As you would expect for an operation that single-handedly accounts for nearly 8 per cent of all Irish exports and generates close to EUR6bn in local revenue, Dell’s site in Raheen, Co. Limerick, is big.
Measuring about 450,000sq ft in size, this is the European manufacturing facility that employs over 3,000 people making nearly 5m PC units a year and distributes to 93 countries around Europe, the Middle East and Africa (EMEA). The two data centres on the site together contain a massive 200Tbyte of data. One of them processes the orders from the seven call centres around EMEA, including from Bray, Co. Wicklow.
To say then that Dell puts high demands on its Irish IT infrastructure is like saying England is pleased at having won the 2003 Rugby World Cup.
Having said that, the continuing development of the IT infrastructure in Limerick is increasingly linked with that of other infrastructures in other operations around the world.
Dell’s global IT organisation sat down about a year ago and hammered out a number of key principles about how it was going to run the IT business to support Dell. One such principle is to eventually have an IT system that is virtually identical in all its operations across the world.
One of those who sat in that meeting was Larry Kiernan, vice president of technologies EMEA. He is the man in charge of Dell’s IT across EMEA.
Kiernan is based in Limerick, in contrast to most of the EMEA senior management team, who tend to gravitate towards London.
He says that the only reason for being based in Limerick is personal choice (he hails from County Westmeath). But it seems just as well he’s based here given the significance of the operation to EMEA and the amount of IT infrastructure hosted by the campus at the Raheen Industrial Estate. Sure enough, it turns out that a good proportion of Dell’s EMEA IT organisation (164 people out of 454) is also based in Ireland .
Kiernan explains that the company doesn’t have specific IT departments to support specific business areas as you might expect. ‘The way I would describe it is that we’ve got a technical organisation that deals with everything to do with data centres, wide area networks, LANs, platform support and the various technical elements of application processes,’ he said. ‘I organise the entire support portfolio into a single organisation.’
This is in contrast to the way many traditional IT organisations are set up, where they might mix application support with application development.
Part of the impetus for creating a single IT organisation was a desire to improve efficiency, namely uptime serviceability, to internal users. Three years ago uptime serviceability was registering at about 92 per cent, which Kiernan says was ‘not acceptable’.
‘In trying to improve that,’ he continued, ‘we took all the support functions that existed in their traditional silos and brought them into one organisation purely focused on support. They were only interested in serviceability. We found in a very short space of time that we took our predictability and service levels up to 98 per cent and then 99.5 per cent, which is what we’re running at, at the moment.’
The Irish organisation also managed through focused support efforts to reduce the number of people working on IT support from 170 to 80. ‘This has enabled us to free up resources to go back into what I would call the transformational side of IT, ie creating new solutions as opposed to supporting the baseline.’
Dell’s ultimate global goal with regard to IT, according to Kiernan, is to reach a point where 70 per cent of its IT resources are focused on transformational or development work and about 30 per cent on baseline operations. ‘Currently, I’m sitting on about 55 per cent transformation, 45 per cent baseline,’ he said.
As well as the technical support organisation, there is the analysis and design group, which is broken down into five separate groupings: manufacturing, sales and marketing, online support/commerce, services, and corporate IT (finance and HR).
‘They are the unique groups that are tied to business functions,’ said Kiernan. ‘The people in those IT functions build up business expertise in those areas and come up with the ideas that help drive efficiencies and productivity.’
Two masters
As an indication of the seniority of his role, Kiernan himself reports directly not to one, but two bosses: the president of Dell EMEA, Paul Bell, whom he describes as his business boss; and the corporate CIO of Dell, Randall Mott, whom he calls his technical boss.
‘Typically, most of my dealings are with my business boss because I’m here to support this region and this business,’ he said. ‘My technical boss wants to ensure that I’m hitting the right portion of the total spend, that I am supporting the corporate programme and that I’m meeting the standards by which he measures me. But as far as delivering value to the company, I spend more of my time working with my business partners and my peers on the European management team.’
Does this not lead to a conflict of priorities? ‘I’m paid to be technical and it’s assumed I have the technical knowledge to run the technical organisation, but I’ve got to think like my business partners. There’s no point in me sitting in the management teams meetings and talking about the bits and bobs of applications. I’m there to help translate the business needs into technical directions for my team to deliver those solutions.’
Six key principles
The meeting of the EMEA senior management team last year, referred to earlier, hammered out a total of six key principles relating to how the global IT organisation could better support Dell’s business.
As well as the predictable ones, such as ‘always value the bottom line’, ‘develop and retain the best technology team’, ‘build it once, build it right’ and ‘on time, every time’, there were two which reflect the centrality of IT to the company’s business. One dictates that ‘global business strategy defines IT strategy’, and ‘build anywhere not everywhere’, means that any IT setup designed and built in one operation should be easily replicated in others, where appropriate.
The Limerick plant was opened in 1991 and the IT infrastructure there and elsewhere, up until a few years ago, consisted entirely of bespoke or proprietary systems, according to Kiernan.
‘When you’re in a company and an industry which at that time was experiencing double-digit growth patterns quarter on quarter, there wasn’t an awful lot of time to consolidate infrastructure,’ he said. ‘It was patching things on top of each other. So you didn’t have time to stand back and say “Whoa”. Investing in something that was going to take me five years to deliver just wasn’t an option at that time.’
Since then, Dell has been able to stand back and take a more strategic view of IT as it matures as a corporation. ‘As we replace legacy products, we want to replace them with a solution which can be global, because our intention is to have one solution from an IT perspective around the world, rather than having every single region, every single country, having their own thing,’ said Kiernan.
With this in mind, the company has made some strategic IT decisions, including investing in Oracle systems and committing to a number of technologies, including Microsoft’s .NET. Linux has also come to play a huge part in Dell’s migration from legacy platforms to a ‘Dell-on-Dell’ environment. Kiernan mentions Dell’s TA2003 (technical architecture), which it started building three years ago as the company’s middleware.
‘It’s not the case that we absolutely always buy a solution,’ he said. ‘We build as well – the intention being that if you want to build something, that you can use it anywhere in Dell’s environment.’
This year has been one of IT consolidation, he said, including the rollout of a new company-wide order management system (OMS) and a standard business process around it. Prior to this, Dell had 32 distinct OMS systems across EMEA, so it’s not difficult to appreciate the cost savings this will make to the business. The next big drive will be on sales tools, building features around the new OMS to bring it closer to internal users.
There has also been a significant investment in services to support pre-sales and post-sales options for customers. ‘In the past our IT solutions would have been focused quite a bit on break fix, rather than on premium service solutions for our customers,’ said Kiernan.
Corporate systems are also getting the once over. There are plans, for instance, to adopt a standard global human resources (HR) system.
The data warehouse, which was previously just a financial reporting system, has also been enhanced, using Teradata technology and EMC/Dell servers. A data-monitoring tool has been built on top of that, which allows users to mine data directly out of the warehouse. ‘The focus next year is going to be to convert a lot of the legacy reporting transactions to a standard feature which can be used in real time,’ said Kiernan.
As far as the call centres are concerned, the company has been examining VoIP (Voice over IP) technology. It is already in use in a number of the EMEA call centres, but only to carry internal traffic between Dell sites. That looks set to change as voice quality of service (QoS) features improve, he said.
Project management
The whole area of project management is something that Dell has taken very seriously, judging by its commitment to recognised methodologies and standards. MSF (Microsoft Solutions Framework) is the company’s development framework for projects and the EMEA organisation is aiming for CMM (Capacity Maturity Model) level 2 certification.
CMM, which is administered by the US-based Carnegie Mellon Software Engineering Institute, is a guide for defining, implementing, measuring, controlling and improving software processes. ‘What that gives you is a solid structure under which to run projects,’ said Kiernan. ‘You can fashion CMM to almost anything. We’re focusing on that for project delivery as far as using the same processes on every project. It cuts down the overhead on your team if you can actually be predictable.’
The recent introduction of new non-PC products, such as printers and PDAs made under licence by third parties, has meant changes to IT systems to allow Dell to maintain control over the delivery of the new products and create a new customer fulfilment model. For instance, changes to the order mechanism were required so that customers could buy online consumables (such as ink cartridges) for its new printer range. ‘There’s not much that we do from a business basis in EMEA that does not require very heavy IT investment and knowledge,’ said Kiernan.
Dell’s direct sales model is, of course, the main way in which it differentiates itself from many other PC makers, but Kiernan firmly believes that its IT systems have played a crucial role in making the company’s business model a success.
‘The systems we have create that differentiating capability and because of our business model we have obviously changed and modified our systems over time to be able to increase that gap between ourselves and competitors,’ he maintained.
The Internet is a key communication channel with Dell’s partners and suppliers. ‘We’ve got programmes like Value Chain which includes higher quality tracking, ordering process, enhanced supplier collaboration systems, all of which are based on Internet technology to bridge our systems to that of our partners and suppliers. I think if you look at it in total, the package of Dell’s IT systems does create a huge competitive advantage.’
Considerations about new IT investment, not surprisingly, are made on a CBA (cost benefit analysis). ‘Where possible, the benefit in that CBA is defined by the customer of the solution, not by IT,’ Kiernan pointed out. ‘I would take the European management team on a regular basis through a project portfolio that their organisations are requesting us to work on and we agree as a group which one should and should not get priority. No investment starts before that.’
Kiernan has lived through the freezing over of IT budgets. ‘Now I think there is a realisation that there’s a time to invest more in IT, but it’s more focused investment rather than in the past,’ he said.
‘We are starting to increase the amount of money we’re spending in IT again,’ he added. ‘A typical industry IT investment in our segment would be around 3 per cent or less of revenues. Dell is currently sitting at about 1.4 per cent with our intention to drive our investment to 1 per cent of revenue over the years. That may seem like a reduction in spend, but its really more focused spend on value add and payback projects.’
Productivity picks up
Productivity is a word that has become synonymous with Dell in Limerick, which has achieved the notable distinction of being one of the company’s most efficient factories. There’s little doubt that the IT organisation had played its part in making this so.
‘The factories within Dell around the world have a healthy competitive spirit,’ said Kiernan. ‘They try to benchmark against each other on a quarterly basis.’ As all the Dell factories around the world build machines using the same manufacturing processes, the company ranks the efficiency and speed of each of the processes at the factories. Those that consistently achieve the highest rank in any one process would be expected to share their secrets with other factories in order to raise everybody’s game.
One example where Limerick beat the rest recently was in the kitting of parts trays, prior to the assembly of a PC unit. A new system was implemented on one line called ‘Pick to Monitor’.
Rather than picking through a paper manifest or using a system called ‘Pick to Lights’, where you get a conveyor flow and people pick when the light comes on, Pick to Monitor introduces intelligence into the picking process, says Kiernan, and so it reduces production bottlenecks. ‘That has literally shot us up to number one in the picking process on a worldwide basis,’ he claimed. The system is to be adopted by other factories over the coming year.
An important manufacturing measurement is cost per box, ie the cost of transforming material into a PC. ‘We are as efficient at delivering the cost of a product to any one customer in Europe as delivering it from China, where labour costs would be cheaper. A lot of that is based on the technology that underpins the factory process.’
The inbound logistics process has also impacted positively on the Limerick plant’s efficiency. This process was created by the local IT and local business logistics teams to track and manage inbound freight from Dell’s suppliers to the factory via distribution hubs. The process enables a hypermarket-type system where shelves are continually refreshed. Being able to track the material meant that the company could identify the cost of the routes it was taking. ‘Inbound freight is a very large, costly part of the cost per box equation,’ he said.
Further efficiency gains have been achieved through the adoption of AFS (Alternative Fulfilment Solution). This is an evolving system that helps to manage the merging of products made in the factory with products made elsewhere, in order to fulfil a complete customer order. In the past, the company might have shipped monitors made in Holland all the way to Ireland to complete an order, only perhaps to end up being shipped back to a customer in Holland.
‘We developed solutions such that you could merge those customer orders in transit in a fulfilment hub on the mainland, with significant cost reductions,’ said Kiernan. Therefore, if a customer orders a PC, a server, a projector and a network hub, the order is split so that the build part comes to Limerick and the rest is put together in a fulfilment centre. ‘But the customer just sees one order and it is delivered together.’ It also cuts down the risk of material being damaged in transmit.
The AFS system is likely to be used further as Dell moves more into products that it doesn’t build in-house, such as PDAs and printers.
Kiernan says that automation is very much a part of the Dell factory operation, but the exception will continue to be that PCs will be assembled by a manual workforce rather than by robot. A quick tour around the factory reinforces the sanctity of this principle. Every machine is different in some way to the next, so there has to be an essential flexibility in the build process that would be hard to programme into a machine.
‘Regardless of how big or small an order is, if there are1,000 pieces on an order for a PC, there can be 1,000 unique configurations, but we can build them down the line, one after the other,’ said Kiernan. ‘We don’t build in batches. This is an advantage of the basic manufacturing systems that we’ve had for years.’
This flexibility extends to the whole integrated test process of units once they are assembled. As well as building to individual customer hardware specs, software of the customer’s choice is also loaded on to the PCs. ‘It can be configured so that there is a standard operating system on it, but a corporate customer might want a security image installed or an internally approved software system. We can do all that,’ Kiernan promised.
Eating their own dog food
Given that Dell has emerged as a leading player in the worldwide Linux server market, it will come as no surprise to Linux followers that the open source software is to be found in many places within the Limerick site in Raheen.
‘We used to have a degree of legacy systems in our environment,’ said Kiernan. ‘We had Unix systems here and there and several other operating systems. As we progressed our own product lines to support more high end computing, we’ve adopted Linux quite a bit. We’ve now put it in place a number of our mission critical systems, as well as some of our second level and third level systems to provide stability, reduce costs and improve flexibility.’
The investment in Linux within Dell seems characteristic of the company’s almost legendary obsession with cost control and cost management. Kiernan says Linux is used in the company’s order management, financial and factory systems and services.
‘Legacy environments are typically costly to enhance and improve, and you’re looking at vertical scale as far as increased capability is concerned,’ he said. ‘Whereas in a Linux-type environment, if you use a modular, horizontal scaling approach and scale out or scale up, you can scale much more affordably than you could working in a legacy environment.’
However, Dell would be the first to point out that it is not evangelising Linux or promoting it over any other operating system; it is merely leaving its options as open as possible. Dell’s internal systems are standardised on Microsoft Windows 2000/2003 or Redhat Linux, its preferred open source provider.
Kiernan says the company is in the final stages of creating a new online commerce engine. ‘In the past, we would have had unique commerce engines for each region with little commonality. Now we are moving to a single online engine throughout EMEA, US and Asia Pacific,’ he said. ‘It will provide the same experience, the same references, throughout the world for our customers.’
As befitting an increasingly virtual organisation, wide area networking is critical to Dell EMEA. ‘We have a pretty robust WAN in place, an MPLS based WAN, with an IPSec backup or shared link for redundancy. That gives all of our users, in any office, the ability to seem as if they are in the same office. We use wireless quite heavily, as the technology has matured a good deal.’
The company also relies heavily on Citrix for wide area networking and it serves as its emulation standard of choice. ‘All of our order management systems, even though they run centrally on the data centres on the campus here, are serving all the countries in EMEA,’ he said. ‘I typically would have somewhere between 25 and 3,500 users at any one time, connecting through their PCs in their local office to here via Citrix.’
Dell Limerick migrated a few years ago to a storage area network from a direct attached system, which Kiernan says has improved flexibility in the data centres. One centre extends to 10,000sq ft and the other measures 6,000sq ft.
Dell has standardised quite heavily on Avaya and Nortel from a telephony perspective, said Kiernan. ‘We are pretty aggressively looking at VoIP, as the next big technology leap forward, both for internal use and to handle external customer calls.’
19/01/04
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