May 2008

Professional services giant Marsh & McLennan found, when it did the math, it could gain significant efficiencies by combining over 130 data centers worldwide.

David Fike

As CIOs increasingly take the lead to consolidate their enterprise data centers, there may be no better model—and few larger—than Marsh & McLennan Companies (MMC).

Like the firm itself, MMC's efforts were no small feat. The global professional services firm, with 2007 revenue of $11 billion, offers risk and strategy management and human-capital support for customers in more than 100 countries. In the company's 137-year history, it has grown through acquisitions of firms such as Kroll, Putnam Investments, and Guy Carpenter & Company. From a business standpoint, the growth and relative autonomy of the operating companies have helped MMC steadily expand into new markets and lines of business. From a technology perspective, the IT sprawl was hindering service to customers and to the enterprise's 55,000 employees.

The mammoth task of centralizing the enterprise's 130 global data centers into six regional sites — and all of the associated hardware, software and business processes they hosted — became the mission of  David Fike. Fike became MMC's CTO in January 2006, after serving as managing director of enterprise computing and communications at one of MMC's former operating companies, Putnam Investments.

Fike acknowledges that the consolidation effort seemed daunting at first: MMC's 130 data facilities ranged from large centers to small server rooms that lacked basic infrastructure, such as uninterrupted power supplies, to fully support them, he says. Another challenge was that the effort would have to be self-funded; the data center consolidation was to be a cost savings, not an expense item. But after six months of planning, Fike and his team rolled up their sleeves and got started. "This is very much a work in progress," he says. "It will be the end of 2010 before we can declare victory."

Combine and Conquer

The first decision was to pare down the sheer number of data centers to just six, a move that led to the acquisition of two vacant sites in the United States and one in the United Kingdom that were then built up into data facilities. An existing U.K. site, as well as two in the Asia-Pacific region, was retained to meet the company's needs. New York-based MMC deliberately located its data facilities on three different continents to distribute the IT infrastructure among its regional businesses and to provide global backup and recovery, Fike says.

Such a dramatic reduction in sites is unusual, says Andi Mann, Research Director at analyst firm Enterprise Management Associates. "There are very few organizations running 25 or more separate installations; 130 is a lot," he says. In general, large enterprises tend to operate about 10 data centers worldwide, "so Marsh started out from a very anomalous position" and will cut its data center count to below the average, Mann notes.

With an overhaul this large, MMC also used the consolidation effort as an opportunity to refresh, replace or retire equipment so that it was left with a leaner and more efficient IT infrastructure. Even after 800 servers — including three mainframes and about 36 midrange servers — were retired and their functions consolidated or virtualized, that still left the company with about 8,000 servers to manage worldwide, Fike says. Using virtualization software from vendors such as VMware and Virtual Iron, Fike now can "take up to 20 servers and consolidate them on one physical device." Server virtualization and shared servers also reduced energy and yielded associated savings. Moreover, Fike and his team were able to cut the cost of running MMC's global IT by close to $120 million in two years. For 2009, he's targeting an additional $30 million in savings.

About $2.5 million of those annual savings can be attributed to using the six global data centers as the enterprise's backup and disaster recovery system instead of paying that amount to outside recovery services. Beyond the financial bonus, Fike believes MMC has vastly improved its IT recovery abilities as a result of moving them in-house.

Keeping It Simple

Other savings were realized from a reduced IT headcount and from standardizing on a few key software platforms. For example, MMC chose CA for its networking, systems and data-center management solutions.

Analyst Mann emphasizes the importance of simplifying system management in such a large-scale enterprise. "It's very hard to integrate data centers when you buy new business units through mergers and acquisitions" or even as you develop new units, he says. "When they grow beyond a certain size," it's just very difficult to meld the different platforms, systems, staffing and data issues.

Simplifying became the mantra at MMC. The data center consolidation effort was part of the enterprise's overall plan to centralize its sprawling IT operations under MMC Global Technology Infrastructure (MGTI), says Brian M. McDevitt, a customer solution architect at CA who works with MMC. The complete infrastructure — server and network management, application monitoring, service support, change management and desktop support — was centralized in MGTI.

To ease the transition for the operating companies, improved management services were offered by MGTI. This centralized approach replaced the disparate systems used by each company previously. Basically, MGTI gave the parent company the opportunity to standardize on a technological foundation, and the data center consolidation gave it a means to execute the plan.

Fike is looking to further consolidate vendors throughout his organization, even when it comes to e-mail, virus protection, backup, databases and operating systems. "We looked at everything, and we found that there is a huge ROI implication" when consolidation is a key part of the restructuring, he says.

Lay the Groundwork

Fike and Jan Stevens, global head of program management at MMC, don't recommend trying such a grand scheme without careful planning and corporate buy-in first. Planning is crucial for a complex, worldwide consolidation of data centers, notes Stevens, who is based in London. Her role was to initiate, plan and execute the consolidation program. "Finding the right 'window of opportunity' is critical to the success, so that the consolidation becomes part of a larger business change," says Stevens.

Naturally, there is "an initial challenge of persuading the business and application development teams that the data center consolidation is the right thing," she says. "There is a fear that they will lose control when the hardware moves away from them, and there is no doubt that the application development team needs to analyze and remediate legacy applications to ensure they perform well over the network." Fike agrees: "Ultimately, they're the ones who are going to have to test everything after a move," he says. The goal, therefore, is to engage application teams as early as possible in the process.

Security and privacy concerns are easier to address now as well. With the concentration of the enterprise's IT infrastructure and services in six data centers, Fike's team can offer encryption services for backup tapes, something that would have been too expensive to do with 130 data centers.

Ultimately, MMC's data center consolidation has demonstrated multiple efficiencies and benefits to the enterprise and its divisions. The biggest and most tangible result is the $120 million in savings so far. "Everything's got to come down to the bottom line in one way or another," says Mann. Businesses aren't just going to improve the manageability of their IT systems because it may be more efficient, he says. At the end of the day there have to be hard-dollar benefits and MMC's calculated efforts have paved the way, he says.

John Zipperer is a San Francisco-based writer and editor and a former editor of Internet World and Windows Server Systems Magazine.

Ask The Expert

David Fike, CTO of Marsh McLennan Companies
davidfike@smartenterpriseexchange.com

David Fike is CTO for Marsh & McLennan Companies (MMC). Before taking on his current duties in 2006, he was managing director of enterprise computing and communications at Putnam Investments, an MMC company. His more than 25 years of technology leadership experience include serving as director of consulting at Gartner Group, and before that, he was responsible for the voice and data networking systems for the U.S. Senate. He holds a B.S. in finance and a master's degree in telecommunications management from the University of Maryland.