1) IBM worked to integrate its global data centers to reduce costs and increase efficiencies. It consolidated 155 data centers down to 5 strategic sites and combined 31 networks into one globally managed network. 2) To update its data center strategy, IBM brought in outside experts to engage stakeholders and develop consensus on the key criteria to use, focusing on responsibility, finances, workloads, and governance. 3) IBM then took inventory of all its servers, data, applications and locations to determine which data centers to consolidate and which workloads could be relocated to more efficient centers.

1. IBM Global Technology Services February 2012
Thought Leadership White Paper
Data center flexibility and efficiency:
increasing the business value of IT
Increasing demand for services provides opportunities to simplify operations

2. 2 Data center flexibility and efficiency: increasing the business value of IT
Contents been reduced from more than 15,000 to 4,700. The result?
From 2006 to 2011, IT transformation and optimization efforts
2 Introduction yielded US$1.25 billion in savings.
2 Building consensus: asking the right questions for
the business Global data center integration has also allowed IBM to improve
operational efficiencies by increasing security and resilience,
3 Crafting the strategy: discovery and analysis
mitigating risk and delivering applications and information to
4 Turning plan into reality: continuous transformation employees in ways that increase productivity and collaboration,
execution while providing the building blocks for further innovation.
9 The results: savings and improvements
Of course, no business environment remains static. Continual
10 What comes next: plans for the future refinement of the global data center strategy is needed to
10 Applying the lessons respond successfully to changing business needs that range
from regulatory requirements to new acquisitions to enhanced
11 End rewards for the CIO customer relations.
11 For more information
This white paper outlines the steps IBM has taken to update
our data center strategy, build a unified plan and execute against
Introduction that plan. This paper also examines the end results, plans for
Cost reduction. It allows organizations to survive tough years the future, and best practices uncovered along the way. For
and increase profits during good years. It provides an opportu- IT executives who are looking to re-engineer their strategies
nity to innovate, as well—becoming the vehicle through which and processes to create tighter global integration with business
IT executives discover new ways to restructure for growth to needs, the information in this white paper can be leveraged to
respond to changing business requirements more quickly, help create an integrated data center strategy and plan, reduce
improving service quality along the way. costs and improve enterprise-wide ability to adapt to change.
Cost reduction was the original impetus behind IBM’s efforts to Building consensus: asking the right
integrate our internal data centers around the globe. The pro-
questions for the business
cess started in 1997, when IBM created a global office of the
In 2009, an IBM Academy of Technology study made it clear
CIO, transferring governance from a geography-centric model
that IBM needed to continue to improve the alignment of tacti-
to a centralized one that encompasses all IT services for all
cal data center initiatives with strategic goals in order to opti-
employees. In the ten years from 1997 to 2007, IBM has seen
mize business performance. Definitions of what comprised a
significant improvements in operational costs and efficiencies
strategic data center, the business logic used in selecting the
as a result. Hosting data centers have been consolidated from
data centers, as well as the required services and capabilities,
155 to five strategic sites, 31 networks have been combined into
needed to be documented to allow IBM to achieve more opera-
one globally managed network and deployed applications have
tional flexibility.

3. IBM Global Technology Services 3
With more than 400,000 employees accessing data and applica- own data center strategy may be different, but will still help
tions that were known to be running outside of strategic data you build tight linkages between business strategies and
centers due to acquisitions, organic growth and skunk works technical execution.
projects all over the globe, it was important to choose a manage-
able starting place to update IBM’s data center strategy. Decision model tenets
●● All data centers should be governed under a single, globally
In order to help overcome stakeholder’s assertions that data cen- integrated technology delivery model
ters needed to be located within each geographic region, the ●● To assure the highest value to the business, total cost of
office of the CIO hired “outside” data center strategy experts ownership (TCO) should be measured at a global corporate
from IBM Site and Facilities Services. This team works with level, not by individual workload, application or data center
clients to use objective, fact-based tools and analytics to guide ●● Appropriate business continuity and security measures should
executive agreement on the decision model that is used to make be applied across all data centers—matching measures to the
strategy recommendations. This allowed the office of the CIO criticality of data and applications within each server
to engage key owners during the analysis process—increasing ●● Location of workloads should be determined by overall
stakeholders’ confidence that their individual needs were being business objectives and data center efficiency, not by the user
met in a way that provided optimal value to IBM as a whole. or asset “owner.”
The Site and Facilities Services experts reached across all of the Crafting the strategy: discovery and
groups involved to solicit input and discuss over 300 potential analysis
decision criteria, arriving at a universally agreed upon set of key
Taking inventory
criteria that provided the best direction for the business. For
One of the tactics recommended as part of the globally inte-
IBM, these items focus on aspects of responsibility, financial
grated governance model was the development and execution of
requirements, workload and governance and provide clear and
a process for maintaining a current and accurate inventory of
overarching executive guidance that enables the technical teams
servers, data and applications—and their locations. This pro-
to execute with a high level of confidence that the results will
vided the input needed to determine which data centers to hold
link positively to IBM’s business strategy. As each organization
or vacate. Priority was given to establishing an accurate and up-
has different business strategies, the criteria developed for your
to-date inventory of every asset in use within the specified scope
for North America and Europe before expanding to include Asia
Pacific and Latin America.

4. 4 Data center flexibility and efficiency: increasing the business value of IT
An accurate global inventory was harder to achieve than antici- data center integration strategy and associated processes that
pated as inventory databases did not always contain applications would achieve the goal of enhanced flexibility through optimiza-
that were created and maintained outside the office of the CIO, tion. Important strategic elements included:
and did not count servers which had been provisioned by indi-
vidual business units—often outside of raised-floor space in the ●● Site selection for target migrations based on overall
identified data center sites. IBM business needs. Three strategic, global data centers
would support 80 percent of the application portfolio. The
The Site and Facilities Services experts applied the time-tested remaining portfolio, including unique workloads to support
rule that says that 80 percent of an organization’s applications manufacturing and regional requirements for security and
are generally delivered via 20 percent of the data center capacity. privacy, would be housed in special-purpose data centers
They started with the largest locations where internal IBM data located to match the assets housed.
and applications were located, and then worked out until they ●● Growth in the strategic data centers would be optimized by
had covered all the locations in scope. virtualizing servers and recovering existing space consumed by
aged and/or redundant servers.
Whenever possible, the identification of applications and infra- ●● Existing data centers would be vacated as indicated to mitigate
structure was automated using the enterprise portfolio registry, risk of critical applications being housed in less resilient or
server security database (mixed address database) or the applica- secure locations and consolidating expenses to the strategic
tion inventory process and repository utilizing Tivoli® data centers.
Application Dependency Discovery Manager (TADDM) and ●● A continually updated service catalog would be established to
Cognos® business intelligence reporting. Purpose-built analysis help assure end-to-end IT service management, allowing the
tools developed by IBM Research helped speed up the process, right level of hosting support and services to be applied to all
along with helping to assure that all servers, applications and assets.
data were properly examined and accounted for. Information
captured included the server count by type, data and applications Turning plan into reality: continuous
on each server and whether each server platform was the most transformation execution
efficient one for the associated assets. Information on server real With the strategy and decision model tenets established, the
estate (in square feet), energy usage and network connectivity office of the CIO executed the processes as shown in Figure 1 to
was also captured. simplify the data center infrastructure and manage the associated
services. This was accomplished by focusing on four major areas:
Building the data center strategy
migration and consolidation, storage growth, flexible delivery
Once accurate and up-to-date inventory information was avail-
and end-to-end service management.
able, this information was filtered through the key decision
model tenets (see the “Building consensus” section) to create a

5. IBM Global Technology Services 5
In IBM’s data center strategy, technology and business requirements work hand-in-hand
and are continually reviewed for flexibility and efficiency
Build consensus
Balance business requirements
• Enable business growth
• Ensure application availability
• Improve operational efficiency
Craft data center strategy
Decision model tenets
• One globally integrated technology delivery model
• TCO measured at global level
• Continuity and security applied to each data center,
matching measures to data/application criticality
• Location of workloads determined by business
objectives and data center efficiency
Execute per technology objectives
Continuous transformation
Manage the services
• Create end-to-end IT service management with
standard services
Simplify the infrastructure
• Migrate and consolidate servers
• Manage storage growth
Achieve flexible service delivery
• Server type matched to data/application needs —
x86, UNIX, mainframe
• Cloud delivery where applicable
Figure 1: By applying consistent governance and processes through the data center consolidation project—and continually closing the loop by evaluating results
against the decision model and strategy—IBM has been able to fully leverage the opportunities presented by optimization.

6. 6 Data center flexibility and efficiency: increasing the business value of IT
Migrate and consolidate to best-fit platform “Fit for purpose” were the bywords when making application
One of the most significant ways to minimize capital expendi- consolidation decisions. Is the application currently being used
tures and measure total cost of ownership (TCO) savings at a to access and work with data the best fit from both a user and
corporate level was to migrate and consolidate workloads to the corporate perspective? Is a newer, more effective version of the
best-fit platform. Specific workload recommendations from the application already available within the organization? Is there a
strategy team were used during execution, including: standardized application that can do as good a job, or better?
●● To deliver optimal efficiency and cost savings, virtualization Based on the fit-for-purpose evaluation, decisions were made to
should be the standard keep or retire existing applications, with retained applications
●● Utilization of each data center should be maximized to avoid being made more widely available and consistent through virtu-
unnecessary expenditures or new capacity alization and relocation into one of the strategic data centers.
●● Automation and processing tools should be used to minimize
conversion costs While consolidating workloads takes hard work and expertise,
●● Optimal TCO can be achieved by eliminating redundant, IBM has found that the results are well worth the effort. Since
overlapping or similar IT services. the project’s beginning, scope has increased from 3,900 servers
to over 15,000 with significant advances in efficiency. Results
With the data center inventory in hand, the execution team was through the end of 2011 are as follows:
able to eliminate significant up-front effort by contacting appli-
cation owners to sunset applications and decommission servers ●● Over 6,500 servers have been consolidated and virtualized,
that were no longer in use. Initially, over 500 servers in 377 cities bringing the total number of servers virtualized to 65 percent
were found in the wild—belonging to an individual location or of the total inventory. When the 2015 roadmap is completed,
business unit and operating outside strategic data centers. As the 90 percent of the total servers will be virtualized.
team expanded their focus to include Latin America and Asia ●● TCO has been reduced by a dramatic 70 percent—achieved
Pacific, they found that nearly 30 percent of the application by increasing average utilization from 10 to 60 percent and
portfolio and equipment could be retired—avoiding the costs resulting in approximately US$50 million in total cost
associated with migration and virtualization. The remaining take-out and US$100 million in savings.
servers and applications are to be migrated to the strategic data ●● Contribution to IBM’s environmental savings has been
centers that will support 80 percent of the application portfolio enhanced, with over 30,000 megawatts of energy saved per
or to the special-purpose data centers. year and 74,000 square feet of floor space returned to the
business.
The team knew from prior consolidation efforts that a work- ●● Enhanced migration efficiency with the average migration
load-centric view of the data center would prioritize the low- time being improved by 55 percent—taking 90 instead of
hanging fruit, but would fail to optimize floor space and leave a 200 days—along with a 72 percent reduction in migration
Swiss-cheese-like pattern of missed servers. Instead, the team costs per server.
used a location-centric view of the migrations—literally using
yellow caution tape to delineate the servers in scope within an
individual data center. This enabled the elimination of data
center fixed infrastructure to drive further benefits.

7. IBM Global Technology Services 7
Manage the explosive growth in storage foundation to leverage cloud technologies for rapid and f lexible
With over 10 petabytes of storage in production use and deployment of resources and accelerated and efficient service
15 petabytes allocated for backup, managing the projected delivery. For IBM’s internal data centers, the adoption of cloud
25 percent compound growth in storage at flat cost is an integral is shaped by workload affinity and characteristics and deployed
part of achieving the optimization and TCO objective. Smarter on a best-fit basis across all delivery models and platforms.
information lifecycle management (ILM) techniques and essen-
tial storage technologies are a key part of IBM’s execution Virtualized private cloud has been selected for workloads that
tactics to: are suitable for virtualization, but require a more robust level of
security and control than can be supplied in a public cloud envi-
●● Reduce volume of data to be stored via advanced techniques ronment. Examples include workloads that depend on sensitive
for compression and de-duplication data normally restricted to the enterprise, workloads composed
●● Maximize utilization of available storage through virtualization of multiple codependent services, and those requiring a higher
and thin provisioning level of auditability and accountability. Other candidates for vir-
●● Achieve the right balance between efficiency of data access tualized private cloud include workloads based on third-party
and storage cost through automated tiering and migration. software which does not have a virtualization or cloud-aware
licensing strategy, those that require detailed chargeback or
Applying storage tiering to identify the correct data placement— utilization measurement and workloads requiring flexibility
and managing the migration using automation and tiering tools and customization.
developed by IBM Research—IBM has been able to achieve
orders-of-magnitude improvement in storage efficiency. For Virtualized public cloud has been chosen for workloads such as
example, migrating 57 terabytes of data now takes just six hours, web infrastructure applications (wikis and blogs), email and col-
instead of the previous 235 hours—a 98 percent reduction in laboration workloads, development and test workloads, batch
time and effort. processing jobs with limited security requirements and Software
as a Service (SaaS) applications. Other virtualized public cloud
Flexible service delivery with cloud candidates include high-performance computing workloads with
The workload recommendations, centered on flexibility of loca- low security requirements, storage-intensive workloads with low
tion, directed that applications be coded to avoid tying them to a security requirements, and secure offsite backup/restore solu-
specific infrastructure location or platform. Along with making tions for data protection and disaster recovery.
virtualization a standard for implementation, this sets up the

8. 8 Data center flexibility and efficiency: increasing the business value of IT
The benefits of deploying cloud within IBM’s internal data ●● Management of all data centers should utilize a consistent set
centers have been significant, including: of tools to allow for maintenance and support efficiencies.
●● Equitable billings for service should be assured to encourage
●● For development and testing—the time to set up an image has users to seek more effective ways to store and manage their
been reduced from five people-days to just one. As a result, data and applications.
over 100 new server images per month are provisioned.
Nearly 100 percent of the requests for server provisioning/ The establishment of a single point of governance within the
de-provisioning are coming through the development and office of the CIO over a decade ago paved the way for imple-
test cloud as opposed to the previous manual-build request mentation of enterprise-wide IT service management (ITSM)
process. This improves the speed, flexibility and level of for internal workloads. ITSM shifts the focus from one-off
self-service. Complementing this is a 50 percent reduction builds and stand-alone applications to standardized services
in IT labor cost and a 75 percent improvement in capital and end-to-end integration of the portfolio. Rather than a focus
utilization. on service level agreements (SLAs) for individual applications
●● For the desktop—tailored thin clients (customized by role) are and siloed cost management, ITSM provides for the use of key
being deployed to 2,000 users in our China development labs business process service level objectives (SLOs) and the ability
running on a private desktop cloud, with plans to expand to an to measure—and reduce—total cost of ownership organization-
additional 2,000 users for an estimated 20 to 30 percent wide. As a result, top priority can now be put on relevance to
savings per user. the business, rather than the performance of individual parts
●● For storage—automated self-service provisioning, flexible of the infrastructure. The goal is to support 80 percent of the
pricing, elastic capacity and advanced virtualization supports application portfolio with standard services in a single catalog.
over 130,000 users accessing email, collaboration and other
applications. No longer are all applications treated the same and given the
same level of support. Instead, they are classified by criticality
End-to-end IT service management and level of support needed, allowing a corresponding match
Four workload recommendations drove the improvements in the in service. Application owners select from one of four levels of
end-to-end IT service management process. support—or tiers—based on the required level of availability,
support, redundancy and monitoring needed. Over 80 percent
●● Location of workloads should be determined by overall of the applications have been classified in tiers 3 and 4, allowing
business objectives and data center efficiency, not by the user service and support cost to be dramatically reduced. Centralized
or asset “owner.” service management of the application portfolio has also resulted
●● Applications should be provided with disaster recovery in a 36 percent improvement in average deployment cycle time
solutions that leverage common infrastructure, tools and for simple applications so far.
methodologies.

9. IBM Global Technology Services 9
The results: savings and improvements
Executing the enhanced strategy for internal data centers has IBM now governs internal data centers under a single,
globally integrated technology model
allowed IBM to continue to reduce costs. More importantly it 3 global data centers now support 80% of applications
has paved the way for operational efficiencies that provide new
opportunities for innovation and operational flexibility to meet
our changing business needs. Thus far, the effort has yielded the
following improvements (also shown in Figure 2):
●● Agreement on the number and location of strategic data
centers—optimizing the cost and performance of the applica-
tion portfolio to the best interests of the corporation as a
whole. This has required greater visibility into the server
inventory for production workload, allowing for the mitiga-
tion of risk for servers not on a hardened floor in more than
290 cities. Continual transformation to deliver optimization through flexibility
●● Migration and consolidation of applications to the best-fit
server platform, reducing the total cost of IT operations by Reduce cost of IT operations Enable rapid and flexible deployment
through total cost of ownership of resources via cloud—65% of
70 percent. This includes returning 74,000 square feet of (TCO) reduction application portfolio eligible for
self-managed cloud
raised floor space from internal use to revenue-generating use Manage 25% compound growth in Support 80% of the application
data at flat cost portfolio with standard services
for strategic outsourcing clients, deferring over US$70 million
in capital costs to build additional data center capacity.
●● Managing growth in storage volumes to support 25 percent
annual compound growth at a flat cost. Figure 2: Consolidating and optimizing its internal data centers has allowed
●● Flexible service delivery with rapid deployment of resources IBM to realize significant savings across all areas of data center implementa-
tion and maintenance
within the cloud in hours versus days, and the use of cloud to
implement lower tier applications.
●● Creation of end-to-end IT service management to support IBM has also realized benefits beyond the numbers, such as
80 percent of the application portfolio with standard services. improved continuity and resiliency, better mitigation of risk
and a more thorough and accurate asset inventory.

10. 10 Data center flexibility and efficiency: increasing the business value of IT
What comes next: plans for the future
The pace of change will continue into the foreseeable future 2. Find your assets
with continued need to improve IT operations and respond to It can be extremely difficult to identify and capture
the changes in the business requiring IT support, such as organic complete inventory information for all data centers and
growth, increasing acquisitions, new products and new markets. assets. Accuracy and consistency may be the responsibility
With results such as those outlined in the previous section, of many people, or no one at all. The best and easiest way
IBM’s roadmap through 2015 will continue to build flexibility to create and maintain an accurate and current inventory is
by leveraging optimization, focusing on three key areas: to use analysis and automation tools.
3. Create a single governance focal point
●● Optimization of global hosting into the strategic data centers IBM’s consolidation efforts only became possible after
that have been identified. This includes completing the the selection of a single point of governance (the office of
migration of ~3,000 servers, exploiting the latest server the CIO). When decisions about location and technology
technologies and continuing with virtualization on new servers requirements were shifted from application developers and
as a standard practice. Implementation of storage tiering and business units to the office of the CIO, consistent processes,
deployment of IBM DB2 Analytics accelerator for faster tools and techniques could be applied—resulting in far
business insights will also be continued. greater efficiencies and cost savings than would otherwise
●● Fully leveraging new asset consumption and delivery models have been possible.
by expanding usage of cloud technologies—65 percent of the
4. Keep your eye on floor space
already consolidated application portfolio has been determined
Traditional metrics for transformation programs do not
to be eligible for self-managed cloud. always ensure optimization of data centers and assets.
●● Increase in development and deployment of applications Along with improvement measurements for items such as
through standard services, as defined by the new end-to-end availability and security, all transformation efforts should
IT service management model. include reclamation of data center floor space as an
indication of success.
Applying the lessons
5. Design for application and workload mobility
Mobility of workloads is essential for the way work gets
The learning curve: management strategies to consider done today. Without it, high availability, business continuity
and technology currency are all difficult to achieve. At IBM,
1. Think and act globally all future work and investments are being designed and
Within many global corporations, an assertion exists that evaluated with application mobility as a key requirement
to be a true geographic unit, you need a data center within to avoid coding applications in a way that ties them to a
your unit boundaries. By separating the selection of specific infrastructure location or platform.
strategic data centers from the organization’s financial
structure and making decisions based on a consensus on
financial feasibility, business capabilities and physical/
technical capabilities—and, most importantly, involving all
the players in the planning process—IBM was able to not
only overcome resistance, but transform resistors into
enthusiastic participants.

11. IBM Global Technology Services 11
Just as interesting as the best practices are the lessons learned capabilities to help,1 it comes as no surprise that many CIOs
during this period, and how to apply them as you plan and view consolidation of their technology infrastructure and
execute your own data center consolidation. organization as the future model for data center operations.
Centralized infrastructures and processes enable optimization
A migration strategy of going after low-hanging workload fruit of shared services that, in turn, provides economies of scale to
is only as good as the fruit itself. Initially, IBM considered an cut costs and increase return on IT investment.
application-focused view of our data centers and other internal
servers to select candidates for virtualization and migration. But More and more, CIOs’ level of success and influence within
this approach did not lead to the desired reclamation of floor their organizations is being measured by how well they manage
space (see learning curve highlight #4) or reduction in TCO. their data centers to raise the return on IT infrastructure invest-
By executing consolidation efforts using a location-led view, ment, expand the business impact of the data centers and make
IBM was able to get a better understanding of all our internal innovation opportunities real. IBM hopes that this white paper,
data center assets, the dependencies between the assets and the based on a real-world execution of a data center consolidation
opportunities for optimization—resulting in significant floor strategy, provides a framework that CIOs and other IT execu-
space reclamation and a healthy reduction in TCO. tives can leverage to deliver cost efficiencies, savings and
opportunities for breakthrough thinking to your own
Including the business case in the decision process increased organization’s efforts.
the options and the opportunities. Using the business case, data
center capacity that had been used for revenue-generating For more information
workload—but had capabilities that made it better-suited for If you would like a more detailed exploration of IBM’s internal
internal workload—could be reallocated, resulting in a more data center story, please contact your IBM marketing representa-
efficient and cost-effective use of resources for all parts of tive or IBM Business Partner to schedule an in-person presenta-
the business. tion by one of our experts. You can also request information
on the IBM offerings, services and tools designed to make
Virtualization is good, but not having to virtualize is even data center consolidation more efficient and effective.
better. Making the first decision point for every application an
either/or—keep or retire—IBM was able to sunset a healthy per- Learn more about these offerings by visiting the following
centage of its application portfolio, avoiding the costs associated websites:
with migration. ●● ibm.com/services/smarterdatacenter
●● ibm.com/services/siteandfacilities
End rewards for the CIO
With over 50 percent of CIOs surveyed in the 2011 IBM Global
CIO Study indicating that they plan to participate in reengineer-
ing their business, and are looking for new expertise and

12. Please Recycle
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