The IBM Chief Information Officer organization strategic insourcing journey
On 8 October 2020, IBM announced plans to divest its managed infrastructure services business. “Today’s announcement is a milestone for IBM, its employees and its shareholders as we enter a new era of growth,” said Arvind Krishna, IBM Chairman and CEO. IBM completed the separation of the managed infrastructure services business on 3 November 2021.
As part of the separation plans, the IBM Chief Information Officer (CIO) organization made the strategic decision to insource all operations and exit third-party managed infrastructure services data centers within 2 years. In 2023, IBM insourced over 66% of its financial and operational applications using IBM Z® infrastructure.1
The work planned for these 2 years involved:
- Hiring and establishing an operational team of 400 IBM Z professionals to support the insourcing2
- Procuring new IBM Z infrastructure and setting up 4 new data centers
- Exiting 12 data centers processing 3.4 million MIPS (million instructions per second)
- Architectural simplification
- Platform, infrastructure and application modernization
1Based on inventory as of November 2023 and the percentage of IBM financial, operational and financial reporting of existing IBM applications.
2Based on IBM internal employment evaluation.
The IBM CIO Z Strategy and Platform team crafted a migration plan and operational model tailored to its priority: insourcing all operations. The plan focused on 3 primary areas: building an IBM Z team, setting up 4 new data centers and developing an effective IT modernization strategy. The speed and efficiency required for this effort were unprecedented. Companies as large as IBM typically require up to a decade to accomplish tasks like this.
First, IBM needed a team, since significant institutional knowledge was lost with the completion of the divestiture. A new team of talented IBM Z professionals was hired and prepared to manage the infrastructure. The key was a dynamic operating model that evolved as the team grew, revisiting accountability every 4–6 weeks.
Leadership worked to identify and uplift talent to onboard, and set up extensive knowledge transfer quickly. The newly formed IBM Z team collaborated with the third-party managed infrastructure services provider to conduct approximately 2,000 hours of knowledge transfer to support the more than 300 global systems. The team also started using consistent tooling, such as GitHub and Ansible®, for both distributed and IBM Z infrastructure to reduce dependency on specialized IBM Z skills.
The next challenge was to exit 12 data centers and set up 4 new ones. The team had to acquire, install and configure infrastructure for these new data centers that were located around the world for business and regulatory purposes.
The IT modernization business plan considered platforms, infrastructure and applications, and incorporated activities to simplify the existing architecture. With this in mind, the IBM Z team addressed the following to facilitate day-to-day business activities and create a modern platform:
- Workloads consolidation on IBM Z for performance and energy efficiency
- Decoupling applications from infrastructure to simplify updates and adoption of newer technologies
- Reduction of images and logical partitions to streamline maintenance
- Standardize builds and repositories for consistency in the development process
- Pipeline, initial program load (IPL), patching, and discovery scripts automation to reduce manual intervention
- Pervasive encryption to secure critical data and enable data governance
The CIO Z Strategy and Platform team used a “lift and shift” strategy alongside a new migration approach called “slip and slide.” Unlike lift-and-shift strategies that moved the environment as-is, slip-and-slide allowed IBM to eliminate technical debt by moving the applications onto a fully automated environment. For the transition, the IBM Z team combined technology and process, using IBM Transparent Data Migration Facility (TDMF) z/OS® and IBM Copy Services Manager tools to move 24 PB of data critical to supporting everyday activities and fueling AI tools from IBM.
Additionally, the CIO Z Strategy and Platform team aims to further improve the environment using observability tools—such as IBM Instana® Observability, IBM® OMEGAMON® and IBM Z IntelliMagic Vision for z/OS—as well as AIOps, and to build an IBM Z AI chatbot and leverage IBM watsonx™ Assistant for Z. On the talent side, the CIO organization joined forces with the IBM Partner Ecosystem and IBM Technology Expert Labs teams to set up a sourcing talent funnel. The objective is to train the talent and rotate within the CIO organization, 6–24 months, depending on their profile. Once the rotation is finalized, they would move to the IBM Technology Expert Labs team or work directly with clients.
3Hours estimated based on project management reports and other internal records.
The CIO Z Strategy and Platform team secured commitment at the highest level of the enterprise and delivered the new IT operations data centers as envisioned. The clear top-down corporate direction and firm completion date enabled cohesion and synergy among the multiple teams as they engaged to achieve the following business results:
- 380+ applications moved4
- 47 migration waves with zero rollbacks to prior third-party managed service provider (MSP)5
- 24 PB of data migrated6
- Decades of network detangled
- Evaluation during the migrations led to the elimination of 250+ logical partitions (LPARs)7
The team set a new standard for strategic insourcing and operational procedures. They’re working with the IBM Technology Expert Labs organization to generate a process template for other teams and IBM clients to follow the transformation methodology and strategic insourcing best practices. According to internal estimates and data retained by IBM, exiting the third-party managed infrastructure services data centers that were running the IBM Z infrastructure helped the CIO organization generate over USD 12 million in annual savings.8
The CIO organization’s experience insourcing all operations and setting up the 4 new data centers yielded valuable lessons for IBM clients worldwide. These include:
- For IT operations to deliver value and world-class performance, talent matters. What seemed impossible was possible because of collaboration, communication management and expertise. Throughout this challenge, the CIO organization pursued a culture of compassion and collaboration—monitoring for burnout and communicating with outside parties when additional help was needed.
- Other large organizations have similar challenges. This experience has shown how a cross-functional approach, involving the business, platform and infrastructure team, can create value across the enterprise. A key piece of the process is having a thorough inventory and a data governance policy in place.
- Establish a document of understanding or partnering agreement with other teams early on to formalize the business agreement.
- Invest in continuous IT hygiene of the environments and understanding of the environments. Know what’s critical to the business and where application source codes are located.
- When exiting data centers, move applications and data first, and then modernize. Create a scalable solution by scoping a larger effort and employing a phased approach to move and modernize applications, platforms and infrastructure.
- Establish a reward and recognition program upfront.
- Keep an open mind and listen to all team members. Foster open communication and a collaborative environment that encourages the exchange of ideas and promotes successful business outcomes.
4Inventory of applications migrated to inhouse IBM infrastructure based on internal project management reports.
5Migration waves to inhouse IBM infrastructure based on internal project management reports.
6Data storage volume to migration inhouse IBM infrastructure based on internal project management reports.
7After the IBM Z professionals evaluated the system records and project management reports, they eliminated 250+ LPARs to simplify hardware requirements and system management.
8Financial savings estimates were calculated based on actual before and after costs of outsourcing versus inhouse IBM Z infrastructure.
The IBM Chief Information Officer (CIO) organization leads the internal IBM IT strategy and is responsible for delivering, securing, modernizing and supporting the IT solutions that IBM employees, clients and partners use to do their jobs every day. The CIO organization’s strategy encompasses creating an adaptive IT platform that makes IT tools, applications and systems easier to access across the enterprise, accelerates problem-solving and serves as an innovation engine for IBM, catalyzing business growth.
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