euro-crisis
Finance

Italian CIOs Battle Through Italy's Tough Times

As the Euro-crisis hit hard in Italy and Spain, Esprinet, which operates in both of those countries, had a lot to be worried about.  Not only were the economies in both countries in trouble but Esprinet was a computer wholesaler with already paper-thin margins whose industry was shrinking.  

Esprinet is the largest IT distributor in Italy and the third largest in Spain, with 70% of its customers selling to businesses which were cutting back. Cesare Pedrazzini, CIO of Esprinet, said his business model was internet-based and depended on his systems being much faster than those of his reseller customers.

“If we were not faster than them, they would simply do it themselves and not need us,” he says.

Pedrazzini saw revenues decreasing and decided to fix the slide with a cost-reduction programme. But a business model where you have tight costs and use your own ERP and web engine because big-name software is too slow is always going to be lean anyway.  That very leanness makes it difficult to cut costs without harming the company. 

Instead of just slashing the ITC budget, Pedrazzini looked to new datacentre technology to give him flexibility. Some of this involved changes with internal management systems but also with outsourcing providers.

“We arranged a new agreement with most of them or changed where it wasn’t possible,” Pedrazzini says.  “We already did a strong cost reduction a few years ago, so we were prepared… as much as we could be.”

Pedrazzini worked on improvements to the company’s cloud and remote datacentre systems.

“These types of services are helpful when you need to increase [scale], but they are also elastic when unfortunately you have to retrench.”

At least Esprinet was lucky because, as a consumer electronics distributor, it was near to all the new technologies and inherently believed in “IT competitive advantage”.

Getting this advantage involved using VMware for the virtualisation, DB2, Oracle and Microsoft SQL Server for database, and hardware from IBM, EMC, HP, Cisco and others. The company piloted the new range of EMC VNX mid-range datacentre products, achieving more speed at a lower cost, thanks to software optimisations for Flash storage and Intel’s multi-core chips.

All this meant that Pedrazzini saw a cost reduction for the ICT budget without sacrificing any of the company’s services.  In fact, the company’s bottom line improved, thanks to the cost savings and efficiencies.

One of the most difficult parts of pushing through the changes was dealing with Italy’s aging telephone system. Italy’s Telecom Italia holds a near monopoly and the debt-laden company has an out-of-date and bureaucratic structure.

“We spend a lot of time pressuring the Italian communication providers,” Pedrazzini says. “Each new installation needed months of planning and sometimes we had to change technology because in some parts of Italy the solution we wanted was unavailable,” he said.

In one case, Esprinet connected the warehouses to the datacentre with a principal data connection and a backup line but had another backup by a radio link. 

Enrico Parisini, IT manager at Conserve Italia also found himself under pressure to reduce costs.  His company is a leader in the Italian food and beverage market and is best known for brands such as Cirio.  The company processes 600,000 tons of raw materials every year and packages foodstuff in France and Spain as well as Italy. But for the last three years Italian shoppers have become extremely price conscious, the market dropped sharply and product margins had to be cut.

Parisini’s company wanted to maintain its volumes and revenue and use aggressive cost cutting to compensate. Cutting ICT costs was unavoidable yet he was under strict orders to not only maintain but improve service support. He says that this difficult conundrum was a little like “Mission Impossible”.

“ICT technology offers the answer to solve this contradiction but to take the opportunity we needed the courage to change, the ability to support that change and find some good ICT partners,” Parisini says.

Conserve worked with solutions provider Dedanext and EMC and used virtualisation to reduce hardware and deployment costs. There also had to be some software and hardware standardisation to bring about greater efficiencies.

However, as is common with virtualisation, there were some issues of software licensing which could lead to hidden costs.

“You can’t make profits improving the datacentre but you can continue to make investments in the datacentre using costs saved by abandoning older technology. In this way you can maintain an efficient infrastructure without any further penalties,” he says.

Datacentre rationalisation and replacements of legacy systems saw other improvements. “These changes saw our power consumption dropping by 70%.  We were also able to save money because we didn’t need new cooling systems,” Parisini says.

Both companies saved enough money through these changes to not only improve their operations significantly, but also to survive Italy’s “interesting times”.

 

Nick Farrell is a freelance writer who was born in New Zealand and recently migrated from Bulgaria to Italy. He writes widely on technology, magic and the esoteric.

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Nick Farrell

Nick Farrell is a freelance writer who was born in New Zealand and recently migrated from Bulgaria to Italy. He writes widely on technology, magic and the esoteric.

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