Call it the CIO "clean slate" fantasy.
From NetworkWorld: The Google-ization of Bechtel
If I were starting from scratch, what kind of IT systems would I build to support my business today?
For most IT leaders, bound by long-standing infrastructure choices and loads of legacy systems, it's little more than a parlor game. For Geir Ramleth, however, the question provided the foundation to a new model for delivering corporate IT services.
Ramleth isn't the IT leader for some hot, new startup. He's the senior vice president and CIO for Bechtel, the construction and engineering company that got its start 110 years ago building America's western railroads and later made a big splash helping raise the Hoover Dam. "We said, If we started Bechtel today, would we do IT in the same way we're doing it now?" says Ramleth. "The answer was no."
When Ramleth first asked the question more than three years ago, the company had just completed a major initiative to streamline IT systems, which had cut costs by nearly 30 percent. But with Bechtel's projects increasingly executed in far-flung geographic locations, from Santiago to Shanghai—and with its systems being accessed by thousands of temp workers, customers, even competitors—Ramleth knew a more drastic shift in how IT services are delivered would be necessary to support the company's complex, distributed business model.
Starting with that imagined technology "tabula rasa," Ramleth took his cues from some real-life IT pioneers who, unlike most corporate IT organizations, could take advantage of an actual clean slate when building their technology platforms. He incorporated high-bandwidth networking practices from companies such as YouTube, the standardized server approach of Google, extreme virtualization techniques from Amazon, and the multitenant application support strategy of Salesforce.com, among others.
The result is the Project Services Network (PSN), an infrastructure to apps overhaul of Bechtel's technology environment that Ramleth says will provide secure, ubiquitous, simplified and rapidly deployable access to corporate and customer information for any user around the globe who needs it. Ramleth calls his approach the "consumerization of the computing environment"—an internal cloud-computing infrastructure serving up in-house applications on demand. Others say it's a sign of the IT times.
"It's really in vogue right now if you're overseeing enterprise IT to look at these upstarts that are talking about how they run hundreds of thousands of servers," says Howard Rubin, president and CEO of Rubin Worldwide and a Gartner senior advisor. "As corporate IT bemoans the issues of virtualizing or large-scale standardization, these younger companies do it all as a matter of course. CIOs are starting to wise up and look at what they're doing right."
An Old Company Needs New Tricks
"That's not our business. That's not what we do."
That was the reaction from Bechtel's corporate management when Ramleth came to them with his big idea: To benchmark IT not against construction or engineering industry peers—or even global enterprises of a similar size—but against successful companies in the Internet consumer space. They couldn't immediately imagine any benefit in dedicating time and money to imitating an online consumer company.
It took time and targeted marketing to get the C-suite to warm up to the idea. "I needed to get them to understand that we didn't want to be a Google or an Amazon. We wanted to understand how these guys do things so we can learn from them," explains Ramleth.
By 2006, Bechtel was operating in more locations than ever. And for every 100 employees in the U.S. and Europe who retired, the company had only been able to replace 60. "We have to chase the talent around the world," says Ramleth. "That's why we have [corporate] operational centers in Shanghai, Taipei, Bangkok, New Delhi, Mumbai and Warsaw." At the same time, Ramleth found that a third of the people accessing Bechtel's network were non-Bechtel employees, creating a huge intellectual property risk.
The situation was leading to an untenable IT environment. Bechtel wasn't only inviting all manner of nonemployees onto its network. IT deployments took dreadfully long: 30 days to put support in place for a new business project. That was a problem Ramleth's corporate peers could understand. "We didn't want our projects to have to wait for us," Ramleth explains. Ramleth knew Bechtel needed a faster, simpler and more secure way to deploy and support IT applications. For starters, he needed applications he could deliver via the Internet, not Bechtel's intranet (an approach Ramleth's team had taken in building one-off IT systems for two multibillion dollar oil and gas projects in the past). But after several months of trying to tackle the problem by rewriting scads of existing applications, Ramleth realized something more fundamental had to change.
Rewriting all of Bechtel's 200-plus applications—40 percent of them built in-house—was crazy. "It would be too costly, and wouldn't solve everything," Ramleth says. "We needed to shed ourselves of all of the thinking that got us to where we [were]," says Ramleth. "We had to start from the infrastructure up."
To figure out what a new IT backbone might look like, Ramleth and his team followed the money. Ramleth interviewed venture capitalists and learned that they were betting 80 percent to 90 percent of their investments on consumer-related tech, with the remaining sliver of funding going to enterprise IT. "If that's where the investment is going, they [consumer technology companies] are doing something that we definitely have to look at and learn from," says Ramleth.
In fact, Ramleth's search for answers in the consumer tech arena is not unusual, says James Staten, principal analyst with Forrester Research. Today's IT demands require new thinking. "CIOs are being asked to continue to reduce the overall spend on IT," he observes. "They're also being asked to spend more time building new applications and driving flexibility and doing things that transform business." To do it all, something's got to give. "You can't manage IT the same way you've always managed it and empower new flexibility," Staten says. "You have to be able to walk away mentally from old processes and procedures."
Thus, CIOs are no longer satisfied with the "your mess for less" offering from an EDS or IBM. They're looking for inspiration from Google and other Internet-era titans. The consumer technology focus on simplification, standardization and on-demand applications made available via cloud computing holds some clues for how Bechtel and other corporate IT departments might rewire themselves. (Read Finding a Way to the Cloud to learn what other IT and business leaders think.)
For most enterprise IT organizations, however, there's been more talk than action to date, observes Rubin. And whether or not corporate IT catches up to its consumer-tech counterparts is, in large part, dependent on IT leadership. "Historically, the CIO was the gatekeeper. But as IT has moved from "mainframe to client server to all over the place," says Rubin, "you have to start to open the gates."
"In the past we wrote applications for an internal, secure environment—inside the firewall," notes Ramleth. "Now we want to create an environment for applications meant for the Internet, rather than the intranet."
Ramleth, who thinks there's a little geek in everyone dying to defy the status quo, has little hesitancy about creating a next-generation IT delivery model. "I'm passionate about it because I truly believe that we as a company can do business very differently in the future by changing the way we do our IT service offerings," Ramleth says. There's an old adage, popular in the recovery community: If you always do what you always did, you'll always get what you always got. Ramleth repeats it like a mantra. "There's too much change in the world on all fronts to accept that things should always be the same."
Ramleth and his team dedicated nearly a year, beginning in the spring of 2006, to studying 18 companies, including a few nonconsumer companies, which had built their IT infrastructure and applications in the post-Internet era. "We found some tremendous discrepancies between our internal metrics and the metrics these guys were dealing with," Ramleth says.
YouTube, serving up videos to the masses, was paying $10 to $15 per megabit for networking. Bechtel was paying at least 50 times that. One Google system administrator was running approximately 20,000 servers; Bechtel's could manage just 100, which was found to be common in enterprise environments. Amazon offered storage to its individual and corporate customers at 15 cents per gig per month. Bechtel's shelled out nearly 40 times that amount. Salesforce.com upgraded software for its one million users four times a year with minimum downtime and no training. Bechtel couldn't even get all its users on the same version of its software. (For more on Bechtel's benchmarking results, see Bechtel's New Benchmarks)
"If they can do it, why can't we do it?" Ramleth wondered.
The answers provided a road map for PSN. YouTube has lower networking costs because it maintains locations near high-bandwidth areas. Google doesn't need hundreds of employees to run its servers because they're standardized to the hilt. Amazon keeps a lid on storage expenses by making sure its servers are highly utilized. And Salesforce.com offers easy upgrades because it runs one application in one location for a million users.
Bechtel, Ramleth thought, could do some of that. He and his team came up with a plan to incorporate the best practices of those technology powerhouses by building new data centers and networks to support multitenant applications within Bechtel. By Ramleth's calculation, the majority of the project could be paid for by reallocating funds set aside in the regular IT budget for refresh and maintenance work. (Bechtel will not reveal how much the PSN transformation will cost.)
And Ramleth, a native of a Norway who enjoys skiing, motor racing and once held an official powerboat speed world record, wasted no time getting started. "I like speed," he says in a moment of sheer understatement.
Between 2002 and 2006, Bechtel's infrastructure group had consolidated 14 data centers into seven (completely modernizing six of them). Ramleth launched the PSN initiative almost immediately afterward. In 2007, Bechtel built three new standardized data centers in entirely different locations—one in the United States, one in Europe and one in Asia—and began decommissioning the seven that had just been revamped. The company took 30,000 square feet of data-center space down to a couple thousand and built out a totally new network between the three new data centers. "In the past we had brought the network to the data," says Ramleth. "But with the PSN, we wanted to bring the data to the network. We moved closer to the traffic aggregation points."
The IT group also consolidated additional servers, using virtualization to get to 70 percent utilization. (Virtualizing the apps has been a challenge, however. "As we started doing more virtualization, we had to be more sensitive to how applications are designed and developed as well as how we operate them," Ramleth notes. More on that later.) The transformation was tough for the infrastructure team, admits Ramleth. He highlighted the difference between the two infrastructure overhauls for his team and his peers. The first was done to reduce operation costs, pure and simple. The PSN transformation, says Ramleth, "is meant to change the way we can serve business on a global basis." Today, Bechtel has migrated approximately 50 percent to 60 percent of its users to the new environment. "Our total costs are the same, but with a heck of a lot more capacity," Ramleth says. Ten times more, to be exact.
The Service Provider Mind-Set
The infrastructure work, it turns out, was the easy part.
Once the new backbone was in place, Ramleth planned to certify Bechtel's most heavily used applications for the new environment. The ones that made the cut would be offered in a software-as-a-service fashion. Those that didn't would be left to die off as employees and partners using them finished their projects.
Only one problem: The external multitenant application model, which assumes centralized management of applications and data for all users, isn't an obvious fit for Bechtel or other large enterprises.
"The information that we have in our systems is not always ours. We might deal with a partner that has proprietary technology information that they don't want to leave our premises," says Ramleth. "If you have to go to a SaaS provider, you might not any longer know exactly where information is."