NetApp: Young Company, Mature IT
NetApp entered the high-technology scene in 1992, offering storage and data management solutions. Since then, the Sunnyvale, Calif.-based company has grown substantially each year, forcing it to quickly adopt information technology practices that are more common in mature organizations.
“We have a very complex business applications environment,” says Marina Levinson, senior vice president and CIO.
The IT organization supports more than a hundred applications, including six tier-one apps from vendors that include Oracle, PeopleSoft, SAP, Siebel and Tibco. On the hardware side, NetApp has more than 200 of its own network-attached storage (NAS) filers and 1,500 servers from Fujitsu, IBM and Sun Microsystems. In all, the company has more than two petabytes of storage.
Today, NetApp boasts sales of more than $3 billion, with approximately 8,000 employees in about a hundred locations in 46 countries. The IT organization, which includes 450 people—both permanent employees and contractors—supports six data centers: three in the United States and one each in Europe, India and Hong Kong.
A New Sheriff in Town
When Levinson joined the company in June 2005, her first objective was to develop clear, strong governance and a three-year IT strategic plan. “At the time, we had hardworking, dedicated people, but we didn’t have any governance around how to prioritize IT investments,” says Levinson. “One of my first actions as CIO was to establish robust governance within NetApp.”
As a starting point, the company put in place a number of function-based councils (such as a finance council), along with a steering committee that includes both IT and executive members, who are tasked with prioritizing the company’s IT and business process investments. The IT steering committee approves all investments of between $100,000 and $1 million, while expenditures of more than $1 million go before the executive staff.
To get funding for a project, the executives and IT professionals, along with the business partner who is doing the work, must jointly fill out a template outlining their proposed project and its projected outcomes and then present it to the steering committee for consideration. In addition, the company has recently begun to require that business partners return at a later date to report on whether they reached their objectives.
“We put these governance processes in place in 2005, and went through a few incarnations to make them more effective,” says Levinson. “We found that we had a disconnect between the functional councils and the steering committee, so we worked to close the gap and improve communications.”
These processes were designed to ensure that NetApp allocated its dollars to appropriate IT investments and to enable executives to monitor progress against the company’s committed roadmap. They also would allow the company to identify business challenges and make appropriate adjustments to its IT plans to address emerging trends.
“The new processes ensure that we are always working on the priorities that are most important to the company, as opposed to [responding to] those who scream loudest,” says Levinson. “We are getting to the point where we are good at governance.”
Close to the Vest
In an environment where outsourcing is becoming widespread, NetApp takes a more conservative approach.
“We have partnerships with third parties, and we give them a portion of the support and development capabilities [to handle],” Levinson explains.
As with the hardware and software it deploys, the company is working with leading outsourcing vendors. “We have a significant partnership with IBM Global Services, which provides a lot of the services out of its Bangalore, India, site,” she says. “We also have on-site resources as part of the agreement.”
Levinson adds that the ultimate goal is to achieve a 70/30 split between offshore and onshore work with IBM, in order to achieve the best cost savings. Another goal is to “eventually have two partners to create some competition,” she says.
However, NetApp plans to keep its strategic activities in-house. “This year, we have focused on making sure we have insourced all our core skills and that we are getting deep knowledge in those skills,” says Levinson. “We want to get to a point at which we’re retaining ownership of applications 90 percent to 95 percent of the time.”
Eighteen months ago, NetApp worked with its internal IT department to create a three-year strategic plan to support future growth. “We want to make sure we are working on the right things, and that there is alignment between our business strategy and our IT strategy,” says Levinson. She adds that the company had $2 billion in sales when she came and is planning to reach $10 billion during the lifetime of the strategic plan.
“We are a fast-growing company,” she says, “and we have to keep an eye on scaling to make sure our business processes keep pace with our growth curve.”
Business intelligence plays a key role in achieving that objective. “We intend to support and build business intelligence as a competitive differentiation for our company,” says Levinson. “As part of our BI initiatives, our goal is to create a 360-degree view of our customers and partners, in order to create customer loyalty, as well as opportunities to cross-sell and up-sell to drive additional revenue.”
The strategic plan also calls for adhering to best practices in storage technology. “We are in the storage business, and it is imperative to use storage solutions and showcase those to our customers, and to provide professional services, product management and engineering to make it even better,” says Levinson.
Another element of the plan includes a global workforce initiative that will allow the company to create a scalable workforce through internal staff development in low-cost geographies, combined with partnerships with managed services providers.
With these evolutionary changes, the IT organization of NetApp will be well-positioned to add value to its corporate goals and objectives.