Royal Dutch Shell Group aims to save up to $40m (£27.5m) in five
years by consolidating its global server infrastructure into what
it describes as "an internal application service provider" with
three regional application-hosting "megacentre hubs".
Shell said the move was a "business convergence initiative" aimed
at consolidating its enterprise resource planning software into a
common operating environment. The company has signed a $100m,
five-year deal with IBM for the supply of storage systems to
underpin the megacentre project.
Alan Matula, Shell's general manager of projects and solutions,
said that total cost of ownership savings will be made in IT
procurement, more efficient IT service provision and economies
resulting from convergence of software platforms. He estimated that
cost savings from moving to the new environment would be 20% - a
$30m-$40m saving over five years.
"We are building an internal ASP, consolidating the hosting of all
applications at server level - SAP and JD Edwards ERP modules
initially then moving to general application hosting for all
business functions," said Matula.
"This model supports our ever-increasing drive for business
convergence, which we believe will improve service performance,
provide an extended reach, achieve greater standardisation and
reduce costs while improving quality."
Shell's proposed megacentres will be located at The Hague in
Europe, Kuala Lumpur in Asia and Houston in the US. They will
support the company's operations in 130 countries worldwide.
Katy Ring, director of research in e-business and e-services at
analyst firm Ovum, said, "This reflects changes in the market
generally. It makes sense to consolidate datacentres in this way -
it reduces costs and lowers headcounts."
Eleanor Christopher, an analyst with Gartner Group, said, "We are
seeing this concept crop up with lots of multinationals that have
distributed business units where key functions are duplicated
around the globe. We call it the enterprise ASP model.
"It is an evolution of the shared service centre which leverages
the Internet. Compared to the true ASP model, it lacks the cost
benefits associated with someone else owning the application
hosting but there are still advantages to be gained."
IBM will provide Shell with enterprise storage servers, tape drives
and libraries, storage area network switches and Tivoli storage
management software.
antony.adshead@rbi.co.uk