you make the right architecture decisions, many other things then fall into place.

What have you done on an architectural level that's allowed this to go more smoothly?

Simpler separation solutions

Agarwal: It’s more about a philosophy than just an architecture, in my view. It goes to the previous question you asked. Why is it simpler now? Just after the separation, there was a philosophy around going to public cloud. Everybody thought that we would save a lot of money by just going to the public cloud.

But in the last two or three years, we realized that the total cost of ownership (TCO) in a public cloud – especially if the applications are not architected for public cloud – means we are not going to save much. So based on that that epiphany, we said, “Hey, is it the right time to look at our enterprise data center and architect it in such a way that it provides cloud-like functionality and still offers flexibility in terms of how much we pay?”

Having HPE Synergy as the underlying composable infrastructure really helps with all of that. Obviously, the newer software-defined data center (SDDC) architectures are also playing a major role. So now, where the application is hosted is less of a concern, because -- thanks to the software-defined architecture and best-fit model -- we may be able to move the workloads around over time.

Gardner: Where you are on this journey? How does that extend around the world?

Multicloud, multinational

Bottome: We are going from four data centers in Texas -- two in Austin and two in Houston – down to two, one each in Houston and Plano. We are deploying those two with full resiliency, redundancy, and disaster recovery.

Gardner: And how does that play into your global reach? How are you using hybrid IT to bring these applications to your global workforce?

Bottome: Anyone who says they are not in a multicloud environment is certainly fooling themselves. We basically are already in a multicloud environment. We have many, many platforms in other people’s clouds in addition to our core data centers. We also have, obviously, our customer resource management (CRM) as a cloud service, and we are moving our enterprise resource planning (ERP) into another cloud.

How do we support all of these cloud environments? We have partners along with us. We are very much out-sourced, too.
So it's a multicloud environment and managing that and changing operations to be able to support that is one of the things we are doing with this transformation. How do we support all of these cloud environments? We have partners along with us. We are using managed service providers (MSPs). We are very much outsourced, too. So it's a journey with them on learning how to have them all supported across all of these multiple clouds.

Ticketing transformed

Gardner: You mentioned management as being so important. Piyush, when it comes to some of the newer management capabilities we are hearing about – such as HPE OneSphere -- what have you learned along the journey so far? Do both HPE OneView and HPE OneSphere play a role as a continuum?

Agarwal: It’s difficult to get into the technology of OneView versus OneSphere. But the predictive analytics that every provider uses to support us is remarkably different, even in just the last five years.

When we were going through this request for proposal (RFP) process for MSPs for our new data center transformation and services, every provider was showing us the software and intelligence on how tickets can be closed -- even before the tickets are generated.

So that’s a huge leap from what we saw four or five years ago. Back then the cost of play was about being in a low-cost location because employee costs were 80 percent of the total. But new automation and intelligence into the ticketing systems is a way to move forward. That’s what will drive the service efficiencies and cost reductions.


Gardner: Sharon, as you continue on your transformation journey, are you able to do more for less?

Bottome: This is actually a great success story for us. In the new data center transformation and the services transformation RFP that Piyush was mentioning, we actually are getting $50 million a year in savings every year over five years. That’s allowed us, obviously, to reinvest that money in other areas. So, yes, it's been a great success story.

We are transforming a lot of the services -- not just in the data center. It's also about how our user base will experience interacting with IT as we move to more of these management platforms with this transformation.

Gardner: How will this all help your IT operations people to be more efficient?

IT our way, with our employees 

Agarwal: When we talk about IT services, there is always a pendulum. If you go back 15 or 20 years, there used to be articles about how Solectron moved all of their IT to IBM. In 2001, there were so many of those kinds of deals.

But within one to two years people realized how difficult it was. The success of the businesses depended not just on IT outsourcing, but in keeping the critical talent to manage the business expectations and manage the service providers.

Where we are now with HPI, over the period of the last three years, we have learned how to work in a managed services environment. What that means is how to get the best out of a supplier but still maintain the critical knowledge of the environment within our own IT.
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Our own employees can therefore run the IT tomorrow on some other service provider, if we so choose. It maintains the healthy mix of relationships between the suppliers and our employees. So, we haven’t gone too far right or too far left in terms of how the IT should be run from a service provider perspective.

With this transformation, that thought process was reinforced. We realized when we began this transformation process that we didn’t yet have critical mass to run our IT services internally. Over the period of the last one-and-a-half years, we have gained that critical mass back.

From an HPI IT operations team’s perspective, it generates confidence back -- versus having a victim mentality of, “Oh, it’s a supplier and the suppliers are going to do it,” that is opposed to having the confidence ourselves to deliver on that accountability with our own IT employees. They are the ones driving our supplier to do the transformation, and to do the operations afterward.

Gardner: We have also seen an increase in automation, orchestration, and some very powerful tools, many of them data-driven. How have automation techniques helped you in this process of regaining and keeping control?

Automation advantages 

Agarwal: DevOps provides, on the one hand, the overall infrastructure, orchestration, and agility to provision. Being part of the previous Hewlett Packard Company, we always had the latest and greatest of those tools. We were a testing ground for those tools. We always relied on automated ways of provisioning, and for quick provisioning.

If I look at that from a transformation perspective, we will continue to use those orchestration and provisioning tools. Our internal cloud is heavily reliant on such cloud service automation (CSA). For other technologies, we rely on server automation for all of the Linux and Unix platforms. We always have that mix of quick provisioning.

At the same time, we will continue to encourage our developers to encompass these infrastructure technologies in their DevOps models. We are not there yet, where the application tier integrates with the infrastructure tier to provide a true DevOps model, but I think we are going to see it in the next one to two years.

Gardner: Is there a rationalization process for your data? What’s the underlying data transformation story that’s a subset of the general data center modernization story?

Application rationalization remains an ongoing exercise for us. In a true sense, we had 1,200 applications. We are bringing that down to 800. The application and data center transformations are going in parallel.
Agarwal: Our CIO was considered one of the most transformative in 2015. There is a Forbes article on it. As part of 2015 separation, we undertook a couple of transformation journeys. The data center transformation was one, but the other one was the application transformation. Sharon mentioned that for our CRM application, we moved to Microsoft Dynamics. We are consolidating our ERP.

Application rationalization (AR) remains an ongoing exercise for us. In a true sense, we had 1,200 to 1,300 applications. We are trying to bring that down to 800. Then, there is a further reduction plan over the next two to three years. Certainly the application and data center transformations are going in parallel.

But from a data perspective -- looking at data in general or of having data totally segregated from the applications layer -- I don’t think we are doing that yet.

Where we are in the overall journey of applications transformation, with the number of applications we have, in my view, the data and segregation of applications is at a much higher level of efficiency. Once we have data center transformation and consolidated applications and reduce those by as many as possible, then we will take a look at segregating the data layer from the applications layer.

Gardner: When you do this all properly, what other paybacks do you get? What have been some of the unexpected benefits?

Getting engaged 

Bottome: We received great financial benefits, as I mentioned. But some of the other areas include the end-user experience. Whether it’s time-to-fix by improving the experience of our employees interacting with IT support, we’re seeing efficiencies there with automation. And we are going to bring a lot more efficiency to our own teams.

And one of the measurements that we have internally is an employee satisfaction measure. I found this to be very interesting. For the infrastructure organization, the IT internal personnel, their engagement score went up 40 points from before we started this transformation. You could see that not only are they getting rescaled or retooled, we make sure we have enough of that expertise in-house, and their engagement scores went up right along with that. It helped us on keeping our employees very motivated and engaged.

Gardner: People like to work with modern technology more than the old stuff, is that not true?

Agarwal: Yes, for sure. I want to work with the iPhone X not iPhone 7.

Gardner: What have you learned that you could impart to others? Now, not many others are going to be doing this reverse separation, modernization, consolidation, application, rationalization process at the same time -- while keeping the companies operating.

But what would you tell other people who are going about application and data center modernization?

Prioritize your partners

Bottome: Pick your partner carefully. Picking the right partner is very, very important, not only the technology partner but any of the other partners along the journey with you, be it application migration or your services partners. Our services partner is DXC. And the majority of the data center is built on HPE gear, along with Arista and Brocade.

Also, make sure that you truly understand all of the other transformations that get impacted by the transformation you’re on. In all honesty, I’ve had some bumps along the way because there was so much transformation going on at once. Make sure those dependencies are fully understood.

Gardner: Piyush, what have you learned that you would impart to others?

Agarwal: It goes back to one of the earlier questions. Understand the business drivers in addition to picking your partners. Know your own level of strength at that point in time.
Learn How the Future
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If we had done this a year and a half ago, the confidence level and our own capability to do it would have been different. So, picking your partner and having confidence in your own abilities are both very important.

Bottome: Thank you, Dana. It was exciting to talk about something that has been a lot of work but also a lot of satisfaction and an exciting journey.

Gardner: I’m afraid we’ll have to leave it there. You’ve been exploring with us how HP Inc. has taken four shared data centers and is transitioning to two more agile ones, with higher performance and lower cost. And we’ve learned how the multicloud data center of the future approach provides such benefits as a strategic and obsolescence-resistant design, DevOps benefits, and pushes people to do more with less with their applications.

Please join me in thanking our guests, Sharon Bottome, Vice President and Head of Infrastructure Services at HPI. Thank you so much, Sharon.


Bottome: Thank you.

Gardner: And Piyush Agarwal, Senior Director of Infrastructure Services, also at HPI. Thank you, sir.

Agarwal: Thank you for having us.

Gardner: And a big thank you as well to our audience for joining us for this BriefingsDirect Voice of the Customer digital transformation success story discussion. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this ongoing series of Hewlett-Packard Enterprise-sponsored interviews.

Thanks again for listening. Please pass this along to your own IT community and do come back next time.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Hewlett Packard Enterprise.

Transcript of a discussion on how a massive corporate split led to the re-architecting and modernizing of IT to allow for the right data center choices at the right price over time. Copyright Interarbor Solutions, LLC, 2005-2018. All rights reserved.

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