Rob van Zwieteren, group infrastructure telecommunications manager at Netherlands-based Shell Information Technology International, said the three-year project would tie together Shell operations in 114 countries via a single network infrastructure.
Shell expects to save up to $50m during that period by consolidating multiple telecommunications services deals under a master contract with London-based Cable & Wireless, he said.
Shell's existing network and telecommunications infrastructure "is fragmented across business units, and one of the key savings areas is consolidating contracts with fewer suppliers," van Zwieteren said. Cable & Wireless is to manage the consolidation process.
The two companies are yet to decide how many services providers will still be needed. But van Zwieteren said that settling on a single contract for mobile phone services across Europe was an example of what Shell had in mind.
The deal with Cable & Wireless - which also includes the installation of wide-area network equipment (WAN) - is the second major IT consolidation move by Shell in recent months. In July, it signed a $100m agreement with IBM for hardware that will be used to set up three major data centre hubs around the world.
The new networking infrastructure will connect 21 Shell data centres - all in different countries - over Cable & Wireless's backbone network, said Alistair Mashford, a consultant at the networking vendor.
Shell will have access to Asynchronous Transfer Mode (ATM) technology and frame-relay and IP virtual private network services, Mashford said. He added that the new WAN will use routers from Cisco, with Cisco switches controlling network traffic across LANs tied into the global network.
Cable & Wireless also plans to add carrier equipment from Alcatel and Nortel to its backbone network as part of the project.
Van Zwieteren said that Shell would continue to handle network management operations internally. The network will support systems running enterprise resource planning applications from SAP and JD Edwards, plus Windows 2000-based desktop software used by 300,000 workers.
Shell began screening networking vendors early last year and chose Cable & Wireless over three other finalists, van Zwieteren said. He would not name the losing competitors.
Lisa Henderson, an analyst at TeleChoice, said users could cut costs and simplify management of networks by reducing the number of network services providers they had under contract. But Shell "is putting a lot of reliance on Cable & Wireless now," she said, adding that a phased migration plan would be in order "for a project of this magnitude".