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An Oracle Enterprise Architecture Case Study
January 2012
IT Transformation at Dell
An IT Transformation at Dell
Introduction
Michael Dell founded Dell in 1984 in Austin, Texas, with $1,000 and a unique vision of
how technology should be designed, manufactured and sold. More than 5.4 million
customers later and with an annual IT budget of approximately $1 billion per year, Dell
has made an indelible mark on the computer industry—and the world. The company
ships more than 10,000 systems every day to customers in 180 countries and employs
100,000 people worldwide.
Long known as one of the world’s largest manufacturers of personal computers, Dell has
grown into not only a multi-national hardware and infrastructure provider but also an IT
services and solutions provider as well. Rapid growth led to regionally specific expansion
from country to country. Dell ended up with unique manufacturing facilities, regional order
management systems, and different operating processes and systems throughout the
world.
Rhonda Gass, Dell’s Vice President of IT Strategy, Technology & Governance, is
charged with mapping out a future direction for the IT giant, with a three-year roadmap
driven by Dell’s Enterprise Architecture (EA) team. At an enterprise level this roadmap
includes ten major programs, each of which involves investments in the tens of millions of
dollars—and, in some cases, hundreds of millions of dollars. Some examples of these
programs include: Global Quote to Cash, Global Service Delivery, Solution Selling,
Global Manufacturing Execution, and Recurring and Usage based transactions.
Oracle is providing executive guidance for this transformative journey, working closely
with Gass and her enterprise architects to establish a long-term view of the requisite
processes, systems and technologies. Individual projects are undertaken to build
general-purpose capabilities, not merely to fulfill immediate needs.
The Problem: Creeping Diversity
Several years ago Dell began a transformation from a hardware infrastructure provider to a
software solutions and services company. The 27-year-old company, which began as a domestic
PC vendor, had moved rapidly to embrace other countries and product sets. To complicate
matters, Dell acquired several large companies in 2010, including Perot Systems, and three other
companies in 2011.
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“It’s important for enterprise architects to have a hand wherever the company invests in IT. Our organized effort
around EA has accelerated time-to-value, made us more agile, and driven significant cost savings. As we free up
dollars spent running the business we are able to reinvest in transforming the business.”
Rhonda Gass, Vice President of IT Strategy, Technology & Governance, Dell
“To grow effectively we knew we needed a solid technology base,” Gass recalls. “Simply layering
new capabilities on our existing systems wasn’t going to work anymore.”
For example, when Dell wanted to implement a common electronic payment type for all of its
online and offline sales properties around the world, the IT department estimated that it would
take 18 to 24 months to develop this service and deploy it globally. IT leaders realized that
having 12 different order management systems, 27 different interfaces for product and customer
data, and disparate data representations in the data warehouse, was inhibiting Dell’s ability to
transform.
“This was a call to action for management, not only within IT, but among the business leaders,”
continues Gass. “It was a joint problem that necessitated a top-down approach. We needed to
embrace globalization, consolidation, and standardization to make headway. Disparities in our
information systems was inhibiting our ability to transform.”
A Process for Rationalization
In order to achieve its corporate objectives, Dell needed to rationalize its IT infrastructure. This
transformative process involved consolidating multi-national systems to improve efficiency,
reduce costs and enforce common standards.
The rationalization exercise helps an organization identify what standards to move towards as
they eliminate the complexities and silos they have built up over the years, along with the specific
technologies that will help them get there.
Depending on the company, rationalization could start with a technical discussion and be ITdriven; or it could start at a business level. For example, a company might have distributed
operations across the globe and desire to consolidate and standardize its business processes. That
could drive change in the IT portfolio. Or a company that has gone through mergers and
acquisitions might have redundant business processes to rationalize.
Rationalizing involves understanding the current state of an organization’s IT portfolio and
business processes, and then mapping business capabilities to IT capabilities. This is done by
developing scoring criteria to analyze the current portfolio, and ultimately by deciding on the
standards that will propel the organization forward. Standards are the outcome of a
rationalization exercise.
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In Dell’s case the EA team began by establishing an enterprise vision—a blueprint to guide
individual projects. This blueprint laid out the structure of the enterprise in terms of its strategy,
goals, objectives, operating model, capabilities, business processes, information assets, and
governance.
Using the blueprint, enterprise architects can now inventory all applications and the underlying
technology currently in use, and then map the applications to business capabilities to identify
omissions and redundancies. Completing an inventory and mapping exercise has revealed
overlapping and duplicate applications that are now candidates for consolidation.
Driven by Architecture
Dell’s Enterprise Architecture team includes business architects, information architects,
application architects, and infrastructure specialists. They have completed the rationalization
process and are beginning the next wave: business process transformation.
These changes are as much cultural as they are technical. After creating a center of excellence
(COE) to study its fundamental business processes, Dell organized the company around five key
“process areas,” each of which exists to enhance the customer value chain:
Develop
Market
Sell
Fulfill
Support
These process areas are underpinned by a Corporate process area, which supports the processes
that support the customer. Process owners in each area are partnered with IT to establish the
future systems that will run these areas based on process and capability needs.
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“Dell used to think about the physical processes that run the company,” Gass explains. “Business
architecture considers logical processes and cross-domain capabilities. That’s what we are
designing now. It’s a huge change.”
For example, the domain of logistics is similar whether you are sending a technician on a service
call or delivering a warranty part to a repair depot. Thus Dell’s focus is now on designing general
logistics capabilities that all the process areas can use. This differs from the “reactionary”
approach common at most large companies, where business processes and information systems
devolve from specific project needs and recommendations. Typically, after management
identifies a market or defines a strategic direction, the IT department works with the appropriate
business units to design the necessary IT solutions to support that initiative. Then IT develops
the associated applications, data and technology infrastructure, and the process repeats itself each
time another strategic initiative is defined. Over time, the company ends up implementing
separate and disconnected IT systems without an overarching plan. Far from helping to shape
the future of the company, IT becomes the bottleneck, continually reacting to the latest strategic
initiative.
Dell has overcome this tendency with its architecture-driven approach. For example, one area
where Dell identified silo-ed but well-intentioned plans was in the development and delivery of
support tools. Various product teams (e.g., notebook team, desktop team, server team, etc.) were
capturing diagnostic information for evaluation. From a customer viewpoint, consistency in how
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these capabilities are delivered is very important, leading Dell to think about its support to tools
across all product lines and to use common develop/design and support processes.
Gass believes that IT must lead the business in any type of large, transformative project. “The
business doesn’t always have the correct discipline or an established program management office,
like IT does,” she explains. “That’s why business leaders rely on IT to solve problems that they
haven’t thought about. IT is the facilitator and IT can drive accountability in the business owners
and help the various domains interlock.”
A Foundation for Execution
Establishing business architecture involves capturing various “views” of the enterprise such as
the business strategy, business capabilities, business processes, knowledge, and organization. In
most EA projects, this information is used throughout the architecture development process to:
Identify business and IT “owners” to sponsor and participate in the architecture review
and transformation process
Prioritize the areas in which to focus rationalization efforts
Capture business capabilities and business process insight
Eliminate redundancies and gaps in the applications portfolio
Align IT initiatives with business strategies and goals
Dell has a systematic method for achieving these objectives. Every year its business architecture
team sits down with the strategy planning office to review essential capabilities and complete a
strategic plan. This plan typically focuses three to five years in the future. Gass and her team
maintain a corporate-wide map of these capabilities that depicts specific business domains – what
they call “process chevrons.” This map provides a logical model of how Dell runs. The business
architecture team looks for “capability gaps” and then interacts with the solution architecture
team, the information architecture team, and the infrastructure team to fill those gaps. Dell’s
Enterprise Architecture team maintains a three-year reference architecture for each of these
domains, which they update each quarter.
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“The reference architectures include templates, guidelines and patterns that ensure consistency
across projects, domains, and functions,” Gass notes. “We are starting to get more practical by
creating a program architecture document about our top 25 business programs. This document
outlines the current state along with the transition phases necessary to fulfill the reference
architecture for each of those programs.”
Creating Business/IT Alignment
Dell prioritizes its IT investments by aligning them with the reference architecture and
identifying the capabilities with the highest return on investment. Gass and her team enforce the
technology reference models and provide an architecture review board to govern the
transformation effort. The EA team periodically assesses the degree to which each project has
realized the transition state on the way to the three-year reference architecture.
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Dell has made it clear to its managers and business process owners that they don’t “own” an
organization or that organization’s requirements. Rather, they own a capability area. Certain
assets are associated with that area, including the business architecture, business processes, and
production applications. “Organizations come and go and programs come and go but the
process owners are still left to manage those capabilities and that asset base,” Gass explains.
Enterprise architects are not typically asked to define or optimize business processes, but they do
need to be equipped to understand those processes in relation to the organization’s overall
business strategy. This knowledge helps to ensure that each department conforms to consistent
business practices, processes and standards. EAs maintain a cross-domain perspective that
represents the vision and requirements of the organization as a whole.
Similarly, while Enterprise Architecture does not necessarily include business process
optimization and design, it has a clear role to play in the governance and monitoring of these
processes, especially when they involve cross-domain IT capabilities. Enterprise architects are
typically not process analysts. They define how a process interacts with other core processes, and
how a process impacts the organization. To do this well they must understand the external and
internal factors that influence the organization. External factors include things like compliance,
which are imposed from without. Internal factors include specific IT standards and operational
business requirements. Having solid governance practices in place makes it easier to anticipate
business and IT risks and ensures compliance with corporate strategies, policies, and statutory
regulations.
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Accounting for Costs
When Dell decided to segment the company into four large business units, with senior executive
VPs leading each division, full cost transparency for IT Services was a must. Gass says this has
been a good way to get senior leaders involved in IT decisions. “Initially they didn’t understand
why certain things cost what they did and they questioned the value of IT. We had to be very
precise about what things cost and why.”
Now these executives can see the specific cost drivers influencing their decisions. Each major
business program has a finance controller acting as CFO ensuring the business results are being
realized. A global audit team assesses each transformational program against risk areas at periodic
milestones.
“It’s important for enterprise architects to have a hand wherever the company invests in IT,”
sums up Gass. “Our organized effort around EA has accelerated time-to-value, made us more
agile, and driven significant cost savings. As we free up dollars spent running the business we are
able to reinvest in transforming the business.”
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Conclusion
At many large companies, Enterprise Architecture entails creating detailed maps and blueprints
to define systems, data and technology assets—both in their current state and desired future
state. As Dell has demonstrated, Enterprise Architecture involves much more that this type of
routine planning exercise. At its foundation is a business vision that stems from a thorough
understanding of how the company operates. This vision identifies fundamental capabilities and
directs specific IT projects for realizing those capabilities and extending them throughout the
enterprise in a consistent, cost effective way.
Enterprise architecture is the organizing logic for business processes and IT infrastructure,
providing a long-term view of a company’s processes, systems and technologies. Based on this
architecture, individual projects are undertaken to build general-purpose capabilities, not merely
to fulfill an immediate need.
Dell’s transformative journey, guided by its internal Enterprise Architecture team, echoes the
approach that Oracle recommends to many other large companies. Oracle enterprise architects
offer a deep understanding of how technology—including Oracle’s vast product portfolio—
impacts enterprise-wide alignment, governance, and business processes. Oracle’s proven
principles, roadmaps, and reference architectures, drawn from many successful engagements,
allow companies to enforce best practices and adhere to architectural principles as they move
from one tactical project to another, always considering the overall needs of the enterprise.
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Author: David Baum
January 2012
Oracle Corporation
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