EMCCaseStudy
- 1. How EMC’s Global Real Estate and Facilities organization contributed to a program to drive repeatable business effectiveness, achieve efficiencies, and ensure that the portfolio was aligned with the company’s business needs. EMC - Cost Reduction Program July 2012 cresa.com
- 2. EMC - Cost Reduction Program July 2012 Overview In January 2009, EMC’s Chief Financial Officer announced to Wall Street a commitment to reduce annual corporate expenses by $500 million by the end of 2010. Consulting firm McKinsey was already engaged at the C-Suite level to provide directional support on how the savings could be achieved. All business unit expenses/capital plans were evaluated. The program was designed to drive repeatable business effectiveness, create efficiencies, and to ensure that their global real estate portfolio was aligned with the needs of the business. The Global Real Estate & Facilities (GREF) group was expected to contribute $80 million to the overall cost reduction, representing a 20% of the overall goal. A new CTP Project Management Organization was formed to work with GREF to support these initiatives. Background Founded in 1979, EMC Corporation is a global leader in enabling busi- nesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing, and through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset — information — in a more agile, trusted and cost-efficient way. The company has 50,000 em- ployees worldwide and 2011 revenues exceeding $20 billion. They have grown exponentially over the years, expanding from one main business line in 1998 to over 20 today. Since 2003, EMC has invested $14 billion more than 50 strategic acquisitions. Their corporate real estate portfo- lio includes 12 million square feet globally, including 600,000SF of high density R&D lab space. They maintain operations in over 80 countries in 475 sites. EMC Real Estate Portfolio 12M square feet 50,000+ employees (contractors) A. Facility Types • Manufacturing • DataCenter • Call Centers • R&D Centers • Field Offices • Campus/HQ B. Employee Services • Food • Transportation • Maintenance & Operations • Customer Calls • Fitness Centers • Mail and Switchboard C.Global Facilities Operations • Facilities Management • Strategic Planning • Real Estate • Project Management & Development • CRM • EHS • Security
- 3. EMC - Cost Reduction Program July 2012 Approach EMC identified five main campuses in Massachusetts, California, North Carolina and Ireland that would provide the greatest opportunity for cost savings. Focus on Massachusetts With 9,000 employees in Massa- chusetts and an $800 million R&D investment in the state, this area represented a significant opportu- nity for EMC to reduce real estate costs. The GREF team focused on several key strategies to downsize the footprint and reduce costs: • Consolidation • Densification • Optimization of existing space • Leveraging new seating and space design strategies • Optimizing space that had grown in an ad-hoc manner as a result of acquisition activities • Utility savings The team’s assessment and analysis resulted in a program that restacked 2.8 million SF in 10 buildings and moved over 6,800 employees, sometimes twice, over a period of 18 months. R&D lab space was reduced by 120,000 SF and four facilities totaling 610,000 SF with 1,600 seats elimi- nated or restructured. New proto- cols for space were established, with EMC doubling up second line managers in 150 SF private offices and reducing engineering station sizes to 8’ x8’. To mitigate the loss of private offices, EMC added col- laboration spaces and quiet rooms as well as an increased number of touch-down stations for mobile and flex employees. Data Center and Lab Consolidation Team members also established a goal to leverage EMC’s cloud technologies and locate primary data center and high density R&D lab spaces in lower-cost locations. However, sites needed to accom- modate future growth needs. A nationwide search process was conducted and narrowed to five states. EMC ultimately selected Durham, North Carolina as the optimal location for a 450,000 SF data center and engineering lab. The three-phase development, of which phases one and two are completed, included a 20,000 SF Tier 3 Data Center and 150,000 SF Tier 1 R&D Lab space. As a result of this consolidation and relocation, EMC estimates it has achieved an annual cost reduction of $15 million. Massachusetts Footprint 9000 employees $800 million R&D investment Program restacked 2.8 million SF in 10 buildings Moved over 6,800 employees R&D space reduced by 120,000 SF Four facilities totaling 610,000 SF were closed or re- structured
- 4. EMC - Cost Reduction Program July 2012 Results 20% cost reduction in the company’s real estate portfolio representing $80 million in savings. focused on optimizing the busi- nesses operating model, not to just drive cost reduction. Strate- gies included consolidations, site closings, right-sizing of locations, leasing strategies such as “blend and extend,” and utility and ex- pense reductions. In total, 124 sites were impacted, eliminating 450,000 SF and achieving $36 mil- lion in annual cost reductions. Results and Lessons Learned Over an 18-month period, the team’s densification and consoli- dation goals were met, allowing the GREF to achieve its cost re- duction commitments to the CTP. More importantly, the analysis resulted in a new way to manage EMC’s global real estate portfolio. Paradigms were broken. Engi- neering is now done remotely, and enterprise data centers can oper- ate separately. Employee mobility programs have come to be seen as a good strategy, and there has been an improved focus on sus- tainability. Corporate behavioral change is possible. The key to implementing dramatic change is to work with employees to implement change. The GREF team was respectful of its internal customer and focused on helping them to their jobs. It is essential to have the backing of Finance and HR, and good communication is essential. Cost reduction will result in some loss, but there are positives as well and these must be emphasized. Workwise In addition to consolidation and re- location, EMC wanted to consider alternative workplace strategies as part of its goal to reduce costs while providing a productive work environment. Understanding that talent acquisition was critical to its success, EMC wished to create an environment that attracts the best talent in the world, one that would retain them throughout all phases of their career. The WorkWise program was de- veloped to meet these objectives. WorkWise supports a remote work environment to enable mobile em- ployees with tools, equipment and support. Only employees within EMC’s major campus sites are eli- gible to participate, and both fully- remote and partially-remote ar- rangements were accommodated to respond to employees’ request for flexible work schedules and to enable further space savings and increased population density at EMC’s campuses and in the field. Participating employees were also provided the opportunity to visit the office and touch down as required. When fully implemented, EMC expects 800 employees to participate in the program. Global Field Sites Field offices, mainly consisting of Sales and Engineering sites, were smaller than EMC’s campus loca- tions but also provided an oppor- tunity for cost savings since there are so many of them. The team © 2012 Cresa. All rights reserved. cresa.com