Downer EDI has outsourced its IT infrastructure to HP as part of a major transformation project that will centralise and present IT as a "single face" to the business.
The engineering and infrastructure management firm is in the second year of a business reform program called 'Fit for Business' that is targeting savings of $250 million across the group over five years.
Chief information officer Joseph Amoia told iTnews that the IT transformation is aligned with Fit for Business.
"What we're doing is completely aligned with our business strategy which is really about reducing risk while supporting the growing needs of the business," Amoia says.
"[We're] doing that by simplifying, consolidating, and enabling the business to provide a single face to its customers, while at the same time delivering savings, which we will."
The complex IT transformation is broken into multiple phases and concurrent projects.
Amoia has already brought together the IT organisation across the group, along with their respective budgets, under a body of work he calls a "pre-transformation program".
"Every Downer division had its own IT organisation, from the head of IT to its own infrastructure," Amoia says.
"We made a decision early on that we would come as a single [IT] organisation if we were going to get the right outcome from a transformational program."
The first part of the actual transformation project has seen Downer outsource its IT and network infrastructure to HP Enterprise Services in a six-year, multi-million dollar deal.
The transition to HP infrastructure services started on December 1 last year.
Next steps include:
- Deploying new services including service desk and a hosted Exchange environment (in pilot phase) on HP infrastructure;
- "Forklifting" existing enterprise apps into the managed HP environment;
- Negotiating licenses for applications to operate on virtual servers;
- The eventual decommissioning of its eight existing data centres nationwide; and
- Application transformation, including a single enterprise resource planning (ERP) platform across the group.
Modelling the paths
Amoia came into the CIO role at Downer in late 2009, having spent the best part of the same year in a group IT strategy role at the firm.
He was immediately tasked with generating a "current status estimate" of the IT organisation and some reform options that could be presented to Downer's executive team.
"What was evident very early on is that it was obviously a very fragmented and inefficient model that Downer had," Amoia says. "It was quite siloed.
"We bought businesses and a lot of those businesses kept running as their own businesses. It was only in the last couple of years we looked at how we consolidate them."
The result was eight data centres, five data networks, 36 operating systems, 16 Active Directory databases, multiple email systems and five ERP systems.
From a pure technology platform perspective, Amoia says his approach was to re-build a common foundation before tackling the applications that sat on top.
"We focused on the infrastructure," he says.
The firm embarked on a total cost of ownership exercise to better understand its existing environment.
"We not only were able to determine what the fragmented infrastructure was costing us but what it actually looked like," Amoia says. "We were now able to articulate what the complexity was."
Amoia says that determining the "end-state" Downer wanted to achieve was the easy part.
"The issue was how do we actually get to that end-state?" he says.
The IT group modelled a number of dimensions to aid the decision-making process, prioritising "dimensions we wouldn't budge on".
"For example, it was clear we were going to virtualise, it was clear we were going to standardise," he says.
"What wasn't clear was, were we going to take an in-house or an outsourced approach? [And] were we going to centralise, decentralise or regionalise?"
Regionalisation in this instance refers to a model that would operate across Downer's businesses in Australia, New Zealand and Singapore.
Cost and operating models were drawn up for the various possible combinations - for example, outsourced-centralised, outsourced-regionalised, outsourced-decentralised, and the same modelling for insourced approaches.
The team culled decentralisation because it was too similar to Downer's existing state.
Regionalisation was also eventually removed as it became clear that New Zealand and Singapore had already outsourced their IT infrastructures.
"When we did the cost model - current and future state - the biggest savings were in Australia," Amoia says.
Read on for Downer EDI's new infrastructure and its plans to retire data centre assets.
The decision whether to insource or outsource IT infrastructure was more complex.
"There was quite a lengthy debate," Amoia recalls.
"The discussions internally were really around risk [and] how quick we could get to the end-state."
Downer paid two vendors (from a pool of five candidates) to participate in what Amoia calls a "blueprint exercise" that would ultimately assist the firm's decision.
"We said, 'Look, what we'd like to do is ... design an environment based on these specifications. We'll pay you for that design, but also give us a proposal to deliver that transformation,'" he says.
"Then we said, 'Well while you're at it, can you also give us a proposal if we were to give you the whole lot and you would run it as well?'
"Because we weren't sure at that time, we were hedging our bets there saying at the end of this process we're either going to choose a vendor to transform our environment and we'd run it, or we would outsource it.
The process ran in parallel with the insource vs. outsource debate. Outsourcing ticked a couple of early boxes for Amoia.
"You've probably heard the term, 'You don't outsource a mess' and I completely agree with that," he says.
"However... I felt I could tick that box because we'd done quite a bit of work around the TCO and because of the blueprint design process that we'd gone through.
"We had a good understanding - as did the two potential partners. So the argument 'you don't outsource a mess' went out the window because I knew what that mess was, I knew what the benefits were going to be and I was happy to tick that box."
Amoia also counted support from Downer's executive body "to make the right decision".
"There was no preference other than make the right decision based on risk and on the commercial aspect," he says.
Ultimately, Amoia says, he was convinced to outsource because it would allow Downer to reach its proposed "end-state" faster.
"We're an organisation that has grown through acquisition and [recently through] organic growth," he says.
"We needed a fairly flexible partner in infrastructure where we could crank up or crank down as the business bought new businesses or divested businesses.
"That was the clincher for me because if I was to try and build that environment myself, I'd be making assumptions ... I wouldn't have all the data to make that decision because the business is looking at investment and divestment options all the time."
The new infrastructure
Downer's IT and network infrastructure is now set to be delivered from HP Enterprise Services' new data centre in Sydney's west.
The firm plans to begin migrating workloads out of eight existing data centres to the single HP facility "around May" on a division-by-division basis.
Data centre consolidation has been on Downer's IT roadmap since mid-2010
"There's no one strategy for that," Amoia says. "There's a number of strategies depending on the data centre."
Cost is a big driver for data centre consolidation ("getting out of expensive data centres we're currently in") as is risk mitigation ("we have servers sitting in rooms they shouldn't be sitting in"), Amoia says.
Amoia says Downer is "buying" availability and response time from HP as part of the outsourced deal, eliminating the need to run an in-house disaster recovery facility.
But reliability of the applications running on that infrastructure remains in Downer's hands, he says.
The new standard server environment uses HP BladeSystem hardware running Microsoft's Hyper-V virtualisation. The company is also using managed network services by HP.
Downer's IT team has conducted some compatibility testing of enterprise apps running on Hyper-V, although Amoia notes "there needs to be more testing".
"We're putting a lot of focus in that now," he says.
Likewise, the company is investing significant time working through licensing agreements for its existing enterprise apps to function in a virtualised environment.
"You need a PhD to work [licensing] out," Amoia jokes. "We're focused on the big ticket [software] items first which are the Microsoft, Oracle and IBM.
"We've pretty much completed that exercise barring a couple of exceptions but we're working through that with the respective vendors."
Read on for Downer's plans for single Active Directory, email and ERP.
The next major undertaking is a consolidated Exchange email environment that is to be hosted on the HP infrastructure.
"That's about to start pilot and user acceptance testing," Amoia notes.
"We're still working through exactly what's going to be included in [the Exchange environment]," he says.
The team is still considering whether to include features from Microsoft's Lync unified communications platform, although this is not part of the pilot.
Part of the reason a consolidated Exchange environment is possible is a major body of work to consolidate 16 Active Directory instances across the Downer Group to one.
"It's an exercise we started long before we signed a contract with HP in terms of understanding the current state," Amoia says.
"There's been a lot of work to consolidate those Active Directories. It's very complex but we're trying to simplify it and I think we have a pretty good plan with HP on how that's going to happen."
Other aspects of Downer's environment will be progressively "forklifted" into HP's data centre from March or April with a staged transition over the next 12 months.
The company has started the second part of its IT "transformation agenda" by examining the complex enterprise app environment that sits atop its existing infrastructure.
Some applications could potentially be retired.
"We are looking at where we can consolidate applications and turn applications off," Amoia says.
"The initial focus of transformation was on the infrastructure, and then it was how do we really add value and enable the business and I guess the strategy the business had there was it wants to provide a single face to customers.
"What we're doing [now] is looking at how we provide a level of group enterprise applications which will allow that to happen."
Enterprise resource planning (ERP) is a prime candidate for reform. The firm runs disparate systems including JD Edwards' EnterpriseOne and World products, Oracle's eBusiness suite, and smaller systems such as COINS.
The entire existing ERP environment is to be forklifted onto HP infrastructure.
Amoia concedes it's a "huge job".
"The bigger job is we're now going and developing a program on what an enterprise ERP may look like for Downer," he says.
Ideally, that will consolidate ERP across the group onto a single platform.
"One of the reasons we decided to go down the [infrastructure] outsourcing path is because I didn't really want to have to worry about the infrastructure," Amoia says.
"I'd much rather be having a conversation with my business colleagues around applications and how we help the business work better and how they work better with their customers."
Read on for how Amoia's change communication strategy to internal IT.
Communication has been an essential aspect of Downer's IT transformation.
From day one, Amoia's strategy was simple - to keep his IT team in the loop on Downer's transformative thinking.
"The principle was really simple - if I was in their shoes, which I have been, how would I have liked to be treated?" he says.
One difficulty in the project was that, although there was a strategic end-state in mind, it remained unclear through much of the process how the firm would reach it.
"I'm very keen on fact-based decision making and when we started the process we pretty much articulated to our guys, 'Look. This is what we're going to do. Here's the problem, we don't know where this is going to end up.'
"We never gave any sense of, 'There's going to be a decision in the next week or so and everything is going to change'.
"It was always, 'We're going to inform you when a decision is made [and] you're going to be given a number of options'."
Amoia says IT staff were told of the decision to outsource "months before we'd actually signed" an agreement with HP.
They were given options to take other roles internally in the newly-restructured IT organisation or to move to HP to work on the Downer account (or other accounts).
"I made a decision very early on that we would be transparent in this process," Amoia says.