AMD's plan to get back into the black? Fix the internal IT culture, and fast
NEW YORK — Think for a moment about how well you slept last night.
AMD's chief information officer Jake Dominguez has one of the more important and anxiety-filled jobs in the chipmaker's recent troubled history — probably more so than anyone else in the executive lounge. He is in charge of overhauling the company's internal processes, which he hopes will make it more nimble and aggressive in the face of extreme competition, not least from archrival Intel, but also up-and-coming mobile chipmakers, including Samsung, Qualcomm, and Micron.
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The Sunnyvale, Calif.-based company currently stands in 12th place behind international rivals, and five of its US-based chip-building giants. It's lagging behind not only because of a combative anti-competitive push by Intel, which landed it with a $1.4 billion fine by the European Commission — a penalty Intel appealed. AMD is lagging due to its inability to draw in the crowds with the best technologies it could make at a decent pace.
AMD's problem wasn't a shortage of new ideas. Rather, the company's own IT infrastructure was letting it down. Designers and engineers couldn't work any faster because the company's internal systems were sluggish and outdated, and costs were rocketing to levels that could not be sustained for much longer.
Enter Dominguez, who joined the company in September 2011, and was promoted to head up the company's own IT unit in November 2012 — about the time AMD's financial struggles hit a peak.
AMD's engineering and development operations were spread out over multiple datacenters around the globe. Its bold and daring plan to storm its way ahead was to shrink its operations down to two facilities, one in Atlanta, GA and the other in Cyberjaya, Malaysia. In shrinking its servers and condensing its technologies into a tighter space — enough to virtualize significantly more than it did before while saving power and operating costs — the company would save significant sums of money and ready it for its recovery push in the coming year.
"One of the biggest customer complaints is that we weren't predictable or reliable, and we did not execute," Dominguez told ZDNet in a phone interview. His job first and foremost was to begin "getting our house in order," he said. "Our IT system is one of the few organizations that touches every process in the company. And so us stabilizing our overall environment running, virtualizing and optimizing performance, it now shows through in how we're executing."
AMD's on-time delivery had rocketed to 92 percent at the end of 2013, but it falls short of its own expectations. This year the chipmaker is shooting for 95 percent. While that three-percentage point rise may seem trivial, it can save and generate the company millions in profit each financial year.
"My anxiety right now is centered around the fact that I know what our mission is, what we're trying to do, and where we're trying to stage it... but are we going to get there fast enough?"
— AMD CIO Jake Dominguez
"Coming into this year," Dominguez said, "the conversation from the engineering house was, 'we need more grid capacity' — whether that means more cores or more storage. And what we have proven is that those needs aren't necessarily true."
Admitting that the datacenter consolidation and the internal IT shift wasn't a popular move at first, he justified it by pointing out too many existing inefficiencies.
"We didn't invest in a lot of areas that we needed to, so we lost track," he said.
After months of finding new servers and applications, and dozens of "we've found even more" meetings in a widescale organization-wide cataloging effort, Dominguez likened the effort to going into the garage and throwing things out, and finding stuff that you didn't even realize was there and you've been looking for it for years.
The company's datacenter consolidation was led one designated program manager, who reported to Dominguez, to head up the effort, knowing full well in his experience that the traditional "run by committee" model doesn't work. Dominguez wanted a single internal person on point to guide the process, and be able to seek help to him when necessary.
Now as the company begins to pick itself up after more than a year's worth of declining profit and two years of operating income declines, it's back in the black and its operating costs are stabilizing and more than breaking-even.
But the whole process wasn't entirely smooth sailing. One of the more critical parts to the consolidation was physically moving the server racks and equipment from its Austin, TX facility to Atlanta. Logistically that involved moving tons of machines half way across the U.S. in trucks over a quiet public holiday, and within a timeframe that would minimize employee disruption.
"There were two big parts of the datacenter move that made me anxious," Dominguez explained. "One was the big engineering grid we had to move during the July 4th weekend, and then the SAP environment we had to move. And if any one of those went poorly, that was going to change the whole perception of how the datacenter move went."
The datacenter assets, he explained, hadn't been touched or moved in years. With concerns and nerves running high for reasons twofold: what if something happens on the move; and what if something blew up when the servers were fired back up in the new building? If anything fell down in the planned move, the entire company's workflow could have been hampered for days, or even weeks, costing the company potentially millions in lost revenue.
"It took us a little longer to get the network link in place than we wanted, and we were cutting it really close to the timing that we had to install and move our SAP systems. But we fought through that," he said.
"Amazingly enough, we were on target on Monday morning after the weekend to start bringing systems back up, and they did like clockwork."
Dominguez anticipated for about seven-days downtime, but the move went well enough to bring the systems back online after the 920-mile trip "on target," he said, first thing Monday morning, a day earlier than planned. He admitted: "If we had a major failure in the grid, it would've been game over from there and we would've lost the confidence of the company," forcing the company to bring in external hands with a fresh set of eyes.
The (so far) successful consolidation of its datacenters couldn't come at a more critical point in the company's history. Historically, Dominguez said, the company would have outages and coordination efforts, and the move would help the company pivot into new domains as a future-proofing strategy. He said reinventing the company's IT strategy will make it more sprightly in future when it comes to jumping on the latest technological breakthrough.
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With the company's attrition rate at historical lows at present, he said, employee satisfaction is on the up. It comes after the company's former chief information officer Mike Wolfe and other high-level executives left the company in 2011 and later. "We had to rebuild the organization and do all of the things we wanted to do," he explained.
Make no mistake, there's still a great deal more to do, he said. "My anxiety right now is centered around the fact that I know what our mission is, what we're trying to do, and where we're trying to stage it — but are we going to get there fast enough?"
With the timeframe he has been given and the execution pace at which his organizational unit has to reach its monthly and quarterly objectives, that's what keeps him awake at night, he said. "That's really what we're chasing and what makes me anxious because if you have any hiccup or stumble in any part of that path, it just slows you down."
If an entire company's prospects for survival rested on my shoulders, that would probably keep me up at night, too.