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Speak dollars not gadgets: How to get upper management to pay attention

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Jonathan Koomey gave this presentation at the Data Center Dynamics Conference in Seattle, WA on Sept. 4, 2014. It describes what executives need to do to modernize their IT operations, and describes an upcoming (Nov 10 to Dec 12, 2014) online class titled Data Center Essentials for Executives, see http://goo.gl/K4kJG2

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Speak dollars not gadgets: How to get upper management to pay attention

  1. 1. Speak dollars not gadgets: How to get upper management to pay attention Jonathan Koomey, Ph.D. Research Fellow, Steyer-Taylor Center for Energy Policy and Finance, Stanford University http://www.koomey.com Presented at DCD Converged Seattle, WA September 4, 2014 Copyright Jonathan G. Koomey 2014 1
  2. 2. What do executives need to know about information technology (IT)? Copyright Jonathan G. Koomey 2014 2
  3. 3. Modern businesses can’t succeed without IT 3 Brynjolfsson, Erik, and Andrew McAffee. 2014. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York, NY: W. W. Norton & Company. [http:// amzn.to/1gYHEGk] Copyright Jonathan G. Koomey 2014
  4. 4. However… Copyright Jonathan G. Koomey 2014 4
  5. 5. IT is almost invariably fragmented and divorced from business performance Only management can fix that Copyright Jonathan G. Koomey 2014 5
  6. 6. Almost all enterprise data centers are paragons of inefficiency, but management doesn’t know it (and those who do know can’t fix it) Copyright Jonathan G. Koomey 2014 6
  7. 7. Inefficient IT increases costs, decreases revenues, AND reduces the rate of innovation Copyright Jonathan G. Koomey 2014 7
  8. 8. What can management do? Copyright Jonathan G. Koomey 2014 8
  9. 9. I. One boss, one team, one budget! Copyright Jonathan G. Koomey 2014 9
  10. 10. II. Tie IT performance to business performance Copyright Jonathan G. Koomey 2014 10
  11. 11. How? Copyright Jonathan G. Koomey 2014 11
  12. 12. Metrics! Copyright Jonathan G. Koomey 2014 12
  13. 13. Creating the right metrics is not as easy as it sounds Copyright Jonathan G. Koomey 2014 13
  14. 14. Metrics drive organizational change • Focus on the whole system – reducing total costs per computation – increasing total value from computation • “Show back” the consequences of choices to every employee, then “charge back” if needed • Key Performance Indicators (KPIs) for management include both costs AND benefits Copyright Jonathan G. Koomey 2014 14
  15. 15. DSE http://dse.ebay.com Copyright Jonathan G. Koomey 2014 15
  16. 16. Can you assess IT costs and benefits at the project level? Most companies can’t! Copyright Jonathan G. Koomey 2014 16
  17. 17. III. Use IT to transform IT • Standardized IT deployments • Move from “sit down restaurant” to “buffet style” IT • Move many users to internal or external cloud • Software should matter more, hardware less • Measure, experiment, learn, and replicate • Use computer modeling to anticipate effects of changes in existing facilities Copyright Jonathan G. Koomey 2014 17
  18. 18. Conclusions • What management can do – I. One boss, one team, one budget – II. Drive institutional change using metrics that tie IT performance to business performance – III. Use IT to transform IT • Summary: Make IT serve the business! Copyright Jonathan G. Koomey 2014 18
  19. 19. IT should NOT be treated as a cost center, it should be a cost reducing profit center that also improves corporate and customer environmental performance Copyright Jonathan G. Koomey 2014 19
  20. 20. For more details on the upcoming (Nov 10 to Dec 12, 2014) online class titled Data Center Essentials for Executives, see http://goo.gl/K4kJG2 Also see my 2014 article titled Bringing Enterprise Computing into the 21st Century: A Management and Sustainability Challenge http://goo.gl/WYFBjb Copyright Jonathan G. Koomey 2014 20
  21. 21. A case study of a company that has been successful at tying its IT performance to business performance Schuetz, Nicole, Anna Kovaleva, and Jonathan Koomey. 2013. eBay: A Case Study of Organizational Change Underlying Technical Infrastructure Optimization. Stanford, CA: Steyer-Taylor Center for Energy Policy and Finance, Stanford University. September 26. [http://www.mediafire.com/view/8ema554a2ho9ifj/ Stanford_eBay_Case_Study-_FINAL-130926.pdf] Copyright Jonathan G. Koomey 2014 21

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