CIOIN

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,' (Latin for blank slate) 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 multi-tenant 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 US 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 non-employees 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 multi-billion 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."

The CIO Mind over Mindset

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. 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."

Better Benchmarks

Ramleth and his team dedicated nearly a year, beginning in the spring of 2006, to study 18 companies, including a few non-consumer 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 (about Rs 500 to Rs 750) 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 (about Rs 7.50) 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 roadmap 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 datacenters and networks to support multi-tenant applications within

IT Infrastructure.

Speed is the key

Geir Ramleth, CIO, Bechtel, believes that the SaaS model for application delivery will enable the company to deliver new information-based services. Bechtel. By Ramleth's calculation, the majority of the project could be paid for by re-allocating 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 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.

Speed is the key

Between 2002 and 2006, Bechtel's infrastructure group had consolidated 14 datacenters into seven (completely modernizing six of them). Ramleth launched the PSN initiative almost immediately afterward. In 2007, Bechtel built three new standardized datacenters 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 datacenter space down to a couple thousand and built out a totally new network between the three new datacenters. "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. 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.

Acquiring 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 SaaS fashion. Those that didn't would be left to die off as employees and partners using them finished their projects.

There's only one problem: the external multi-tenant application model, which assumes centralized management of apps 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."

It's also tough for a big, often Byzantine business like Bechtel to alter its processes to align with an external SaaS offering. "The change would just be too big," says Ramleth. "Because of the highly distributed way we operate, it would be hard for us initially to integrate a third-party SaaS offering with our work processes and embedded applications." In addition, he says, there are industry- or enterprise-specific applications, like Bechtel's proprietary suite of procurement applications, that aren't available from a reliable SaaS vendor today.

Google-Like Apps

The solution became for Bechtel IT to become its own SaaS provider to Bechtel's project teams. By the end of next year, Ramleth expects to convert and certify 50 of Bechtel's most heavily used applications for operation in the new environment and offer them to users via Internet-based portal technology that includes Microsoft SharePoint.

Google-Like Apps

The IT organization studied software usage patterns and found that for any given application, 80 percent of users weren't doing heavy transactions. They were mainly trying to get some information (such as the status of a project) or perform a minimal operation (such as make a purchase). Ramleth's team realized this majority of users could benefit from having access to smaller pieces of big applications via the portal. "You can make a few screens available to a user who otherwise would have had a myriad of applications to go to," says Ramleth. "It wasn't rocket science, but we finally got that." The goal is to create a Google-like experience for enterprise application users. Log in to the portal, pick a task and get it done in a few simple steps rather than logging in to an assortment of applications. "The portal is really where we'll get the benefits of the consumerization approach," says Ramleth. He expects that new versions of applications and pieces of applications delivered via the portal will lead to increased productivity and reduced training for users.

Some users will still need the full version of certain applications — such as computer-aided design software — and IT will continue to support them. "Those designers aren't necessarily nomadic users," says Ramleth. "We'll keep the larger-scale deployment models for those stationary heavy users."

So far, IT has converted about a dozen applications to the new environment and made parts of many more available via the portal. Microsoft Exchange, which used to run on more than 100 server environments around the world, is being consolidated via the PSN. InfoWorks, Bechtel's workflow and document management system — which used to be deployed in a distributed fashion project-by-project — has been rewritten to operate on a centralized, multi-tenant platform.

The development team has had to keep in mind the requirements of the new, highly virtualized back-end when rolling out new Internet-based versions of Bechtel applications. "You have to use technologies that are already certified for use in the virtual environment. You have to tune your databases differently. You have to write and architect applications that can work in a multi-processor environment and [according to a] dynamic utilization model."

In some cases, IT is rewriting the old applications. In others, they're transitioning the legacy systems to the Internet using the virtual application server from Citrix.

Ramleth knows that some applications will be harder to convert to the new environment than others. While there are no "show-stoppers," he says that figuring out how to rework Bechtel's in-house procurement application is going to be particularly difficult. "We can't lean on the vendor community for help," he says. What's more, "it's as big an application as a full-size ERP implementation. But we believe that it's a big differentiator for us in the marketplace."

DealingWith Disruption

Ramleth's team is migrating employees and partners to the PSN portal as they are assigned to new projects. Ten thousand users globally are using services within the PSN today, and Ramleth has the complete deployment wrapping up by the end of 2009. It's not an easy transformation for any company. "If you look at Google or Amazon, they were able to build their infrastructure with no legacy," says Forrester's Staten. "Most organizations just find it too hard to operate in the flat Google environment because they have to completely rewrite all of their applications," the way Bechtel is doing.

"To be totally honest," Ramleth says about the apps transformation, "this is where we still have a lot more work to do."

DealingWith Disruption

It's been a period of disruptive change for IT. "Without change, life would be boring," Ramleth says, but he realizes that many people in his organization hold a dissenting view. The first issue that surfaced was security. "When you start saying, 'We should think more like an external provider,' the first thing people say is, 'Let's be careful with what we're doing in security.'"

Ramleth made a deal with his security team - a hand-shake pact that before anyone spent any significant amount of money on PSN, there would be a clear view of how security might work. By March 2007, when PSN work began in earnest, the security team had embraced a new way of thinking. Bechtel began working with Juniper Networks on a policy-based security model for the PSN. It's not perfect yet, but it's progressing. "It's a big change from having stuff inside or outside a firewall to this model we call any-to-any, secure-when-needed," says Ramleth.

"What has been harder is getting our IT people to accept these larger changes," he continues. "IT people are not the risk takers of the world." And for many at Bechtel, the PSN represents big professional and personal risk. Specialized skills they spent years perfecting are seemingly going by the wayside in a more commoditized, cloud-based IT world (although the new technology, as Ramleth sees it, brings with it additional opportunities as well).

Ramleth identifies three ways employees respond to change. "You have some people that just take you on blind faith and say, 'This makes sense, let's figure out how to do this,'" he says. Next, "there are some early followers who say, 'I would like to be there, but tell me that I am not going to get hurt.' They don't need too much convincing." In the third group "are the people who become part of the problem rather than part of the solution."

The key to winning over the staff is to look for individuals in the latter group whom you can convert from pointing out everything that's wrong with the new plan to helping you figure out what has to change to make it right. Notes Ramleth: "I often say to people, 'I don't know of anybody that embraced change that ever got hurt by it. Most people that embrace change benefit from it.'"

Experts say such a transformation can benefit the larger IT group, "The enterprise can actually start to do things quite differently," says Rubin. "[It can] take all that time and money tied up in technical specialization and leverage that massive amount of new computing power to create business differentiation. It frees up money and it frees up focus."

Everything as a Service

Everything as a Service

If Bechtel is able to get its big applications up and running in the new environment by the end of next year, that will be a success. But it's just a baby step, says Ramleth. "If you say the ideal world is when everything is done as a service — computing, storage, software, X-as-a-service — and you look at where enterprises are today, we have a long road to go," says Ramleth.

He imagines a 10-step process. Steps one and two were to build the foundation—three new highly standardized and virtualized datacenters. The next few will be to transition the old applications into the new environment. Then comes the hardest part: getting new business value from the PSN. Or as Ramleth puts it, "what it is that you can do now that you never did before."

One of those new things will be to offer partners and customers lifecycle information management. Today, there's no comprehensive capture of information on Bechtel's massive, years-long projects. But if the PSN becomes a part of day-to-day business, says Ramleth, "we can really start doing cross-company integration."

For example, Bechtel recently built a polyethylene plant in China. Once the PSN is fully deployed and integrated into Bechtel's business operations (by 2011 or 2012), Bechtel could help the plant owner implement its IT infrastructure and applications so that all of the information that was gathered while Bechtel was on the job is automatically integrated into the customer's IT systems. If there's a problem with, say, a valve, someone would be able to query the plant's SAP maintenance software and find out who the manufacturer is, what the specs are and how to fix the problem. Better yet, as more viable "X-as-a-service" offerings become available from third-party providers, Bechtel will be in a better position to plug and play. "Could we someday buy storage from Amazon, for example?" asks Ramleth. It's possible, he says. With the in-house transformation behind Bechtel, "making that leap will be easier."

"We see what we're doing with the PSN — creating our own internal proprietary cloud — as an enabler and precursor to [embracing] third-party SaaS offerings in the future," he says. "We'll have already broken down our old operating model and reduced internal complexity." Meanwhile, Ramleth no longer gets blank stares when he talks to his executive peers about incorporating the best practices of YouTube, Google, Amazon and Salesforce.com. Not only that, he reports, "I'm getting a heck of a lot more interest from CIOs asking how they can do this. Maybe they're starting to come into some of the same issues we were, or maybe I'm just articulating it better."

Ramleth is convinced that IT leaders who wait to pursue similar strategies will be at a disadvantage down the road, as they continue to build more complexity and resource demands into their current environments instead of systematically trying to reduce that complexity and increase efficiency. "You have to start opening up a little to this way of thinking so you can start to transition now, rather than making it an expensive forklift operation down the road."

If the day comes when all computing moves to the cloud, at least Bechtel, Ramleth insists, won't have to start from scratch.