HP's Consolidation Project runs into Organizational Issues, needs CEO Support

WSJ writes an article about Taming Technology Sprawl and how consolidation is HP's main method to save energy and costs.

Consolidation is a strategic tenet of H-P Chief Executive Mark Hurd, who has trimmed costs and improved operations since he was named to the post in early 2005. Mr. Hurd's goal for the IT project: Cut the percentage of annual revenue spent on IT by more than half. In 2005, Mr. Hurd says, H-P spent $4.2 billion -- about 5% of 2005 revenue -- to maintain its IT systems; he wants that to drop to 2% by the end of this year.

They ran into typical issues like underestimating the # of computer programs and not allocating a large enough budget as a result.  But, the bigger problem they ran into is vice presidents who didn't want to take orders from the CIO.

In H-P's case, obstacles surfaced as early as December 2005. At the time, several vice presidents "really dug in" and resisted, says Mr. Mott. Some units said, "'We're not going to give you a cost-benefit analysis (for why we use the IT we have). We're just going to tell you what product we want,' " the chief information officer says.

In the end HP needed support from their Board and CEO to make the project continue.

To address such issues, Messrs. Hurd and Mott got a mandate supporting the project from H-P's board. Mr. Mott says he also learned the importance of telling employees about the consequences of not cooperating. He told difficult executives that doing a cost-benefit analysis of their IT use "isn't really a choice," and, backed by Mr. Hurd, threatened some with termination. "Saying 'this is a policy and if you don't follow it you'll be in violation' was a powerful thing," Mr. Mott says.

"There are going to be booby traps all along the way if you have a culture like we do at H-P," Mr. Hurd cautioned the chief information officers, adding that the solution is to get management support from the top. "Getting the CEO lined up is hard, and that's the key person," he said.

This is a good lesson to learn for a big Green/Energy saving project in your data center like a consolidation project.  Without support from your executive staff, the VPs and other business unit owners are going to be one of your top organizational issues in going Green.  As soon as you start talking about PUE, and equipment efficiencies executives will wonder why you are bothering them with the details.  At the core of any green program is change.  And change will be resisted by organizations who don't see the downside of not supporting the change. Don't bother the execs with the technical details, focus on the issues of instituting changes required to support a Green Data Center.  List those changes that need to be supported, and get the support from your management.

Note: part of the inspiration for this post is a question from a friend who wants to discuss Green Data Centers at an executive conference.  We're stuck in that the details appeal to CIO and his staff, but without the buy-in from the CEO too many projects will fail as business units resist the changes required to go Green.