By conventional measures, the cloud-first transformation Hewlett Packard Enterprise (HPE) executed would have to be labeled a success. After all, we shrunk our data center footprint from nearly 500 to just four, took $2 billion in costs out of the business, and migrated 90 percent of our apps to a combination of PaaS, SaaS and private/public cloud.
But, as Arianna Huffington once said, the path to success is “not a straight line.” She described it as “much more of a dance, and being open to possibilities,” and we can relate to that. We had to do our share of dancing to move past obstacles we inadvertently put in our own path. We of course were open to all possibilities as we moved through the process. But we didn’t take advantage of all the best practices at our disposal – such as the ones HPE and Cloud Technology Partners (CTP) deploy today: creating a Cloud Business Office (CBO), or following a plan that connects the impacts of specific events in a more holistic way.
Here’s a rundown of how we executed our cloud-first transformation, and the valuable lessons we learned along the way.
Embarking on a Cloud-First Journey
In the beginning, we focused our plan on cutting costs and improving agility. We had too many data centers – 85 large properties and more than 400 small sites (under 10,000 square feet) in 29 countries. We also had about 7,000 applications in our portfolio, including more than 100 instances of SAP.
This was the result of 35 years of inadequately integrating acquisitions. When we acquired a company, at least one data center came along with the deal. To keep peace with the acquired company, HPE management told IT to leave them alone for three years, and then go in and integrate the systems. Three years would go by, and the will and the funding would not be there, so many of the integrations just never got done.
We arrived at a point where we were spending just north of $4 billion a year on IT – about 4 percent of the old HP’s $115 billion in annual revenues. For years, that seemed like a reasonable percentage. Companies we saw as our peers – Google, Twitter, Facebook (which we liked to joke could be seen from our offices in Palo Alto) – hovered around the 4 percent mark. But they were different. When Google spends 4 percent on IT, it is using its IT budget to build products. We were an IT company, but we were spending 4 percent on IT just to manage our business. We should have been comparing ourselves to engineering and manufacturing companies like IBM, Cisco and GE, which tend to spend about 2 percent of revenue on IT. So we had to put together a program to get down to 2 percent.
We did just that, going through a grueling exercise of consolidation, virtualization and automation. We shrank from 465 data centers to six, saving about $200 million. Fewer data centers requires less networking, so we shaved $600 million off our carrier fees. Eliminating many instances of SAP saved about $100 million in licenses. A remaining $1 billion-plus of savings came from rationalizing our application portfolio from 7,000 to 1,800, and reducing IT headcount from 20,000 to 2,000.
Just Getting Started in the Cloud
At this point, we were pretty happy with our progress. We were running the company’s IT with six shiny new data centers, and costs seemed like they were at a manageable level. We didn’t realize it at the time, but we were only getting started.
Within 18 months of building the new data centers, we began struggling with capacity. We decided to plug the gap with EcoPODs, modular, containerized data centers HPE manufactures, which each provide a self-contained megawatt of capacity. We set up an EcoPOD next to each data center and planned to add two a year for the next five years. They were an expense, but far less costly than adding power and cooling to existing data centers or even building new ones.
While our strategy achieved the desired objective and provided the DC capacity that we required to remain operational, Meg Whitman, HPE’s CEO at the time, questioned us about our plan and its metrics, such as CPU utilization. At the time our CPU utilization was about 10 percent, just below the industry average. She said she would like to see it in the 80 percent range.
We had work to do. When we looked at our environment, we saw that we had close to 10,000 virtual machines (VMs) that essentially were not being used. The reason? Developers were hoarding them. On average, it took 21 days to get a VM approved and provisioned. Developers didn’t want to wait that long. They wanted to have capacity on hand to start developing immediately, as they can today on a PaaS. So, they ordered extras – dozens of them.
This got us thinking in terms of a larger transformation.
Taking the Next Step with Automation
The first thing we did was set up a cloud-like system we referred to as highly automated platform provisioning. It was not really a cloud. There were no APIs, just automation. Developers could go to a portal and order up cores, storage, memory, an operating system, middleware databases and load balancing. Twenty minutes later, they would have an environment.
This helped us to do a better job managing our IT environment. We identified VMs that were overprovisioned, used automation tools and drove our utilization up by 30 percent. We were able to eliminate the use of EcoPODs and shrink the number of data centers down to four.
The next step was to move to the cloud. We started by creating an on-premise OpenStack cloud for cloud native development projects and then started brokering workloads to Azure. The positive response was immediate. People were tired of the old way of relying on traditional IT resources, so we put together a project to transform the majority of our workloads.
Our initial plan called for the dissemination of workloads into four main buckets; traditional IT, OpenStack private cloud, public cloud and SaaS. The first would house about 10 percent of our applications – traditional IT resources, such as SAP HANA appliances, large HPUX systems for our EDW platform and an IBM mainframe, which would have to remain on-premises. The remainder would go to the OpenStack cloud (10 percent), to the public cloud (60 percent) and to SaaS applications (20 percent).
In the end, we moved more workloads to our on-premise cloud solutions (about 50 percent) and far fewer to the public cloud (10 percent). The problem was we didn’t have a good plan in place to manage costs throughout the process. Public cloud costs were swelling, and we weren’t shutting off VMs quickly enough to harvest the savings so we could move fast on public cloud deployments. We got scared and scaled back our cloud efforts.
If We Could Do It Over Again…
HPE had set a goal to move 60 percent of our workloads to the public cloud, but we did not consider the many factors involved in making migration decisions. This is something CTP’s business model could have helped with; they help their customers understand the “why.” Our problem was, we had no clear idea of why we should move workloads into certain buckets at certain times. We just wanted to do it.
Our move to Azure had some hiccups. We had very little understanding of the time it would take to do the migrations. Our culture didn’t put a premium on scheduling – doing little things like spinning instances down on the weekends when nobody in the organization would need the resources. That cost us a lot of money because the controls weren’t there.
We also did not instill a direct relationship between our on-ramp to the cloud and our use of on-premises infrastructure. These were seen as two separate processes that were not connected. Control and transparency between environments is essential when you are making the transition between VMs and the public cloud.
If we were to do it all over again, having a Cloud Business Office (CBO) to direct traffic and manage those relationships would be critical to the success of the project. A CBO gives structure to the business owners and makes sure all functions are handled – everything from security to procurement, to finance, to executive reporting. The CBO holds people accountable and ensures the project is done right.
These days enterprises face stiff competition from cloud-borne companies that are not saddled with legacy costs and processes. Cloud-first transformations can help enterprises close competitive gaps and get ahead. But they can be a challenge to pull off, given the number of obstacles companies can encounter along the way. At HPE we learned a lot of lessons on our sometimes circuitous journey to the cloud. With a little more planning and a little more understanding of the migration process, other companies can follow more of a straight line to get to their own cloud destinations.
Scott Anderson is Vice President of Global Strategic Accounts with HPE.