Bechtel’s New Benchmarks

In today’s business environment, says Bechtel CIO Geir Ramleth, IT needs to benchmark itself against a new set of peers: successful technology companies that built their IT systems in the Internet era. Doing so is a painful exercise for the ego. “Corporate IT is trying to break the sound barrier, and the Googles and Amazons are supersonic. They’re hypersonic,” says Howard Rubin, president and CEO of Rubin Worldwide and a Gartner senior advisor. But the exercise can yield big returns.

Ramleth researched 18 companies and developed benchmarks against many of them. Among them were: YouTube, Google, Amazon and Salesforce.com.

• Company: YouTube
• Technolgoy: Wide-Area Network
• BENCHMARK*:
• YouTube paid $10-15/megabit
• Bechtel paid $500/megabit
• WHAT BECHTEL LEARNED: It was more than volume discounts from telecom vendors that got YouTube its lower costs. YouTube locates its data centers in places where there’s already a lot of bandwidth, so they don’t have to pay as much for infrastructure.
• Company: Google
• TECHNOLOGY: Servers
• BENCHMARK*:
• Google employed one systems administrator for about 20,000 servers.
• Bechtel employed one systems administrator per 100 servers.
• WHAT BECHTEL LEARNED: Bechtel was building whatever the business wanted, whenever it wanted, wherever it wanted. Google standardized its server infrastructure.
• Company: Amazon
• Technolgoy: Virtualization
• BENCHMARK*:
• Amazon sold storage to external customers for 15 cents/GB/month (estimated).
• Bechtel’s internal storage costs were $3.75/GB/month.
• WHAT BECHTEL LEARNED: Amazon could sell storage cheaply, Ramleth believes, because its servers were more highly utilized.
• Company: Salesforce.com
• Technolgoy: Applications
• BENCHMARK*:
• Salesforce.com provided one version of one application for 1 million users. Upgraded four times/year with minimal downtime or training.
• Bechtel ran 230 applications, up to five versions of each—nearly 800 different application versions altogether. Upgrades and training were constant. No version management.
• WHAT BECHTEL LEARNED:”We’re so far apart from Salesforce, it’s scary,” says Ramleth. His team is converting Bechtel’s 50 most heavily used apps into single-instance software-as-a-service apps run from a Google-like portal.

*Benchmarked costs for Google and YouTube are based on research and estimates by Bechtel in 2006 and may not reflect current numbers.