Call it the CIO "clean slate" fantasy.\n\nRelated Links\nFinding a Way to the Cloud\n\nBechtel's New Benchmarks\n\nFrom NetworkWorld:The Google-ization of Bechtel\n\nIf I were starting from scratch, what kind of IT systems would I build to support my \n\nbusiness today?\n\nFor most IT leaders, bound by long-standing infrastructure choices and loads of legacy \n\nsystems, it's little more than a parlor game. For Geir Ramleth, however, the question \n\nprovided the foundation to a new model for delivering corporate IT services.\n\nRamleth isn't the IT leader for some hot, new startup. He's the senior vice president and \n\nCIO for Bechtel, the construction and engineering company that got its start 110 years ago \n\nbuilding America's western railroads and later made a big splash helping raise the Hoover \n\nDam. "We said, If we started Bechtel today, would we do IT in the same way we're doing it \n\nnow?" says Ramleth. "The answer was no."\n\nWhen Ramleth first asked the question more than three years ago, the company had \njust completed a major initiative to streamline IT systems, which had cut costs by nearly 30 \n\npercent. But with Bechtel's projects increasingly executed in far-flung geographic \n\nlocations, from Santiago to Shanghai\u2014and with its systems being accessed by thousands \n\nof temp workers, customers, even competitors\u2014Ramleth knew a more drastic shift in how \n\nIT services are delivered would be necessary to support the company's complex, distributed \n\nbusiness model.\n\nStarting with that imagined technology "tabula rasa," Ramleth took his cues from some \n\nreal-life IT pioneers who, unlike most corporate IT organizations, could take advantage of \n\nan actual clean slate when building their technology platforms. He incorporated \n\nhigh-bandwidth networking practices from companies such as YouTube, the standardized server approach of Google, extreme virtualization techniques from Amazon, and the multitenant \n\napplication support strategy of Salesforce.com, among others.\n\nThe result is the Project Services Network (PSN), an infrastructure to apps overhaul of \n\nBechtel's technology environment that Ramleth says will provide secure, ubiquitous, \n\nsimplified and rapidly deployable access to corporate and customer information for any user \n\naround the globe who needs it. Ramleth calls his approach the "consumerization of the \n\ncomputing environment"\u2014an internal cloud-computing infrastructure serving up in-house \n\napplications on demand. Others say it's a sign of the IT times.\n\n"It's really in vogue right now if you're overseeing enterprise IT to look at these upstarts \n\nthat are talking about how they run hundreds of thousands of servers," says Howard Rubin, \n\npresident and CEO of Rubin Worldwide and a Gartner senior advisor. "As corporate IT bemoans \n\nthe issues of virtualizing or large-scale standardization, these younger companies do it all \n\nas a matter of course. CIOs are starting to wise up and look at what they're doing right."\n\nAn Old Company \nNeeds New Tricks\n\n"That's not our business. That's not what we do."\n\nThat was the reaction from Bechtel's corporate management when Ramleth came to them with his \n\nbig idea: To benchmark IT not against construction or engineering industry peers\u2014or \n\neven global enterprises of a similar size\u2014but against successful companies in the \n\nInternet consumer space. They couldn't immediately imagine any benefit in dedicating time \n\nand money to imitating an online consumer company.\n\nIt took time and targeted marketing to get the C-suite to warm up to the idea. "I needed to \n\nget them to understand that we didn't want to be a Google or an Amazon. We wanted to \n\nunderstand how these guys do things so we can learn from them," \nexplains Ramleth.\n\nBy 2006, Bechtel was operating in more locations than ever. And for every 100 employees in \n\nthe U.S. and Europe who retired, the company had only been able to replace 60. "We have to \n\nchase the talent around the world," says Ramleth. "That's why we have [corporate] \n\noperational centers in Shanghai, Taipei, Bangkok, New Delhi, Mumbai and Warsaw." At the same \n\ntime, Ramleth found that a third of the people accessing Bechtel's network were non-Bechtel \n\nemployees, creating a huge intellectual property risk.\n\nThe situation was leading to an untenable IT environment. Bechtel wasn't only inviting all \n\nmanner of nonemployees onto its network. IT deployments took dreadfully long: 30 days to put \n\nsupport in place for a new business project. That was a problem Ramleth's corporate peers \n\ncould understand. "We didn't want our projects to have to wait for us," Ramleth explains.\nRamleth knew Bechtel needed a faster, simpler and more secure way to deploy and support IT \n\napplications. For starters, he needed applications he could deliver via the Internet, not \n\nBechtel's intranet (an approach Ramleth's team had taken in building one-off IT systems for \n\ntwo multibillion dollar oil and gas projects in the past). But after several months of \n\ntrying to tackle the problem by rewriting scads of existing applications, Ramleth realized \n\nsomething more fundamental had to change.\n\nRewriting all of Bechtel's 200-plus applications\u201440 percent of them built \n\nin-house\u2014was crazy. "It would be too costly, and wouldn't solve everything," Ramleth \n\nsays. "We needed to shed ourselves of all of the thinking that got us to where we [were]," \n\nsays Ramleth. "We had to start from the infrastructure up."\n\nTo figure out what a new IT backbone might look like, Ramleth and his team followed the \n\nmoney. Ramleth interviewed venture capitalists and learned that they were betting 80 percent \n\nto 90 percent of their investments on consumer-related tech, with the remaining \n\nsliver of funding going to enterprise IT. "If that's where the investment is going, they \n\n[consumer technology companies] are doing something that we definitely have to look at and \n\nlearn from," says Ramleth.\n\nIn fact, Ramleth's search for answers in the consumer tech arena is not unusual, says James \n\nStaten, principal analyst with Forrester Research. Today's IT demands require new thinking. \n\n"CIOs are being asked to continue to reduce the overall spend on IT," he observes. "They're \n\nalso being asked to spend more time building new applications and driving flexibility and \n\ndoing things that transform business." To do it all, something's got to give. "You can't \n\nmanage IT the same way you've always managed it and empower new flexibility," Staten says. \n\n"You have to be able to walk away mentally from old processes and procedures."\n\nThus, CIOs are no longer satisfied with the "your mess for less" offering from an EDS or \n\nIBM. They're looking for inspiration from Google and other Internet-era titans. The consumer \n\ntechnology focus on simplification, standardization and on-demand applications made available via cloud \n\ncomputing holds some clues for how Bechtel and other corporate IT departments might rewire \n\nthemselves. (Read Finding a Way to the Cloud to learn what other IT and business leaders think.) \n\nFor most enterprise IT organizations, however, there's been more talk than action to date, \n\nobserves Rubin. And whether or not corporate IT catches up to its consumer-tech counterparts \n\nis, in large part, dependent on IT leadership. "Historically, the CIO was the gatekeeper. \n\nBut as IT has moved from "mainframe to client server to all over the place," says Rubin, \n\n"you have to start to open the gates."\n\n"In the past we wrote applications for an internal, secure environment\u2014inside the \n\nfirewall," notes Ramleth. "Now we want to create an environment for applications meant for \n\nthe Internet, rather than the intranet."\n\nRamleth, who thinks there's a little geek in everyone dying to defy the status quo, has \n\nlittle hesitancy about creating a next-generation IT delivery model. "I'm passionate about \n\nit because I truly believe that we as a company can do business very differently in the \n\nfuture by changing the way we do our IT service offerings," Ramleth says. There's an old \n\nadage, popular in the recovery community: If you always do what you always did, you'll \n\nalways get what you always got. Ramleth repeats it like a mantra. "There's too much change \n\nin the world on all fronts to accept that things should always be the same."\n\nBetter Benchmarks\n\nRamleth and his team dedicated nearly a year, beginning in the spring of 2006, to studying \n\n18 companies, including a few nonconsumer companies, which had built their IT infrastructure \n\nand applications in the post-Internet era. "We found some tremendous discrepancies between \n\nour internal metrics and the metrics these guys were dealing with," Ramleth says.\n\nYouTube, serving up videos to the masses, was paying $10 to $15 per megabit for networking. \n\nBechtel was paying at least 50 times that. One Google system administrator was running \n\napproximately 20,000 servers; Bechtel's could manage just 100, which was found to be common \n\nin enterprise environments. Amazon offered storage to its individual and corporate customers \n\nat 15 cents per gig per month. Bechtel's shelled out nearly 40 times that amount. \n\nSalesforce.com upgraded software for its one million users four times a year with minimum \n\ndowntime 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) \n\n"If they can do it, why can't we do it?" Ramleth wondered.\n\nThe answers provided a road map for PSN. YouTube has lower networking costs because it \n\nmaintains locations near high-bandwidth areas. Google doesn't need hundreds of employees to \n\nrun its servers because they're standardized to the hilt. Amazon keeps a lid on storage \n\nexpenses by making sure its servers are highly utilized. And Salesforce.com offers easy \n\nupgrades because it runs one application in one location for a million users.\n\nBechtel, Ramleth thought, could do some of that. He and his team came up with a plan to \n\nincorporate the best practices of those technology powerhouses by building new data centers \n\nand networks to support multitenant applications within Bechtel. By Ramleth's calculation, \n\nthe majority of the project could be paid for by reallocating funds set aside in the regular \n\nIT budget for refresh and maintenance work. (Bechtel will not reveal how much the PSN \n\ntransformation will cost.)\n\nAnd Ramleth, a native of a Norway who enjoys skiing, motor racing and once held an official \n\npowerboat speed world record, wasted no time getting started. "I like speed," he says in a \n\nmoment of sheer understatement.\n\nBetween 2002 and 2006, Bechtel's infrastructure group had consolidated 14 data centers into \n\nseven (completely modernizing six of them). Ramleth launched the PSN initiative almost \n\nimmediately afterward. In 2007, Bechtel built three new standardized data centers in \n\nentirely different locations\u2014one in the United States, one in Europe and one in \n\nAsia\u2014and began decommissioning the seven that had just been revamped. The company took \n\n30,000 square feet of data-center space down to a couple thousand and built out a totally \n\nnew network between the three new data centers. "In the past we had brought the network to \n\nthe data," says Ramleth. "But with the PSN, we wanted to bring the data to the network. We \n\nmoved closer to the traffic aggregation points."\n\nThe IT group also consolidated additional servers, using virtualization to get to 70 percent \n\nutilization. (Virtualizing the apps has been a challenge, however. "As we started doing more \n\nvirtualization, we had to be more sensitive to how applications are designed and developed \n\nas well as how we operate them," Ramleth notes. More on \nthat later.)\nThe transformation was tough for the infrastructure team, admits Ramleth. He highlighted the \n\ndifference between the two infrastructure overhauls for his team and his peers. The first \n\nwas done to reduce operation costs, pure and simple. The PSN transformation, says Ramleth, \n\n"is meant to change the way we can serve business on a global basis." \nToday, Bechtel has migrated approximately 50 percent to 60 percent of its users to the new \n\nenvironment. "Our total costs are the same, but with a heck of a lot more capacity," Ramleth \n\nsays. Ten times more, to be exact.\n\nThe Service Provider\nMind-Set\n\nThe infrastructure work, it turns out, was the easy part.\n\nOnce the new backbone was in place, Ramleth planned to certify Bechtel's most heavily used \n\napplications for the new environment. The ones that made the cut would be offered in a \n\nsoftware-as-a-service fashion. Those that didn't would be left to die off as employees and \n\npartners using them finished their projects.\n\nOnly one problem: The external multitenant application model, which assumes centralized \n\nmanagement of applications and data for all users, isn't an obvious fit for Bechtel or other \n\nlarge enterprises.\n\n"The information that we have in our systems is not always ours. We might deal with a \n\npartner that has proprietary technology information that they don't want to leave our \n\npremises," says Ramleth. "If you have to go to a SaaS provider, you might not any longer \n\nknow exactly where information is."\n\nIt's also tough for a big, often Byzantine business like Bechtel to alter its processes to \n\nalign with an external SaaS offering. "The change would just be too big," says Ramleth. \n\n"Because of the highly distributed way we operate, it would be hard for us initially to \n\nintegrate a third-party SaaS offering with our work processes and embedded applications." In \n\naddition, he says, there are industry- or enterprise-specific applications, like Bechtel's \n\nproprietary suite of procurement applications, that aren't available from a reliable SaaS \n\nvendor today.\n\nThe solution became for Bechtel IT to become its own SaaS provider to Bechtel's project \n\nteams. It's a position Ramleth may be predisposed to. In 1995, he started and ran an ISP \n\ncalled Genuity, funded by Bechtel, which provided high-speed Internet solutions for \n\nmid-to-large-sized organizations (Genuity was acquired by GTE in 1997). "Until we have \n\n[vendors] with applications and service models that work in our industry, we can learn from \n\nother guys [in the SaaS industry] about how to do it ourselves." (Ramleth is one of 12 CIOs \n\ninducted this month into the CIO Hall of Fame. Read more about him and other newly selected Hall of Famers)\n\nBy the end of next year, Ramleth expects to convert and certify 50 of Bechtel's most heavily \n\nused applications for operation in the new environment and offer them to users via \n\nInternet-based portal technology that includes Microsoft SharePoint.\n\nGoogle-Like Apps\n\nThe IT organization studied software usage patterns and found that for any given \n\napplication, 80 percent of users weren't doing heavy transactions. They were mainly trying \n\nto get some information (such as the status of a project) or perform a minimal operation \n\n(such as make a purchase). Ramleth's team realized this majority of users could benefit from \n\nhaving access to smaller pieces of big applications via the portal. "You can make a few \n\nscreens available to a user who otherwise would have had a myriad of applications to go to," \n\nsays Ramleth. "It wasn't rocket science, but we finally got that."\n\nThe goal is to create a Google-like experience for enterprise application users. Log in to \n\nthe portal, pick a task and get it done in a few simple steps rather than logging in to an \n\nassortment of applications. "The portal is really where we'll get the benefits of the \n\nconsumerization approach," says Ramleth. He expects that new versions of applications and \n\npieces of applications delivered via the portal will lead to increased productivity and \n\nreduced training for users.\n\nSome users will still need the full version of certain applications\u2014such as \n\ncomputer-aided design software\u2014and IT will continue to support them. "Those designers \n\naren't necessarily nomadic users," says Ramleth. "We'll keep the larger-scale deployment \n\nmodels for those stationary heavy users."\n\nSo far, IT has converted about a dozen applications to the new environment and made parts of \n\nmany more available via the portal. Microsoft Exchange, which used to run on more than 100 \n\nserver environments around the world, is being consolidated via the PSN. InfoWorks, \n\nBechtel's workflow and document management system\u2014which used to be \ndeployed in a \n\ndistributed fashion project-by-project\u2014has \nbeen rewritten to operate on a \n\ncentralized, multitenant platform.\n\nThe development team has had to keep in mind the requirements of the new, highly virtualized \n\nback-end when rolling out new Internet-based versions of Bechtel applications. "You have to \n\nuse technologies that are already certified for use in the virtual environment. You have to \n\ntune your databases differently. You have to write and architect applications that can work \n\nin a multiprocessor environment and [according to a] dynamic utilization model."\n\nIn some cases, IT is rewriting the old applications. In others, they're transitioning the \n\nlegacy systems to the Internet using the virtual application server from Citrix.\n\nRamleth knows that some applications will be harder to convert to the new environment than \n\nothers. While there are no "show-stoppers," he says that figuring out how to rework \n\nBechtel's in-house procurement application is going to be particularly difficult. "We can't \n\nlean on the vendor community for help," he says. What's more, "it's as big an application as \n\na full-size ERP \n\nimplementation. But we believe that it's a big differentiator for us in the \n\nmarketplace."\n\nRamleth's team is migrating employees and partners to the PSN portal as they are assigned to \n\nnew projects. Ten thousand users globally are using services within the PSN today, and \n\nRamleth has the complete deployment wrapping up by the end of 2009. It's not an easy \n\ntransformation for any company. "If you look at Google or Amazon, they were able to build \n\ntheir infrastructure with no legacy," says Forrester's Staten. "Most organizations just find \n\nit too hard to operate in the flat Google environment because they have to completely \n\nrewrite all of their applications," the way Bechtel is doing. "But what they need to do now \n\nis look at their IT portfolio and start segmenting it into things that have to still be done \n\nthe old way, and things that can be transformed."\n\n"To be totally honest," Ramleth says about the application transformation, "this is where we \n\nstill have a lot more work to do."\n\nDealing With Disruption\n\nIt's been a period of disruptive change for IT. "Without change, life would be boring," \n\nRamleth says, but he realizes that many people in his organization hold a dissenting view.\nThe first issue that surfaced was security. "When you start saying, 'We should think more \n\nlike an external provider,' the first thing people say is, 'Let's be careful with what we're \n\ndoing in security.'"\n\nRamleth made a deal with his security team\u2014a hand-shake pact that before anyone spent \n\nany significant amount of money on PSN, there would be a clear view of how security might \n\nwork. So while other teams researched the new infrastructure and applications environment, \n\nsecurity did its own studies. By March 2007, when PSN work began in earnest, the security \n\nteam had embraced a new way of thinking. Bechtel began working with Juniper Networks on a \n\npolicy-based security model for the PSN. It's not perfect yet, but it's progressing. "It's a \n\nbig change from having stuff inside or outside a firewall to this model we call any-to-any, \n\nsecure-when-needed," says Ramleth.\n\n"What has been harder is getting our IT people to accept these larger changes," he \n\ncontinues. "IT people are not the risk takers of the world." And for many at Bechtel, the \n\nPSN represents big professional and personal risk. Specialized skills they spent years \n\nperfecting are seemingly going by the wayside in a more commoditized, cloud-based IT world (although the new technology, as Ramleth sees it, brings \n\nwith it additional opportunities as well). \n\nRamleth identifies three ways employees respond to change. "You have some people that just \n\ntake you on blind faith and say, 'This makes sense, let's figure out how to do this,'" he \n\nsays. Next, "there are some early followers who say, 'I would like \nto be there, but tell me \n\nthat I am not going to get hurt.' They don't need too much convincing." In the third group \n\n"are the people who become part of the problem rather than part of the solution."\n\nThe key to winning over the staff is to look for individuals in the latter group whom you \n\ncan convert from pointing out everything that's wrong with the new plan to helping you \n\nfigure out what has to change to make it right. Notes Ramleth: "I often say to people, 'I \n\ndon't know of anybody that embraced change that ever got hurt by it. Most people that \n\nembrace change benefit from it.'"\n\nExperts say such a transformation can benefit the larger IT group, even if it's unsettling \n\nfor individuals. "The enterprise can actually start to do things quite differently," says \n\nRubin. "[It can] take all that time and money tied up in technical specialization and \n\nleverage that massive amount of new computing power to create business differentiation. It \n\nfrees up money and it frees up focus."\n\nEverything as a Service\n\nIf Bechtel is able to get its big applications up and running in the new environment by the \n\nend of next year, that will be a success. But it's just a baby step, says Ramleth.\n"If you say the ideal world is when everything is done as a service\u2014computing, \n\nstorage, software, X-as-a-service\u2014and you look at where enterprises are today, we have \n\na long road to go," says Ramleth.\n\nHe imagines a 10-step process. Steps one and two were to build the foundation\u2014three \n\nnew highly standardized and virtualized data centers. The next few will be to transition the \n\nold applications into the new environment. Then comes the hardest part: getting new business \n\nvalue from the PSN. Or as Ramleth puts it, "what it is that you can do now that you never \n\ndid before."\n\nOne of those new things will be to offer partners and customers lifecycle information \n\nmanagement. Today, there's no comprehensive capture of information on Bechtel's massive, \n\nyears-long projects. But if the PSN becomes a part of day-to-day business, says Ramleth, "we \n\ncan really start doing cross-company integration."\n\nFor example, Bechtel recently built a polyethylene plant in China. Once the PSN is fully \n\ndeployed and integrated into Bechtel's business operations (by 2011 or 2012), Bechtel could \n\nhelp the plant owner implement its IT infrastructure and applications so that all of the \n\ninformation that was gathered while Bechtel was on the job is automatically integrated into \n\nthe customer's IT systems. If there's a problem with, say, a valve, someone would be able to \n\nquery the plant's SAP maintenance software and find out who the manufacturer is, what the \n\nspecs are and how to fix the problem. Better yet, as more viable "X-as-a-service" offerings \n\nbecome available from third-party providers, Bechtel will be in a better position to plug \n\nand \nplay. "Could we someday buy storage from Amazon, for example?" asks Ramleth. It's \n\npossible, he says. With the in-house transformation behind Bechtel, "making that leap will \n\nbe easier."\n\n"We see what we're doing with the PSN\u2014creating our own internal proprietary \n\ncloud\u2014as an enabler and precursor to [embracing] third-party SaaS offerings in the \n\nfuture," he says. "We'll have already broken down our old operating model and reduced \n\ninternal complexity."\nMeanwhile, Ramleth no longer gets blank stares when he talks to \nhis executive peers about \n\nincorporating the best practices of YouTube, Google, Amazon and Salesforce.com. Not only \n\nthat, he reports, "I'm getting a heck of a lot more interest from CIOs asking how they can \n\ndo this. Maybe they're starting to come into some of the same issues we were, or maybe I'm \n\njust articulating \nit better."\n\nRamleth is convinced that IT leaders who wait to pursue similar strategies will be at a \n\ndisadvantage down the road, as they continue to build more complexity and resource demands \n\ninto their current environments instead of systematically trying to reduce that complexity \n\nand increase efficiency. "You have to start opening up a little to this way of thinking so \n\nyou can start to transition now, rather than making it an expensive forklift operation down \n\nthe road."\n\nIf the day comes when all computing moves to the cloud, at least Bechtel, Ramleth insists, \n\nwon't have to start from scratch.