Dana Deasy's IT transformation idea "caught on like wildfire." when people realized they had to get on board or get out. To keep people focused on the right goals and to force a consistent approach, BP's IT leaders came up with a communication strategy of the Four R's.
As word spread about just how dramatically CIO Dana Deasy planned to transform the IT organization, you can imagine people realized they had to get on board or get out. Deasy says the transformation idea "caught on like wildfire." To keep people focused on the right goals and to force a consistent approach, BP's IT leaders came up with a communication strategy of the Four R's, which later gave way to the Four E's.
Here are the Four R's Deasy and team laid out at the start of the effort:
"We needed to take the whole global IT organization and gut it, and then rebuild it," Deasy says.
Deasy describes this as "fixing the capability of the organization--our people and the assessment of them." That led to skill evaluations of 1,000 top IT people, cutting 1,000 full-time contractors, and focusing talent more on subject-matter experts.
REENGINEERING Deasy saw too many silos of IT operation, so he centralized IT decision-making in year one to force people to work together. The plan was then to decentralize those roles that made sense to sit inside the business units.
This involved rebidding $1.5 billion worth of IT spending for a single year, cutting BP's 2,200 IT supplier base, and requiring suppliers to work together.
The IT team made quick progress on those goals, which created a different kind of problem. "We're coming out of the transformation and the fear is that people would be preoccupied with wondering, what's next?" Deasy says. "To avoid that, we had to create a sustainable program that everyone could get their heads around." That led to retirement of the Four R's and creation of the Four E's to explain where the IT team members had been and where they were headed:
This is what the IT team did at the first stage of the process: "We changed people, suppliers, and a lot of pretty heavy-handed things," Deasy says.
Deasy characterizes this as "leveraging our scale." That starts with rebidding contracts to get new terms for 65% of its IT spending, but also demanding more ongoing transparency and cooperation from those suppliers.
Deasy says his CEO, Tony Hayward, "always says, 'Dana, don't ever lose your efficiency edge. You've worked so hard to gain that, and you need to be sure you don't lose it.'" That drives the IT team to explore how to use its new tiered structure to deliver a service--like e-mail, help desk, or data center capacity--that's more closely tailored to a business unit's price-performance needs. It's pushing its five key app dev and maintenance vendors for fresh ideas.
"Only after the effectiveness piece is in place can you move on to innovation and new things," says Deasy. "Only at this point can you truly be able to deliver new kinds of business value."
BP Did It With E's
Often heavy-handed steps--centralized IT, layoffs, new suppliers
Leverage bargaining power for new rates and operating practices from suppliers
Use the new IT strategy to drive more gains, and keep from losing efficiency edge gained in step 2
Once the core IT operation's running well, turn to innovation and new projects
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