Information Technology Reference
In-Depth Information
INFORMATION
Chevron Takes to the Clouds
The importance of the Internet and Web is illustrated in the many
applications discussed in this chapter. However, their importance
may far exceed the sum of these applications. The Internet and the
Web are quickly becoming equivalent with computing, especially
with the rise of Web 2.0 technologies, which provides a platform for
computing. This is evidenced by online applications such as Google
Docs and Adobe Photoshop Express, and extends to the way busi-
nesses are managing their information systems. Take Chevron as
an example.
Chevron Corporation is based in San Ramon, California and is
one of the world's leading energy companies. It employs more
than 55,000 people in 180 countries to produce and transport
crude oil and natural gas and to refine, market, and distribute fuels
and energy products. Chevron works with many suppliers, each of
which provides the company with continuously updated editions of
their products and services catalogs. Chevron negotiates the price
of the items and services that they purchase from the suppliers.
Managing supplier catalogs and negotiating prices while staying
within a budget has been such a chore that Chevron, like most
other large enterprises, decided to pay an outside information
systems company millions of dollars annually to manage the
responsibility.
The complicated process of negotiating prices with suppliers
became unwieldy for Chevron and its catalog management ser-
vices provider. Most negotiating was done through e-mail with
spreadsheet attachments. The company hired by Chevron to man-
age the process acted as the middleman. Eventually, it became
apparent that the system was ineffective and costly. Chevron
searched for an alternative and found it in a new service from
Ketera Technologies.
Ketera Technologies provides on-demand services that the
company calls “spend management solutions.” According to its
Web site
(www.ketera.com),
Ketera provides “applications and ser-
vices needed to control and reduce corporate spending at a low
cost of ownership.” The application and services that Ketera pro-
vides run on Ketera servers maintained by Ketera staff and deliv-
ered to clients over the Internet through a Web browser.
Using Ketera's services over the Web, Chevron suppliers can
change prices, which Chevron executives then approve or adjust
to stay in budget. Ketera's service provides numerous tools that
Chevron can use to analyze and control its spending. Most impor-
tantly, since the service is provided on the Web, all involved parties
have convenient access to a centralized system, allowing Chevron
to negotiate with all suppliers from one location and using one tool.
Ketera is one of many software companies providing software
services over the Internet. Recall from previous chapters that this
method of delivering software is referred to as software as a ser-
vice, or SaaS. Increasing numbers of businesses of all sizes are
turning to SaaS. One compelling reason involves accounting. To
stay profitable in a challenging economy, many companies are
reducing capital expenditures. Software purchases are classified
as capital expenditures, while Web- delivered software services
are not. Web-delivered software is sold on a subscription basis,
and classified by accountants as a maintenance expense, an area
of the budget that is not being cut as much as capital expenses.
Internet security has also developed to the point where compa-
nies are more confident that the data being managed will remain
private and secure as it travels the Internet. SaaS vendors are pro-
viding clients with adequate assurances that the data will remain
safe in their hands.
Industry analysts expect that by 2011 the worldwide market for
SaaS will grow from $6.3 billion to $19.3 billion. This estimate and
the rapid increase of offerings of Web-based software for both per-
sonal and business use indicate a strong migration from private
ownership of software and information systems to a model in
which software and information systems are supplied as subscrip-
tion services delivered over the Internet. This is what defines cloud
computing. Cloud computing will make the Internet and Web more
important to businesses and society than ever.
Discussion Questions
1.
What benefits and dangers are presented by SaaS and cloud
computing?
2.
Name two reasons companies are turning to SaaS.
Critical Thinking Questions
1.
Do you think SaaS suffers from any limitations because it is
delivered over the Internet? What are they?
2.
How might the increasing number of software services and
data being delivered over the Internet affect its infrastructure?
Sources:
Vara, Vauhini, “Web-Based Software Services Take Hold,” The Wall
StreetJournal, May 15, 2007, Page B3; Baker, Stephen, “Google and the
Wisdom of Clouds,” BusinessWeek, December 24, 2007, Pages 49-55; Ketera
Web site,
www.ketera.com,
accessed May 6, 2008.
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