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AMD CIO jettisons data centers and gives the company a lift

The CIO of multinational semiconductor company AMD shares his story of how he consolidated 18 data centers into two.

AMD, the multinational semiconductor provider, ended 2014 with two data centers worldwide, the result of a three-year IT consolidation that retired 62% of the company's applications, cut IT costs by almost 35%, and reduced the number of data centers by nearly 90%. The massive project, said AMD CIO Jake Dominguez, has brought another important result:
"[Sixty percent] of my [IT] organization now is spending more time on business innovation activity versus maintenance and running the shop activities."

The new IT focus on business innovation is more than a nice-to-have. Three years ago, AMD was at a crossroads. The market for its primary CPU business, which accounted for 95% of its revenue, not only was shrinking due in part to a decline in PC sales but also was being taken over by Intel. Saddled with debt and its stock price plummeting, the Sunnyvale, Calif.-based AMD needed to cut costs and was in desperate need of innovation.

However, AMD's IT team was not in a position to be of much help back then. "From an IT perspective, we just knew that we were spending too much on IT," Dominguez said. Making matters worse, only about 25% of that bloated budget was being spent on business innovation activities, while the rest was being used to "keep the lights on" -- not a formula that would spur AMD's journey to reinvent itself.

Jake DominguezJake Dominguez

Part of the imbalance was due to the size and complexity of the company's IT infrastructure. AMD's 18 data centers were spread across the globe and running on aging technology, and IT was supporting 700 enterprise applications -- all for a business that at the time was doing approximately $6.6 million in annual revenue.

"For the size of AMD, all those components were just red alarms to me," said Dominguez, who was hired in November 2011 and would become part of the turnaround team headed by then-CEO Rory Read to set a new course for AMD.

Dominguez immediately started shaping an aggressive plan to sharply reduce the size and cost of IT by decommissioning the bulk of the existing data centers over 24 months.

"Almost 70% of the gear that we had in these data centers we either sold for scrap, decommissioned it, threw it away … and then [we] were able to condense down with newer technology," Dominguez said.

The massive two-year transformation, orchestrated in close collaboration with the business, was largely self-funded. Here is how he did it.

Cultivating a do-it-yourself attitude

The first major challenge Dominguez faced was getting the IT organization on board.

"You need to make [IT] believers that they can actually accomplish the task, and you have to get it into a time window that's compressed and is a lot more aggressive than people are usually, traditionally willing to do," he said.

The task at hand was daunting. Unlike other companies that have consolidated data centers, Dominguez didn't have the money to build all new technology and flip a switch. This meant he and his team would have to transfer the equipment they were keeping from their existing data centers -- including AMD's big SAP environment and its massive engineering grid -- to the new data center locations.

"We had to physically move servers and get equipment to our Atlanta data center," he said, as well as ship equipment to the location in Malaysia.

To his IT team's initial consternation, Dominguez also didn't see the point in spending money to hire one of the big IT service firms to manage the project. The first step in such engagements, he said, is to interview the IT team on the company's applications and ecosystems, so why pay outside help "to basically tell me the same story" his team already knew?

"I know that was a little unnerving at first, but once [IT] got that this was a good thing and they started proving to themselves that they could actually accomplish the task, we started really ramping up our capabilities," Dominguez said.

The first big test of his team's prowess was shutting down the company's data center in Austin, a move that would end up taking eight months and included the SAP environment as well as 60% of AMD's core engineering systems. It also required intense collaboration with the business.

To minimize the impact of the downtime for the engineering grid, for example, Dominguez took advantage of the Fourth of July holiday window when many employees were on extended vacations. IT also coordinated closely with AMD engineers, analyzing product roadmaps, establishing a timeline and then negotiating a precise window for the move.

"A very similar thing happened with our SAP environments. We worked with our finance team and the businesses that rely on our SAP environments and really drove a window of when we were going to move it. Everyone knew it was going to be down for four days," he said, a time frame that included the 28 hours required to physically move the equipment.

With each data center move, his IT team gained confidence -- and became more efficient.

"Once we got the psychology of the team to buy into the idea that 'you can do this,' then we started pressing the timeline. The first data center move took about eight months to execute. The most recent one we finished took us three months," he said. "That's just the kind of the pace we were able to pick up through learning."

Communicate and then over-communicate

Dominguez said that meeting the negotiated timetables over the two-year process of going from 18 to two data centers was critical for winning the business' trust and its business participation. Still, no IT leader should expect that an IT transformation this massive will be conflict-free. "I had to do an executive presentation and I was getting a lot of questions about 'Why do you have to have any downtime?'" Dominguez said. "I said, 'Well, if someone wants to write me the check to go build out the technology and stand up all the infrastructures … I'm more than willing to do that and then we can avoid any downtime at all.'"

Of course, no one volunteered to write that check, and downtime was inevitable. But the key to smoothly dealing with the upheaval was constant communication, Dominguez said. "You cannot communicate enough. You just have to be constantly sending out messages, keeping people informed, making them understand what you're doing," he said.

This is especially true when it comes to the executive team, Dominguez added. If the executive team is on board and they understand why this move makes sense, dealing with pushback and resistance will be a lot easier.

Homegrown technology and self-funded to boot

The IT transformation project has been a boon to the business in another important way, Dominguez explained. He used AMD technology to make the consolidation and transformation happen.

The IT team used a combination of AMD's Opteron technology, a server and processor workstation line, and AMD's SeaMicro, a server combining processing power and storage capacity that makes it possible to install thousands of cores and 5 petabytes of storage in a single data center server rack.

"It was a good customer showcase that you can run an enterprise on AMD-based severs out of your data centers," Dominguez said.

In addition to using AMD technology to make this happen, Dominguez found the money for the consolidation project by looking within his own department and identifying areas and resources to cut. As the data centers were closed, the project became self-funding as Dominguez cut down maintenance costs, got out of contracts, retired applications, got rid of hardware and reduced the overhead, including staff, required to run those centers.

"[There] wasn't an influx of a lot of new cash coming in for us to do the effort, and I know that's difficult in some places, but I think people might be surprised how much they can really self-fund if they really get aggressive about taking a lot of the redundancy and cost and simplifying their environment," Dominguez said.

The constantly moving parts of a project this big require some serious strategizing and priority-setting from the get-go. "You look at your priorities, you look at your skills that you need and you try to determine where you need those skills to align," Dominguez said.

Next Steps

Bally Total Fitness' business transformation

Transformation is best tackled in chunks

Five principles that sparked a business transformation

This was last published in January 2015

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