Adrian and Jeff (Novell people)..Here, make me feel better...Chevron
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Chevron Takes Control
Energy company launches a broad-based plan to rein in the costs of PCs
By Stuart J. Johnston
Issue date: Nov. 4, 1996
The high cost to corporate America of owning, managing, and supporting PCs is a lot like the
weather--everyone talks about it, but nobody seems to be able to do anything to change it.
For years, IT managers have struggled without much success to rein in the overall cost of owning
PCs. Now, some companies are beginning to take serious steps to reduce those costs, an effort
that--if successful--could produce millions of dollars in savings.
Chevron Corp. appears to be at the forefront of this effort. The San Francisco energy company has
launched an ambitious, broad-based initiative to control costs on the desktop. A major part of that
effort involves standardizing the software the company uses.
"We're focusing on getting smart about how we buy goods and services and finding efficiencies in
how we deal with total-cost-of- ownership issues," says Michael Wolfe, who's in charge of a key
aspect of Chevron's effort.
While estimates of the cost of owning, managing, and supporting a PC vary widely and are
dependent on each company's needs and circumstances, studies indicate that the cost ranges from
$8,000 to $12,000 annually per machine.
Rather than fight the cost issue one brush fire at a time, Chevron instead decided to develop an
overall vision of how to go about cost containment, and has embarked on its program in an
organized and comprehensive fashion.
Chevron hopes to save as much as $50 million a year in ownership costs. That would cut more than
10% from its total IT budget, which InformationWeek estimates to be about $420 million in 1996
(IW, Sept. 9, p. 128).
Trend-Setter
"Chevron is on the leading edge of a trend to make lowering the total cost of ownership a reality by
addressing it across the enterprise," says Rob Enderle, a senior industry analyst at research
company Giga Information Group in Santa Clara, Calif. "Most companies are struggling with the
total-cost-of-ownership issue--but not doing anything broadly about it yet."
To guide and manage Chevron's broad vision, the company created the position of VP of
technology in September, and appointed a 21-year Chevron executive, Don Paul, to the post.
Another company veteran, Sheila Taylor, was appointed at the same time to manage implementation
of two critical portions of Chevron's vision. One involves a "governance model" to detail processes
for picking technologies and deciding how much standardization is necessary. The other is to
implement the company's vision of a distributed computing environment companywide.
Wolfe, an engineer of network software at Chevron Information Technology Co., Chevron's IT
division in San Ramon, Calif., is the release manager for the company's Common Operating
Environment (COE) group. Wolfe's group is in charge of rolling out a set of standard software and
hardware that will be deployed to the majority of the company's PC users worldwide. As release
manager, Wolfe will determine what is included in each version release, set the release schedules,
and provide project management.
Chevron believes that having common software and hardware will provide a number of benefits,
such as the ability to maximize the usefulness of help-desk and technical support personnel by
keeping to a minimum the number of components they need to support. Additional benefits could
come from common training and interfaces for users, standardizing computer programs to eliminate
unpredictable interactions among them, and standardizing file formats to simplify file exchanges
companywide. "We're trying to drive down support costs, and one way to do that is to reduce
diversity," says Wolfe.
As part of the program, Chevron plans to deploy 30,000 to 40,000 copies of Windows 95
worldwide in the next year. The copies of Win95 all are customized in a standard fashion. The
background desktop bitmap and screensaver features a Chevron "Common Operating
Environment" logo.
Chevron has also incorporated its own in-house documentation directly into the Windows help sys-
tem, including guides to help users install all the network options the company supports.
Chevron began implementing COE about two years ago using Windows 3.1, and has deployed
between 3,000 and 4,000 units of Win95 in a pilot project. The company will consider deploying
Windows NT Workstation 4.0 on a custom basis for users who need a more powerful and robust
operating system.
One For All
Chevron also will deploy a standardized set of applications, including Office 95, Visio's graphical
design package, and antivirus software. The company has written a guide in Visual Basic that leads
a user through a simple set of steps to set passwords for Win95, the screensaver, the network, and
mainframes. These steps are expected to reduce help-desk calls.
Another key element is requiring all PC vendors to deliver machines with Chevron's software,
including the customized COE software, installed. Chevron officials figure this will cut the amount of
time technicians have to spend on each machine by four to eight hours.
One IT manager applauds the cost-cutting move. "If they can save four to eight hours per machine,
you've saved $500 to $1,000," says Briscoe Stephens, coordinator for space sciences in the
Advanced Scientific Information Systems group at NASA in Huntsville, Ala. "That's saving
significant money."
Chevron didn't stop at the desktop. The company also will deploy standardized server applications.
Heading the list of server-side changes under COE is a migration from Novell's NetWare to
Microsoft's Windows NT Server during the next two years.
"One thing that contributed to NT winning was that Novell announced they were going to kill Super
NOS," a promised, enhanced version of NetWare, says Wolfe. Chevron also had islands of
Windows NT and Microsoft's BackOffice servers sprouting up around the company. That means
training is less of a challenge than if there were no installed base of NT.
Chevron also decided to use Microsoft's Systems Management Server to handle electronic
software distribution and inventory tasks. The company expects that SMS will be a vital component
in rolling out Win95 to so many desktops in such a short time.
Experts in software distribution agree. "Electronic software distribution is key because it's a very
significant cost-saving tool," says Bill Holder, co-founder and director of operations at Micropath
Inc., a computer asset management consultancy in Bellevue, Wash. "A company division with 2,000
PCs on average can save as much as $1 million by using an electronic software distribution tool."
In keeping with its plan to use mostly Microsoft products, Chevron selected the Exchange
messaging server as its standard E-mail system. While there will be some exceptions for users of
Unix and Internet E-mail products, Chevron is migrating most users to Exchange. The company
already has about 25,000 Microsoft Mail users and is moving other users off of IBM's aging Profs
mail system. More than 1,000 users already are on Exchange and more are moving to the system
each week.
For some companies, relying so heavily on one company for the software to run its business can be
scary--even if that company is Microsoft. "That comes up every time we talk, and the point is you
have to consider all options," says Wolfe. While the current standard for desktop applications is
Microsoft's Office suite, for example, the group's specifications do not refer to products by name or
vendor. "Our vision statement, instead of saying 'Excel,' says 'spreadsheet,' and instead of saying
'Word,' says 'word processor.' We specify generic names in the bundle."
Chevron is negotiating with Microsoft over proposed changes in pricing under its buying contract.
While Wolfe concedes the probability that his company will switch to another vendor is low,
Chevron is talking to Microsoft's leading applications competitors and maintains that the door is still
open for making changes.
"Don't believe we will not be listening to what Corel and Lotus are saying about their suites," he
says. "Microsoft has to be more flexible and, depending on pricing and our negotiations, we might
switch."
Chevron's decision is a big one for both companies. The energy giant spends $3 million to $4 million
annually on Microsoft products, and a decision to switch to Corel or Lotus could cost Microsoft
sales of 20,000 or more units of Office 97.
Another key decision still to be made is the choice of a Web browser. Chevron, which Netscape
Communications recently touted as standardizing on the Navigator browser, may decide by early
next month in favor of Microsoft's Internet Explorer 3.0 instead of Navigator 3.0, according to
Wolfe.
"I would say that it is highly likely that we'll switch to Internet Explorer," he says. "There's a 99%
certainty this is going to happen, so I'm planning for it." One big reason is cost. Because Microsoft is
giving away Internet Explorer 3.0 while Netscape now charges corporate users for Navigator, the
cost differential when spread across 30,000 to 40,000 users comes to about $1 million in savings.
Another factor is that Microsoft plans to build its browser directly into Windows 95 and Windows
NT some time next year, eliminating the need for a separate browser. "Our recommendation was
that we go to Internet Explorer, and those people who need Navigator can use it as a custom,
cost-added option," Wolfe says.
The company's aggressive cost-cutting efforts don't stop with the COE group. For instance,
Chevron used to have 40 different help-desk numbers worldwide. That's been consolidated into
two support centers, in San Ramon and in Houston, that share a single phone number. Local
support teams provide direct support at each Chevron location.
Chevron also is negotiating with PC vendors to move from a purchasing model to a leasing model.
The lease model is called "life cycle management," and is being tested by several major Chevron
operating companies. One company, Chevron Production Downstream, already has leased nearly
5,000 desktops and notebooks under a three-year deal.
The company is considering a three-year leasing cycle that would replace one-third of all PCs each
year so that all users would get the latest hardware every third year. In order to provide more
flexibility for users who really need the freshest technology, each user would also have the option to
completely replace a machine once during those three years.
Micropath's Holder applauds much of Chevron's cost-cutting initiative, particularly the leasing idea.
But he's skeptical that offering users a single upgrade during the course of three years will provide all
the benefits Chevron hopes for. Instead, he says power users should be given new machines every
year and the older machines should be passed down to those who can make do with less-powerful
PCs, an approach called "cascading."
Many users and analysts praise Chevron's overall plan. While a number of companies are doing
some or many of the things that Chevron is doing, few are approaching the total cost of ownership
problem in such a broad-based and organized manner, they say.
So far, Chevron's plan is moving forward and things are working well. But the company still has a
long way to go, and could run into some surprises as it implements its program. One surprise could
come from the Internet and the Web.
"It's an excellent plan, but the question is: 'Can they adapt to the abrupt shifts that are bound to
happen due to the sudden explosion of the Internet?'" asks Frank Dzubeck, president of
Communications Network Architects Inc., an industry consulting firm in Washington.
While Chevron seems to be doing all the right things today, companies need to remember that
cost-cutting is a never-ending journey, not a destination, says Michael Gartenberg, director of
research for desktop operating systems at Gartner Group Inc., an IT advisory firm in Stamford,
Conn. He also notes that the payoff is worth the effort: "If you've got best practices in place for a
well-managed environment, you can reduce your total cost of ownership by as much as 25% to
30%."
It may not add up to doing something about the weather, but for IT managers, it's the next best
thing.
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Joe... |
