Nortel’s CIO: It’s turnaround time

Albert Hitchock has seen Nortel Networks at its lowest. Now he wants to take its IT strategy higher.

As the firm’s CIO, Hitchcock has spent the last three years taking part in a company-wide exercise to get Nortel back on track

in the telephone equipment supplier market. Naturally, customers expect a company like Nortel to set an example with a streamlined IT infrastructure, a challenge Hitchcock said he does not take lightly.

Hitchcock recently looked back on his accomplishments and plans for next year in an interview with You’ve managed some pretty big cost reductions, which many other IT managers and CIOs would probably like to do. How did you figure out where to begin?

Albert Hitchcock: Obviously Nortel was hit at the turn of the century with a massive downturn. The telecom industry went through a major reform over the past few years, as you’re very well aware. So one of the challenges immediately that hit us was how to take operational costs out of Nortel. One of our first tasks was to really look at restructuring all of IT across the company. You know, when I look back over the last three years from the present day back to the year 2000, we’ve taken about 75 per cent of our budget out in terms of IT. We’re saving about $1.3 billion per annum compared to the year 2000 in IT costs. I know that a lot of people are very shocked when I say that, but there was a lot of work done to achieve that. It’s not been an easy journey by any means.

ITB: So how did you do it?

AH: We have done a fairly good job of using technology to enable our cost savings. In a way, it’s sort of an “”invest to save”” strategy. When you look at each of our different areas of costs in IT, you can look at them in a number of different ways. Back in 2000, we had over 12,000 servers across the company and over 100 data centres around the globe. Today, well, we’ll be at less than 3,000 servers by the end of the year. And we have 20 data centres. A lot of that has been achieved through consolidation of application, of business processes. We had over 3,000 applications across the corporations in 2000, and we have 1,000 today, so we’ve cut our applications by two thirds. We had a lot of different standards in our compute environment, and we’ve rationalized those. We’re still driving that further, actually. I have a plan next year to get to 2,500 servers. We’re using technology to do that — through virtualization, we’re doing quite a bit of that. We’re optimizing our environment, we’ve implemented Linux quite a bit within the design area, which allows us to use multiple applications on a single environment.

ITB: What about your network itself?

AH: We run Nortel entirely on Nortel product, but the network was very complex — literally hundreds of private virtual lines, frame relay and ATM circuits, public and private voice. We collapsed all of that down onto a single converged optical ethernet core, we packetized all our voice traffic. We upgraded all our Meridans to voice-over-IP on the trunk side. We did that probably about a year ago now. We moved all our public voice off our service provider network onto our private network. We’ve been steadily migrating, over the last year, a lot of our offices to voice-over-IP on the line side. And in terms of the optical core of the network, we’ve implemented that across the globe so optical Ethernet is the major connection on our major sites. That’s enabled us to save up to 50 per cent of the cost of the megabit of traffic carried across the network compared to ATM/Frame relay and private circuit.

ITB: A lot of companies would like to consolidate their servers and applications, but they can’t even get a handle on IT asset management. How did you tackle that?

AH: Well, we were a similar position. IT asset management was not in a good state for us. That’s one of the first things we sorted out. We literally didn’t know how much we had. We put a very rigorous asset tagging process in place. That doesn’t just apply to the physical assets — the desktops, the servers and the routers — it also applied to the software and the applications. You have to create a relationship. You really need to know what applications are sitting on which servers, which servers are sitting on which IP nodes of the network, and how does this whole thing tie together in order to look at that holistically at a solution, let’s say, and understand the total cost of ownership. Creating that linkage is absolutely vital.

ITB: There’s a lot of change in a short period of time. How did you do that without creating a lot of upheaval in the organization?

AH: There was certainly a lot of that. I guess there’s nothing like a burning platform to motivate people. Nortel was really in survival mode in 2000 and 2001. I think every employee in the company knew the situation we were in and was behind this in terms of making the reduction. What I would say to you is that an IS organization, our primary function is to serve our customers. Through that downturn, we took our eye off the service equation. We had to. We couldn’t listen to our internal customers as well as we’d have liked. We had to be totally driven by this cost reduction initiative. I guess that’s just a factor of what we had to live with. What we’ve tried to do in the last year is very much put customer service back at the top of the list.

ITB: How do you begin that process?

AH: We’re re-engaging. I’ve been reorganizing my team to be facing each of the line-of-business presidents. I have a member of my cabinet that sits on each of their boards. We’ve also implemented what I call “”site primes.”” At every Nortel location around the world we have someone that’s anointed as the IS prime for that location. This role is really to engage with all the business people there, so there’s not working with the organization just through the help desk. They can actually go and speak to IS person at the site that they know and discuss the problems they have, the needs they may have. That’s done enormously positive things for us. We did an IS customer satisfaction survey in the middle of this year and got an 85 per cent rating back of people satisfied internally. We’ve done a lot this year to turn that balance around.


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