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The Transformational CIO: Leadership and Innovation Strategies for IT Executives in a Rapidly Changing World by Hunter Muller

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Riding Two Horses

There's a great scene in The Mask of Zorro in which the hero stands astride two galloping stallions to escape from his enemies. That scene came to mind midway through our conversation with Robin Johnson, the CIO of Dell.

Robin guided a transformation that changed the way IT and the business look at costs. And in the process, Dell reduced fixed IT costs by $160 million—and reinvested $100 million of the savings in development projects.

“More than half of our budget is now spent on building new value streams for Dell,” says Robin. “That's radically different than what we were doing a couple of years ago.”

What's truly amazing, in my opinion, is that Dell accomplished this miracle without increasing the IT budget or dramatically slashing programs. The extra money came from driving efficiency on what Robin calls “the fixed-cost side of the house.”

When he joined Dell, Robin faced a challenge that is familiar to many CIOs: He could continue supporting costly legacy applications that people were comfortable using or he could shut the applications down and spend the money he saved on development projects.

Instinctively, he wanted to direct his resources toward development. But first he had to convince the business that the legacy apps were a significant problem.

Robin made his case in a variety of ways. For example, IT began charging the business units on a usage basis for each application. Now each business unit knew exactly how much it cost to run an application. That ...

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