Intel CEO Craig Barrett oversees a nearly $30 billion empire that leads the world in the production of microprocessors. Speaking recently with ZDNet's Dan Farber and David Berlind Barrett offered an IT prescription, described how price/performance is a key metric, and told how innovation shouldn't fall victim to a sluggish economy.
Q: According to some estimates, by the end of this decade IT expenditures are going to account for about 50 percent of an enterprise's operating expenses. Given that, a gross miscalculation of a long-term IT strategy could mean the difference between life and death for an enterprise. So, if you woke up tomorrow as the CIO at one of the companies in our audience, what would your IT road map look like?
A: Well, I think everyone is pretty much in the same boat. Everyone is looking at the infrastructure that they have. Most of us have infrastructures that have grown up over time. You have separate databases, separate applications that'll talk to one another. If I was to wake up tomorrow [as the CIO of another company], I'd say the most important thing is to put a kind of a uniform, horizontal infrastructure in place--which is seamless hardware, seamless databases, seamless business processes. And, then drive my applications off of that kind of pancaked, horizontal baseline.
You look at the issues that we're facing today as we make that conversion, and one of the major issues is how to get databases to talk to one another. The most graphic example in the world is the United States government and their whole response to terrorism in the 9/11 event. You know, if everybody has their own database, and nobody talks to one another, and there's no coordination ... that's not much different than a lot of corporations today.
So, if I was an IT guy, I'd make sure that I'd put that infrastructure in place. I'd pick out the most critical applications to make me competitive in my particular business model. Obviously, that depends on the channels and products, and the geographies in which I would be operating and a whole bunch of things. I'd pick the most critical business applications associated with the Internet that are going to make me competitive and put my wood behind those couple of arrows--the ones that are the most critical.
What do you mean by "put your wood behind those arrows?"
My investment.
So, what kind of investment would you make, aside from making sure they talk to each other?
Well, that's an open-ended question. I'd put enough investment to make them successful. If the most important thing I had to do was to have a manufacturing, planning, and response system to respond to market demand, then I'd put my wood behind that arrowhead and make sure that I got that in place. If my most important thing is customer relationship management, then I'd put my wood there. If the most important thing I could do is to take information throughout the corporation and combine it into a common-designed database to create my next generation of products, I'd put my wood behind that. So, until you lay out the whole problem, I can't tell you how much wood to put behind each one of those things. I need the gory details first.
Is price/performance the top metric? What about other criteria such as reliability?
That's part of a total cost of ownership. If you go back to the mid-1980s when quality was the major issue in the semiconductor industry, the Japanese brought forth quality as a competitive advantage. The whole world said, "OK, that's interesting."
Everybody has to have quality to compete. It is not a competitive advantage per se--it's a necessity to compete. At the enterprise level, reliability is pretty much a necessity to compete. You don't put databases in place, or data centres in place, and say, "OK, 95 percent up time is good enough".
We get people who are arguing whether you are five-nines, four-nines, or three-nines in terms of reliability. It's kind of a rounding error because everybody defines their own capability a little bit differently. They're probably all four-sevens. So, that's a basic requirement that we have in the system, or you don't play.
Assuming you pass that activation barrier to get in the system, then the next question is, what's the total cost of ownership? What's the price/performance? That's where you see the world going today. The world is not rich. The IT dot-com bubble has burst. The Internet euphoria is gone. But, since everybody recognises the Internet is a critical part, everybody has to invest to take advantage of it. But, before they do that, they must look at return on invested capital. That's why we are looking at total cost of ownership.
Price/performance, therefore, gets to be a very, very critical aspect of what people are doing.
