DHL Reaps Massive Savings in Data Center Consolidation

When Steve J. Bandrowczak and Darrel Waite joined DHL International Ltd. in March 2002, the two men embarked on a mission to consolidate the freight company's eight data centers sprinkled throughout North America into one state-of-the-art facility in Scottsdale, Ariz.

"DHL wanted to create a seamless single offering to our customers, like a single invoice or a single Web interface," says Bandrowczak, DHL's CIO. "In order to enable that global logistics business vision, we had to consolidate our IT infrastructure, which included the data center, our network backbone and our key global applications."

The project, also helmed by Waite, who is vice president of operations, was designed to do just that. The goal was to bring together into one facility DHL's global and regional IT functions within North America, including people, computers and business systems.

And they did it, on time and under budget. The total cost of DHL's Americas Information Service consolidation program, completed in December 2002, was $75.86 million. The project's budget was $76.15 million.

The consolidation is currently saving DHL about $24 million a year, and when the company consolidates the IT infrastructure of its latest acquisition, Airborne Express, into the Scottsdale facility in the second quarter of this year, the savings will be more than $50 million annually, Bandrowczak says.

The information services center in Scottsdale completes a loop of centers circling the globe that provide round-the-clock management of the company's IT services.

The other two centers are in London and Kuala Lumpur, Malaysia. Each center manages DHL's computing and telecommunications network, DHLNet, for a nine-hour shift—eight hours of support plus a one-hour overlap to transfer control from one center to the next. The centers provide support to DHL's 60,000 employees and more than 1 million customers worldwide.

Part of the project included migrating or consolidating 103 Unix, Wintel and AS/400 servers and 18TB of storage from the Redwood Shores, Calif., data center to the Scottsdale facility; migrating Sun Solaris systems to Scottsdale from Tempe, Ariz., and in most cases, converting them to DHL's global open-systems standard HP-UX 11i; and moving the mainframe, tape and print operations units from Houston to Scottsdale.

Steve J. Bandrowczak, CIO of DHL International Ltd.
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Steve J. Bandrowczak, CIO of DHL International Ltd.
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"We were predominantly open systems, but we had a large mainframe environment in Houston we had to move," Waite says. "And we had to integrate the mainframe skills into our technical skills. Now the mainframe has become an equal part of the new Scottsdale facility and the new global environment for DHL."

Another challenge was how to capture and transfer some longtime employees' knowledge about the company's core applications, particularly when those employees had decided not to move to Scottsdale. One way was to use a "shadow approach," Waite says.

"We brought on new employees, and they shadowed the legacy employee. They got up to speed, and there was knowledge transfer," Bandrowczak says.

The move to Scottsdale benefits both DHL and its customers, says Satish Jindel, an analyst at SJ Consulting Group Inc. in Sewickley, Pa. "By bringing all the IT needs of DHL together, the company has a better understanding of what customers are doing, and it will have positive implications from a cost point of view and from a customer perspective," Jindel says. "In the long run, everyone will come out ahead."

Donald Broughton, a transportation analyst at A.G. Edwards & Sons Inc. in St. Louis, is impressed with DHL's ability to get the project done fast and inexpensively. "That they accomplished this on time and under budget is heroic given the operational complexity of the business that this information system has been charged with managing," Broughton says.

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DHL International Ltd.

www.dhl.com

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Business: An express and logistics company, DHL had 2002 sales of $21.6 billion. Its express service reaches 120,000 destinations in about 230 countries and territories.

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Project champions: Steve J. Bandrowczak and Darrel Waite

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IT department: 4,000

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Project payback: The project, which cost $75.86 million, is saving the company about $24 million a year. That annual savings figure is expected to reach more than $50 million later this year.

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