Two years ago, the CEO of one of the world's largest corporations laid some very tough love on his 500 top managers. Despite having annual revenue of about $300 billion, BP had become, said CEO Tony Hayward, "a serial underperformer" that had "promised a lot but not delivered very much."
At that March 2008 meeting, those same 500 top BP managers also heard a Morgan Stanley oil and gas analyst tell them that while the rest of the energy industry was undertaking rapid change, BP was building a legacy of consistent failure both in finding and extracting new energy, and in refining and marketing finished products. And unless BP transformed its entire global business dramatically and rapidly, the analyst predicted, "BP will not exist in four to five years' time in its current form."
One of the people in that meeting was BP CIO and group VP Dana Deasy, who'd joined the company four months earlier as its first global CIO. He was a key figure in the strategy by Hayward, who became CEO in May 2007, to restore revenue growth across the enormous company, refocus the behavior of the company around high performance and accountability, and reduce the stifling complexity of the organization. That effort already had resulted in the elimination of up to four layers of management.
As Deasy listened to the sobering comments from his CEO and from a highly influential analyst, he thought about the transformation he had already launched within IT, an organization he thought had become, like the company overall, bloated, passive, unfocused, and unconcerned with performance and accountability.
Deasy wanted to strip out $800 million in expenses from BP's overall IT budget of $3 billion; cut in half the more than 2,000 IT vendors it had; overhaul BP's ranks of 4,200 IT employees; rationalize and reduce the 8,500 applications in use at BP worldwide; and turn IT from a tactical services unit to a business-driven and intimately embedded strategic weapon.
No stranger to challenging CIO roles, Deasy took the CIO post with full knowledge of the tumultuous times ahead.
"We were several billion dollars behind our competitors in oil and gas, and there was a real and very pressing concern in the company due to that," Deasy says. "Another part of the gap that Tony wanted to see closed was around organizational simplification: fewer layers of management, smaller corporate staffs, and deeper talent across key functions."
While noting that BP at the time had some great people in IT and some cutting-edge systems for exploration, Deasy also understood that he was going to have to drive enormous change in personnel, processes, and objectives across the entire IT organization in order to support and enhance the larger overhaul taking place across all of BP.
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