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 frontrunners Amazon.com, Google, Salesforce.com and YouTube. After all, these companies have exploited the latest in network design and 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 provider for internal users, subcontractors and business partners.

After researching the Internet's strongest brands, Bechtel scrapped its existing data centers and built three facilities with the latest in server and storage virtualization. Bechtel also designed a 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 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 says. "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, calls 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 outsource its IT infrastructure fully. That may take as long as 10 years, he adds.