Global financial institutions, following the 2008 financial crisis, took a long, hard look at all aspects of their business. The same has been true for technology organizations that have had to adjust to the new realities of the financial services landscape.
Many IT groups have trimmed staff, outsourced and consolidated operations to match reduced technology budgets. Larger organizations, grown from acquisitions, expansions into new business lines and unchecked growth during years of high profitability, have faced a daunting task. Disparate systems, redundant data centers and high numbers of under utilized IT assets (think: thousands of servers running at 2% capacity), caused operational costs to soar.
Citigroup, as has been well-known since the crisis began, has been going through a process of evaluating its entire business. Citi has already sold its Smith Barney unit to Morgan Stanley, numerous consumer banking units in various countries and laid off thousands of workers — most recently 11,000 this month.
But on the operations side, Citi has been focusing on consolidating its global data center footprint, with some remarkable success. When Citi started its five-year data center consolidation project five years ago, it had 70 data centers. Today it has just 20, reports Jagdish Rao, head of enterprise operations and technology at Citigroup. "We are near to the end of a five year data center consolidation strategy," Rao says. "This is a massive consolidation that follows our global operational model."
In order to cut 50 data centers out of the equation, Citi did a complete review of all its existing facilities, its business needs and the future plans for the business, including areas where the bank is expecting to see growth. As Citi had many older data center facilities, along with some that were acquired during acquisitions, Rao says the bank determined that it could close a large number of data centers. Rao, who reports to Don Callahan, Citi's CAO and chief technology & operations officer, and his team also realized that the best approach to reaching a goal of optimal capacity, was to close some of the oldest facilities and also build eight brand new data centers to increase overall efficiency.
"As we consolidated from 70 to 20 data centers, we constructed eight brand new data centers around the world," Rao says. All of the data centers are ISO and LEED certified, including the LEED platinum certified facility in Frankfurt. "When you move to a new house, you get the latest and greatest," in terms of features and functionality, Rao says. "The same is true in a data center. The environment is a concern and our data centers are very efficient."
The focus on efficiency has helped reduce the costs of running the facilities. "The whole data center infrastructure cost has come down drastically," Rao says. "In fact, the reduction in costs has been so substantial, the entire consolidation program was self funded" through operational savings.
The efficient technology in the data centers has also helped Citi "flip" its IT spending, something that all financial firms are looking to do. "Five years ago, 60% of spending was on infrastructure and maintenance, with 40% focused on application development. Today, those figures are reversed, Rao adds.
40,000 Virtualized Servers
One of the major initiatives that helped reduce cost in Citi's IT infrastructure was to virtualize all of its servers. The bank has virtualized 40,000 of its servers in its data centers. The virtualized server network now runs at 40 to 50% capacity, up from a low utilization average of 5% to 10% just a few years ago, reports Rao. "Being that it is a virtual environment, we are comfortable" running at 50% capacity. "We could become more efficient, but there are other concerns," he says, noting that Citi needs to be able handle spikes in activity, such as trading market volumes. "You have to have the capacity to handle the spikes. We won't run it at a higher" capacity level, he adds.
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