reinventing IT at BP case analysis
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BP's IT organization was highly dependent on external contractors, with around 45% of IT workers being contractors and over 2,200 vendors. The new CIO, Deasy, centralized the IT organization, cutting over 1,200 suppliers to reduce costs. He replaced much of the existing IT leadership and empowered the new leaders to make changes. As a result, the IT budget was cut by $900 million over five years and the organization was rebuilt by spending $1.5 billion. The culture had become bloated and unfocused prior to Deasy, but is now more efficient and centralized under his leadership.
reinventing IT at BP case analysis
- 1. Reinventing IT at BP Joseph Sebastian b1939
- 2. The case mentions the dependence of BP’s IT organization on external contractors. Why would this be an issue? When is it a good idea for IT departments to hire contractors, and when is it not? Discuss some scenarios
- 3. Outside contractors Hiring is Expensive organization has Less Control over them Their experience and knowledge cannot be used properly Wont be participating in HR and other events Contractor Pros Can be used when expertise is unavailable within the organization Can be hen only short-term commitment is needed and organization cant afford hiring permanent employees Contractor Cons It is an expensive process Knowledge/experience walk out the door when contractors leave Not as much control or accountability (people's careers don't depend on the project's success)
- 4. The culture of the IT organization is mentioned as an important issue. How do you think it changed throughout the period covered here? What did it look like when Deasy came onboard? What does it look like now
- 5. When Deasy took over the office: IT organization was highly Decentralized About 45% IT workers were contractors The organization had around 2200 vendors Organization was using around 8500 applications The annual budget allocated was a massive $3Billion Changes brought about by Deasy wiped out most of IT leadership, made more centralized, each unit CIO works for business leader and also reports to Deasy. Cut around 1200 IT suppliers to reduce cost. IT leaders became loyal to Deasy IT leaders became empowered to make changes IT leaders became less risk-averse
- 6. Present status of the IT organization The system became highly centralized and the operations became more efficient Company was able to cut down IT budget and saved around $900 million in the next five years. The entire organization was rebuilt by spending around $1.5 billion.
- 7. How did BP get into the situation mentioned at the beginning of the transformation process? Does it appear to be the result of a conscious decision? Use examples to narrate
- 8. It seems to be a result of the attitude and business practices of the employees. It was a conscious decision to operate in that way, but not to create that culture.“…an organization he thought had become, like the company overall, bloated, passive, unfocused, and unconcerned with performance and accountability.” The company’s contractors were a huge problem as well. Not only were there too many, but they weren’t properly managed. There were a huge number of suppliers ,which was not necessary. The company was allotting huge budgets annually without really knowing how it is being utilized. Managers weren’t ensuring that the value pitched in order to gain the contract was the value being gained in the end. What’s a vendor’s job over the next five years? Well, when you strip away all the fancy talk, it’s to claw back all that money they gave up in our rebids.”
- 9. Thank you