Bechtel's CIO tells how the construction giant is transforming its IT operations by emulating practices of Internet leaders such as Amazon.com and Google.
If you could build your IT systems and operation from scratch today, would you recreate what you have? That's the question Geir Ramleth, CIO of construction giant Bechtel, asked himself three years ago.
The question-- and the industry benchmarking exercise that followed -- prompted Bechtel to transform its IT department and model it after Internet front-runners YouTube, Google, Amazon.com and Salesforce.com. After all, these companies have exploited the latest in network design, server and storage virtualization to reach new levels of efficiency in their IT operations. Ramleth wanted to mimic these approaches as Bechtel turned itself into a software-as-a-service (SaaS) provider for internal users, subcontractors and business partners.
Bechtel also designed a new Gigabit Ethernet network with hubs at Internet exchange points that it is managing itself instead of using carriers. Now, Bechtel is slashing its portfolio of software applications to simplify operations as well as the end user experience.
Dubbed the Project Services Network, Bechtel's new strategy applies the SaaS computing model internally to provide IT services to 30,000 users, including 20,000 employees and eventually 10,000 subcontractors and other business partners.
We operate "as a service provider to a set of customers that are our own [construction] projects," Ramleth said. "Until we can find business applications and SaaS models for our industry, we will have to do it ourselves, but we would like to operate with the same thinking and operating models as [SaaS providers] do."
Nicholas Carr, author of several books including "The Big Switch: Rewiring the World from Edison to Google" which chronicles a shift to the SaaS model, called Bechtel's strategy a smart move.
"For the largest enterprises, the very first step into the Internet cloud may well be exactly what Bechtel is doing: building their own private cloud to try to get the cost savings and flexibility of this new model," Carr says. "Large companies have such enormous scale in their own IT operations that the outside providers, the true utility providers, just aren't big enough yet…to make them a better option."
Carr predicts, however, that Bechtel's do-it-yourself SaaS strategy will be an interim step until the company is able to fully outsource its IT infrastructure. That may take as long as 10 years, he adds.
"My guess is that over time -- and maybe it will start with the HR system -- Bechtel will look outside and start running some aspects of its IT operations off of [SaaS] sites," Carr says. "Then its cloud will start to blur with the greater Internet cloud."
Bryan Doerr, CTO of utility computing provider Savvis, says many enterprises like Bechtel are interested in the SaaS model for applications that don't differentiate them from their competition.
"The move to SaaS is simply a different delivery model for an application that has little to do with intellectual property or innovation," Doerr says. "Once you make the decision to outsource to somebody else's software, the decision to host it yourself or use a SaaS provider is about economics…For many enterprises, licensing by end user seat is much more efficient than licensing as a bulk package, buying servers and storage and data center space, and then training people to self-host the application."