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Wee Kim Wee School of Communication and Information


              CI6228 – Managing Information Systems




“Evaluating British Petroleum (BP)’s Enterprise Information Assets for
business goals attainment using Information System Strategy triangle”




                                 Submitted By


                                 ThangaveluMuthuKumaar (G1101765E)

                                 AjaiLoganathan Singh (G1101834E)
Table of Contents
Introduction: ........................................................................................................................................... 3
British Petroleum - Overview .................................................................................................................. 3
   2.2 Reason for Choosing BP ................................................................................................................ 4
Theoretical frameworks and reasons for choice .................................................................................... 5
   3.1 Information System Strategy Triangle framework........................................................................ 6
   3.2 Hypercompetition Framework...................................................................................................... 7
   3.3 IT Value Chain model .................................................................................................................... 7
Related Frameworks available in aligning strategies .............................................................................. 8
Applying frameworks in BP ..................................................................................................................... 8
   5.1 Hypercompetition framework ...................................................................................................... 9
       5.1.1 Strategic soothsaying ............................................................................................................. 9
       Buy, not build .................................................................................................................................. 9
       Selective outsourcing ...................................................................................................................... 9
       Strategy to manage outsourcing ................................................................................................... 10
       Technology implementation in BP - Evolution of a dedicated IT stack......................................... 10
       5.1.2 Positioning for speed ........................................................................................................... 14
       Failure to leverage Social Media during Crisis Management........................................................ 14


Research findings .................................................................................................................................. 17
Lessons Learnt....................................................................................................................................... 18
Conclusion ............................................................................................................................................. 19
Appendix ............................................................................................................................................... 21
Abstract:

The study analyses the information systems and technology implemented in British

Petroleum (BP) from a business perspective. The key success in technology transformation

for any organization lies in the proper alignment between Information Systems and Business

Strategies. The objective of this study is to analyse BP‟s business strategy using Hyper

Competition model;using internal Value Chain model created by BP to understand IT

outsourcing strategy and tracing enterprise technology implementations evolvedin British

Petroleum over the years.



   1. Introduction:

The essence of survival for an organization is to gain competitive and strategic advantage

with every move to differentiate and serve the customers better. With technology

advancements in the recent past includes increase in processing power of computers, data

storage capacity of servers and robust network connectivity; enterprises have realized IT to

be an important business component and integrated in their organizational processes.

Understanding IT to be a key driver in organization growth and enabler of business

processes, there has been an increased thrust in organizations to leveragevalue intheir

investment in technology. The success is usually determined by the alignment between the

Information System (IS) and organizational planning, that is attained when general managers

and technical personnel are able to work in collaboration.



   2. British Petroleum - Overview

BP was an Anglo-Persian company involved in exploiting the discovery of oil for

commercial purpose in Iran in 1909. It was then changed to Anglo-Iranian Co and later to

British Petroleum in 1954. BP expanded its business towards petrochemical industries in
1947, followed by major discovery of oil wells in Alaska and North Sea. Around 1970, BP

diversified its functions into new areas including computer software, coal and other minerals

(Hollier, 1992).


2.1Understanding BP’s Business and Organizational structure

British Petroleum (BP) is the fourth largest oil and gas company in the world. They are

involved in both B2B (Business to Business) and B2C (Business to Consumer) markets with

customer base in around 70 countries. Their major end products are petrol, diesel, lubricants,

maritime and aviation fuel, gas for industrial consumers and bottled gas. BP‟s major retail

brands are BP Connect, BP Express, BP Shop, Castrol, Air BP and BP Shipping. Shell,

Chevron, Exxon are BP‟s top competitors.

Upstream & Downstream model:BP core operations involve exploration, production and

processing in its upstream model and refining, marketing and distributing energy in the

downstream model. A vertical-integration management style is adopted in BP. Apart from

these distinct divisions, a fourth division namely Strategy and Integration which hosts

business functions Human Resource (HR), Information Technology (IT), Finance and

Technology and ensures integration among the core three divisions and functions. In 2010,

organizational strategic realignment in BP was done by the Chief Executive, Bob Dudley in

Exploration and Production division after considering the competitive market.


2.2 Reason for Choosing BP

Over the years, many organizations had changed their existing information systems due to

advancement in technology, overspending of IT budget and overhead in maintenance. The

increase in thrust in leveraging IS assets towards their growth has led to Strategic Information

Systems Planning (SISP) (Pollack, 2010). As stated during mid-90's, BP's mission is to

become the best upstream company in the world.The foremost change in BP was done to IT
division. This report analyses the BP's strategic plans in achieving their business mission

using the ISS triangle. The main objective of BP transformation is to change the existing

organization to a more dynamic, scalable and adapting to changing environment and

economic demands. Since IT was used extensively throughout the organization in the

business processes, changing IT will have a direct impact on their business strategy. An

organization to realise this fact and re-architecture the information systems to achieve their

business strategy is British Petroleum (BP).

Early 90's, CEO John Browne realised the potential change needed for the IT functions in the

exploration division of BP. There have been three broad generations of changes in IT

functions, First generation focussing on the cost-savings and efficiency; Second generation

started during late 80's with the objective to maintain IT as a strategic resource, the primary

aim of this era is to have IT aligned with or supporting business strategy.Unfortunately

strategic benefits yield from second generation is less sustainable hence third generation

principles focus changed to outsourcing and decentralising IT functions.

The principle change from third generation in IT function is discussed in this paper to

understand the alignment between IS and business strategy. Also the recent technology

implementations and integration of new information strategies after lessons learnt in the

recent oil spill crisis is understood to analyse how BP leverages IT to create business value.



   3. Theoretical frameworks and reasons for choice

To better understand the importance of organization's information system which is not an

island within a firm, rather it is the core functioning part in enabling the business engine. We

have used Information System Strategy (ISS) triangle, a simple framework for understanding

the impact of Information System (IS) in organization as depicted by (Pearlson& Saunders,

2009).
Alignment: The definition for alignment provided in the paper "Winning 3 legged

race"(Hoque, Sambamurthy, Zmud, Trainer, & Wilson, 2005) is used for this study; "the

situation in which a company's current and emerging business strategy is enabled, supported

and unconstrained by technology". When an organization is able to achieve proper fit

between the IT functions and organization's business strategy, it is said be in strategic

alignment. Hence, alignment has become a prime concern for senior executives.

Over the years, BP has undergone technology transformation to accomplish their business

goal and to sustain the inevitable economic market. The most recent critical events in BP‟s

calendar found to have a massive impact on business, operations and revenue is the 2010‟s oil

spill by BP in the Gulf of Mexico followed by 1980 oil glut (Refer Appendix Figure 4).


3.1 Information System Strategy Triangle framework

A framework that helps to understand the importance of information systems in current

organization trend is the Information System Strategy triangle (Pollack, 2010).




                     Figure 1: Information System (IS) Strategy Triangle

The three elements of the triangle are as follows (Pearlson& Saunders, 2009);

    Business strategy is the mission of the organization; what the business seeks to

       accomplish; a clear boundary that shows the steps taken by an organization to achieve

       the goal and objectives.

    Organization strategy is focussed on the people, process, and purpose to achieve the

       business goal.
 Information systems strategy is the service provided by the organisation to

       complement the business goal.

   For a successful organisation, these three vertices of the triangle should be aligned and

   complement each other.


3.2 Hypercompetition Framework

The main focus is to understand the alignment between BP‟s information system strategy and

business strategy. This framework helps us to identify different aspects of BP's business

strategy and helps us to analyse the alignment of IS in the strategy triangle. With the

economic changes faced by BP over the years this framework is useful in understanding the

changes made in sustaining the business strategy during the tough times. The approaches

used in this study are Strategic soothsaying and Positioning for speed


3.3 IT Value Chain model

A framework created by BP is the IT value chain model or Jacob's ladder. This framework

has helped BP better distinguish between areas to be maintained in-house and outsourced.

The four main components of this framework are;




                              Figure 2: IT value chain model

Business process delivers business outcomes; it provides a level to measure the business

performance.Information is an important component in an organization, every decision
making process is made based on the information available and accessible. Application often

called as information systems, the medium in which information is transported.

Infrastructure provides the base for the information system, this allows organization to easily

measure the cost, value but it is difficult to measure the outcome of information, application

development.

Organizations sometimes fail to satisfy their business strategy due to lack of understanding

core business process rather focussing on nice applications which results in no return on

investment (Baets, 1992).



   4. Related Frameworks available in aligning strategies

During the IT transformation era 1989 to 1995, BP's has framed new principles to manage IT

activities. Seven elements (Pearlson & Saunders, 2009) identified in their transformation

agenda which acted as a framework for other organizations in IT transformation(Refer

Appendix: 1.1).

Zachman framework is an enterprise architecture framework, it provides a structure to

analyse and define the architectural artefacts. It provides a two dimensional matrix logically

analysing an enterprise information systems along the lines of What, Where, When, Why,

How and Who.



   5. Applying frameworks in BP

The frameworksare applied to analyse the role of information system in ISS triangle. BP's

approach in competitive environment using technology changes is discussed in this section;
5.1 Hypercompetition framework

5.1.1 Strategic soothsaying

BP's approach towards seeking new knowledge that can predict or create a new window for

opportunities to achieve the business strategy is seen during the technology transformation.

The traditional models were useful only during the environmental stability era, these models

were not able to sustain the continuously changing market and were not flexible to adapt

during economic changes. BP was one of the pioneers in forming new management principles

such as seven component model for IT transformation (Refer Appendix Table 1) and IT value

chain modelfor outsourcing. Further over the years, BPhas implemented various enterprise

systems and use of social media during crisis management to align IS with their business

strategy. Following are the few strategic moves highlighted during the different phases;

Buy, not build:The key decision to destroy the current IT functions and strategically plan for

outsourcing is implemented. The core business of BP is basically exploring oil and not

application development or infrastructure management, hence value creation to the business

are held by in-house expertise. Activities like application and infrastructure management are

cost drivers rather than value creators hence in order to reduce cost and achieve business

strategy outsourcing is followed. BP's pursuit of realising their goal to "buy, not build" policy

was a unique initiative in creative external software market (Cross, Earl, & Sampler,

1997).Selective outsourcing: BP strategy to reduce the dependency on specific suppliers and

implemented the mixed sourcing strategy, increasingly moved to selective outsourcing

(hybrid model)(Lacity, Willcocks, & Feeny, 1996). Since 1986, it had outsourced selected

services in the form of renewable contracts with providers like SEMA group, Syncordia,

SAIC, I-NET and CTG (Cross, 1995).IT value chain or Jacob's ladder model was used to

draw guidelines to identify the IT functions to be outsourced.
Strategy to manage outsourcing:The foremost transition took place in the core working

strategy of IT division, traditional role of system analyst are changed to business consultant.

Realigning traditional job responsibilities of IT analyst from mere solution providers to

redesigning and optimising business operations were carried out. Managers were involved in

coordination roles like vendor management, change management, post project evaluations

rather than software development and management. This transformation in IT personnel

skillshas provided a best-of-class solution for the problems and also sets an equal balance

between business, people and technical skills (Cross, et al., 1997).

Centralised IT system “plug and play”

The decentralized IT systems have resulted in fragmented and duplicated information due to

which managing information had become increasingly cumbersome. The strategic move to

define a global architecture planning was designed, regional IT divisions are allowed to select

applications "plug and play" in the global architecture. This architecture led to the design of a

number of services shared among divisions. Since IT resources has short-life span,

redesigning and updating infrastructure was a constant process to meet changing business

solutions.

The main goal of IT implementation was to avoid the complexity involved in the existing

systems (application reduced from 175 to 75, with no complaints from business), and

outsourcing of the value realization IT functions. This strategic move has eventually allowed

IT division to pursue value creation, cost reduction and oversee infrastructure.

Technology implementation in BP - Evolution of a dedicated IT stack:Technology

evolved in BP over years. By now, they have stacked the IT in three different layers with four

different kinds of technologies.
Figure3: IT Stack at BP (Rao, 2007)


Foundation:BP achieved secure, seamlesscommunicationand basic processing capability

Enables business by providing the firm wide basic back end and system capabilities.

Enterprise data centres and servers are managed by HP since 2010. Cisco manages the

wireless LAN Communication links and network services with over 20 collaborative projects

since 2001 to access control, plant operational data and to connect their operating offices.


Commodity:BP increased productivity with improved process planning and materials

management triggered by a common user level electronic platform for collaboration and

collaboration available as a commodity.IBM Maximo Asset Management enables BP to

connect its business processes with over 1500 suppliers to co-ordinate the maintenance,

operation and repair of specialised exploration and production equipment.BP uses shared data

systems based on common data standards such as XML (Holland, Shaw &Kawalek,

2005).Plum Tree‟s Content Management Systems enables BP to manage its organizational

memory and help in dissemination and diffusion of processes and operations knowledge.


Table Stakes:BP maximized asset efficiency by outsourcing the functionalities to specialized

vendors or by purchasing the license of the software. BP improved business process
management with SAP and IT business applications with competing IT vendors since 2009

(IBM, Wipro, Tata, Infosys, and Accenture). Microsoft provides Business Intelligence

services for the BP management to gain insights on the business processes since 2006. Oracle

Siebel CRM systems provides downstream operations management. Seebeyond‟s ICAN and

Tibco are the Enterprise Application Integration (EAI) systems used to connect with different

platforms, architecture and technology.SoftwareAG‟sWebmethods enable enterprise work

flow modelling used to process transactions, avoid conflict at different layers of the

organization. (Vemmestad, 2008)Google Search Appliance enhances BP‟s enterprise search

engine capabilities with more intuitive searches with multi-lingual options for the employees

and website users and enhanced search speed five-fold, increasing internal and public

searches by 80%

Differentiating:IT guided BP in overcoming the upstream challenges in transforming the oil

rigs to digital oil platforms, oil recovery to optimized oil recovery. Process simulations with

advanced imaging and visualization in real time helped BP to ensure the best quality and

safety standards in their operations and delivery. Specialized and competing oil field service

providers helped BP to achieve operational efficiency in the fields of exploration.

BP outsources most of its operations at the previous levels in the stack and it relies on

specialized Supplier performance Management solutions providers like Biznet Solutions

tuned for energy companies with integrated energy metrics since 2000.3D Visualization and

simulation helps in risk analysis and to ensure operational capabilities like deployment,

change management. Extensive video monitoring ensures safety levels, fire and gas

detections. Real time web based information processing helps in solving issues confronted in

operations and to serve as a self-diagnostic platform. Augmented reality based simulations

help in intuitive and realistic core exploration and production process design. Transocean,

Halliburton, Cameroon, Schlumberger and Baker Hughes are the major oil field service and
simulation software providers employed by BP now. To exploit the ingrain talent of human

capital in BP, it has launched an „Idea Aggregator web tool‟ to propose, vote and promote

ideas to market after validation since 2006. It has also launched a crowdsourcing platform to

tap on collective intelligence from the external communities. BP has also invested on next

generation web search based on semantic web to be on the top of the competing ladder.

Field of the future (FOTF) portalis an in-house state-of-the-art system consisting of the use

control systems, sensors, real time data distribution and the use of advanced optimization and

control modelling. (Source: www.bp.com, Frontiers Publication, Dec 2006)

ACE (Advanced Collaboration Environment) is used for control rooms offering real time off

shore monitoring and “see and talk facilities with always-on video link”.One touch tool

works using a web browser pulls and combines information from 24 different databases about

reservoirs, geological maps to generate easily consumable mash ups, visualizations for

comparison and instant decision making.CMS (Crisis Management System) gathers and

visualizes the information from Geographical Information Systems (GIS) about the weather,

environment , ocean currents and also various other internal and external sources and

monitors the safety of environment and people.ISIS (Integrated Subsurface Information

Systems) gathers the down hole information from the wells using sensors in real time that

measures critical parameters such as temperature and pressure.

Starting from the third generation (transformation) stage wherein BP's focus is to align

Information System towards their business strategy. Pitching with outsourcing strategy to

reduce cost, downsizing IT resources and implementing various enterprise and innovative

technology has made BP attain a position of competitive advantage in gaining new

knowledge and creating a window for opportunities.
5.1.2 Positioning for speed

Though BP had a winning streak in positioning its IT transformation and reacting to the

change in technology and process as fast as possible in its competing circle, it has clearly lost

the game in the Information Communication perspective during the Oil Spill Crisis in 2010.

This part critiques the negative aspects of BP‟s reactions to social media during the early

days of the spill and how BP progressively incorporated the social media strategies in their

Information Strategy soon after the lessons learnt.

On April 20th 9.46pm: The Deep-water Horizon, the sub sea oil drilling system exploded

off the Louisiana coast in the Gulf of Mexico.

Impact on environment and people: 11 dead, 16 injured and 115 workers rescued. BP had

released about 4.9 million barrels of crude oil causing the ecological imbalance in the

surrounding coastal areas and affected tourism and fisheries industry to a great extent.

Impact on corporate image and brand:BP had employed Ogilvy & Mather as their Public

Relations (PR) consultants. During the spill, the corporate communications was not

positioned for speed to reveal BP‟s realization of the mistake and commitment in the

reformation activities.

Failure to leverage Social Media during Crisis Management

Social Media by then added a new layer of communication. Environment activists, local

artists trying to popularize them with BP‟s context used YouTube video channel to criticize

BP‟s poor actions to resolve the crisis. “When BP spills coffee” 1produced by UCB comedy

reached 2.5 million views by June 2010.On 16th May, a parody twitter account for BP named

@BPGlobalPR opens with the tweet: “We regretfully admit that something has happened off

in the Gulf Coast. More to come”.By June 2010, @BPGlobalPR (parody) had 125,000

followers whereas @BP_America (official) had 10,000. „Boycott BP‟ facebook page had


1
http://www.youtube.com/watch?v=2AAa0gd7ClM&ob=av3e
233,000 fans while the official BP page had 18,000 (Andersson & Macdonald, 2010).

Greenpeace, the global environmental non-governmental organization (NGO) initiated a

"Rebrand the BP Logo" contest in Internet and asked the contest entrants to submit their

entries on Flickr.com, the social photo sharing site. There were approximately 2,500 entries

and about 600,000 views of the logo rebrands entered, just in a few weeks by June 2010.

The stock price of BP fell by 15% in 43 days partially due to the disruption of its corporate

image in social media .2

BP started off communicating very late even for the first time. It came up with a tweet from

its official page only after 10 days from the start of the spill. BP also ignored the parody

twitter account @BPGlobalPR activities and the unofficial logo redesign competition

organized internally in the micro blog. @BPGlobalPRsold $10,000 of „BP cares‟ t-shirts and

donates all proceeds to the recovery mission (Refer Appendix Figure 5).These activities

should have been recognized and supported by BP officially, but it underestimated the value

of social media and social networks.From the start, BP was not sharing the feedback about

the reformation activities openly in social media and BP wasn‟t open to public criticisms and

comments about the disaster or recovery. It imposed extensive commenting policy that warns

any "ad hominem attacks" will be removed. This to some extent provoked the social media

users to start online campaigns against BP.

Its sole strategy of purchasing more “Google Ad words” , search key phrases and Youtube

overlaying ads related to the oil spill which redirected to the BP‟s video channel or website

about reformation activities was not able to save their corporate image.


2http://www.propublica.org/article/congressmen-raised-concerns-about-bp-safety-in-months-before-gulf-spill
http://abcnews.go.com/WNT/video/conversation-twitters-satirical-bp-star-10849258Don't
http://mashable.com/2010/06/09/bpglobalpr-changes-bio
http://mashable.com/2010/06/02/social-media-gulf-oil-spill/
http://www.nytimes.com/interactive/2010/05/01/us/20100501-oil-spill-tracker.html
http://www.businessinsider.com/bps-crisis-pr-strategy-unprepared-inefficient-and-incomprehensive-2010-5
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7804922/BP-chief-Tony-Hayward-sold-shares-weeks-before-oil-
spill.html
http://www.fastcompany.com/1644053/infographic-of-the-day-what-the-heck-is-a-relief-well-bp-explains
BP's strategy towards Social media monitoring and reputation maintenance

Followed by criticism, an aggressive social media strategy which formed a part of their

recovery strategy was devised. BP outsourced the social media monitoring to Social360, a

corporate specializing in monitoring social media content to selectively respond and engage

online discussions of users for seven months following the spill. It identified relevant

conversations on social web (blogs, Twitter, Facebook, forums, etc.) and results are filtered

and analysed by a team of human editors into concise reports for client consumption. More

than 10.5 million individual social media posts were processed. The marketing team at BP

directly coordinated with the social360 team in generating interactive content to the public.

New posts on social media and collaborative activities connected people withBP activities

like reformation, executivepublic speeches about the pace of relief activities and investigation

results for the cause of spill. (Source: Social360 BP case study3). BP partnered with Radian6,

a social sentiment analytics organization to constantly report on the social media sentiments

permanently after the oil spill.BP started engaging online reputation management consulting

to guide on their social media and online brand management strategies along with the PR

consulting firm Oglivy&Mathers.

The competitive advantage attained by BP in the strategic soothsaying approach with the

insight in analysing the current IT functions and using the IT value chain model for

outsourcing has tried to align IS towards their business strategy in ISS triangle.But the

delayed action from the corporate communications perspective during the massive

environmental disaster created by BPmadethem completely pull back from the competitive

market. The poor performance in responding to the crisis and poor planning has lost

credibility among customers and stakeholders. BP has a tough recovery mission for its

corporate image and it‟s still going on.


3
http://social360monitoring.com/case-studies-bp/
6. Research findings

BP has rightly envisioned the IT transformation early in the competitor circle (1990) and

framed a customized strategic plan to align information system with business strategy.

Outsourcing is one of the key elements in the transformation phase which has provided BP

with a tremendous cost reduction results. The selective IT (hybrid) outsourcing for cost

reduction and business process improvement right from the start of IT transformation

provides least bargaining power for suppliers.Using the IT value chain model by making the

right choice of competing vendors and differentiating their core and non-core processes has

led to align their information system with business strategy. Starting with a complete strategic

information system planning to transform their business strategyto an architecture and then to

infrastructure implementation has set an example for other organizations in IT

implementation. BP chose the best-in-class enterprise systems for its operations and business

process facilitation.BP enabled best collaboration between virtual teams across geographies

to share knowledge and expertise by choosing and installing the best and secure

communication, collaboration and content management software and hardware.


Ignoring the social media sentiments during the greatest BP crisis, oil spill and

underestimating the power of network effects, user generated content and web 2.0 for

corporate communications led to the destruction of its corporate image in the market

comprising competitors, customers and stakeholders.


BP uses Knowledge Management (KM) and Business Intelligence (BI) to turn data and

information into contextual knowledge and generate insights to the top management about the

customer trends and business. BP also tuned its global information systems to provide both

autonomy as well as decentralization to facilitate context based decision making in the

operating locations across geographies.Advanced in-house Information processing systems in
real time providing simulations in multiple dimensions enabled BP to exploit their

operational capability and gain competitive advantage.


The use of balanced score card, an intellectual capital management framework helps vendor's

to focus not only on providing service but to contribute to BP's core business process.



   7. Lessons Learnt

BP learnt from the mistake of underestimating the power of social media during a crisis. BP

then strengthened its social media strategy by partnering with consulting firms providing

specialized sentiment analytics and online reputation management solutions.


The official YouTube channel for BP was launched only on May 18, 2010, soon after the

disaster and it is very unfortunate to see such an industrial giant in oil and gas had no clues

about the emerging information and communication platform and social media. The in-house

IT team of BP need to have research collaboration with universities, offered to attend latest

technology conferences and subscribe to IT journals, consumer and market trend reports from

Nielsen, Ipsos and integrate research databases like Forrester inside BP‟s library.


The oil spill‟s investigation also proved that technology wasn‟t the sole reason behind the

disaster, but also due to the negligence of the employee at site, who ignored the early

warnings raised by the system about the defect. Knowledge Management can be a viable

solution in long term to avoid such risks by codifying the scenarios, discussing in

communities about the problem and exploiting collective knowledge to solve it.
8. Conclusion

The strategic planningby British Petroleum‟s during IT transformation to carry selective

outsourcing, enterprise system implementationshows how BP leverages information systems

towards their business strategy. To specifically drill down and understand the business

strategies with Information systems, D‟Aveni‟s hyper competition model – Strategic

soothsaying and positioning for speed approaches were used. Value chain model helped us to

appreciate their selective outsourcing strategy retaining the core differentiating state-of-the-

art systems in-house. Improper initial response during oil spill through social media shows

their set back in handling new technology. Late recovery strategy post oil spill showed the

protest arose due to negligence of the mass in social media. Information systems and

technology has been and is a key value creator and business process enabler for BP. The

success lies in understanding and catering information systems to the needs of the business

strategy.
References

Hollier, A. (1992),“Computerised finding aids at the British petroleum archive”, Journal of
       the Society of Archivists, 13(2), 124-131. doi: 10.1080/00379819209511677

Pollack, T. A. (2010), “Strategic information systems planning”, ASCUE Proceedings, 47-58.

Pearlson, K., & Saunders, C. S. (2009), “Strategic management of information systems”, Keri
        E. Pearlson, Carol Silverman Saunders: Hoboken, N.J.: John Wiley & Sons, c2009.
4th ed., International student version.

Hoque, F., Sambamurthy, V., Zmud, R., Trainer, T., & Wilson, C. (2005), “Winning the 3-
      legged Race: when business and technology run together:” Prentice-Hall, Inc.

Baets, W. (1992), “Aligning information systems with business strategy”, The Journal of
       Strategic Information Systems, 1(4), 205-213.

Cross, J., Earl, M. J., & Sampler, J. L. (1997),“Transformation of the IT function at British
       Petroleum”,Mis Quarterly, 401-423.

Lacity, M. C., Willcocks, L. P., &Feeny, D. F. (1996), “The value of selective IT sourcing.
        Sloan management review”, 37, 13-25.

Rao Vijay (2007), “Future Challenges Facing BP, How technology can help”, available at
      http://www.bp.com

John Cross (1995), “HowBP Exploration achieved seamless service from multiple suppliers”,
      Harvard Business Review

Frontiers (2006) ,“Virtually there”, Frontiers publication, available at http://www.bp.com

C.P. Holland, D.R. Shaw, and P. Kawalek (2005), “BP's Multienterprise Asset Management
      System”, Information andSoftware Technology 47(15), pp. 999-1007.

Andersson Liri and MacdonaldJonathan (2010),“An overview of the BP crisis from a
      communications perspective”, available at www.thisfluidworld.com

John Vemmestad ( 2008),“Mature fields technology”, available at http://www.bp.com

Tony Hayward, Andy Inglis, Byron Grote and Iain Conn (2010), “BP Strategy Presentation”,
      London, available at http://www.bp.com
Appendix

Table 1: BP IT transformation agenda with 7 component model

From                                         To
System Provider                              Infrastructure Planner
Monopoly Supplier                            Mixed sourcing
Business Standard                            Industry standards
Decentralized bias                           Centralized topsight
System analyst                               Business consultant
Craftsman                                    Project Managers
Large Functions                              Lean Teams




Figure 4: Uncertain price environment,
Source: BP Statistical Review of World Energy, 20114




Figure 5: @BPGlobalPR(Twitter Parody Account) statement by its founder, Leroy
Stick (MacDonald & Andersson,2010)




4
http://bp.com/statisticalreview

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Bp business and information strategy alignment

  • 1. Wee Kim Wee School of Communication and Information CI6228 – Managing Information Systems “Evaluating British Petroleum (BP)’s Enterprise Information Assets for business goals attainment using Information System Strategy triangle” Submitted By ThangaveluMuthuKumaar (G1101765E) AjaiLoganathan Singh (G1101834E)
  • 2. Table of Contents Introduction: ........................................................................................................................................... 3 British Petroleum - Overview .................................................................................................................. 3 2.2 Reason for Choosing BP ................................................................................................................ 4 Theoretical frameworks and reasons for choice .................................................................................... 5 3.1 Information System Strategy Triangle framework........................................................................ 6 3.2 Hypercompetition Framework...................................................................................................... 7 3.3 IT Value Chain model .................................................................................................................... 7 Related Frameworks available in aligning strategies .............................................................................. 8 Applying frameworks in BP ..................................................................................................................... 8 5.1 Hypercompetition framework ...................................................................................................... 9 5.1.1 Strategic soothsaying ............................................................................................................. 9 Buy, not build .................................................................................................................................. 9 Selective outsourcing ...................................................................................................................... 9 Strategy to manage outsourcing ................................................................................................... 10 Technology implementation in BP - Evolution of a dedicated IT stack......................................... 10 5.1.2 Positioning for speed ........................................................................................................... 14 Failure to leverage Social Media during Crisis Management........................................................ 14 Research findings .................................................................................................................................. 17 Lessons Learnt....................................................................................................................................... 18 Conclusion ............................................................................................................................................. 19 Appendix ............................................................................................................................................... 21
  • 3. Abstract: The study analyses the information systems and technology implemented in British Petroleum (BP) from a business perspective. The key success in technology transformation for any organization lies in the proper alignment between Information Systems and Business Strategies. The objective of this study is to analyse BP‟s business strategy using Hyper Competition model;using internal Value Chain model created by BP to understand IT outsourcing strategy and tracing enterprise technology implementations evolvedin British Petroleum over the years. 1. Introduction: The essence of survival for an organization is to gain competitive and strategic advantage with every move to differentiate and serve the customers better. With technology advancements in the recent past includes increase in processing power of computers, data storage capacity of servers and robust network connectivity; enterprises have realized IT to be an important business component and integrated in their organizational processes. Understanding IT to be a key driver in organization growth and enabler of business processes, there has been an increased thrust in organizations to leveragevalue intheir investment in technology. The success is usually determined by the alignment between the Information System (IS) and organizational planning, that is attained when general managers and technical personnel are able to work in collaboration. 2. British Petroleum - Overview BP was an Anglo-Persian company involved in exploiting the discovery of oil for commercial purpose in Iran in 1909. It was then changed to Anglo-Iranian Co and later to British Petroleum in 1954. BP expanded its business towards petrochemical industries in
  • 4. 1947, followed by major discovery of oil wells in Alaska and North Sea. Around 1970, BP diversified its functions into new areas including computer software, coal and other minerals (Hollier, 1992). 2.1Understanding BP’s Business and Organizational structure British Petroleum (BP) is the fourth largest oil and gas company in the world. They are involved in both B2B (Business to Business) and B2C (Business to Consumer) markets with customer base in around 70 countries. Their major end products are petrol, diesel, lubricants, maritime and aviation fuel, gas for industrial consumers and bottled gas. BP‟s major retail brands are BP Connect, BP Express, BP Shop, Castrol, Air BP and BP Shipping. Shell, Chevron, Exxon are BP‟s top competitors. Upstream & Downstream model:BP core operations involve exploration, production and processing in its upstream model and refining, marketing and distributing energy in the downstream model. A vertical-integration management style is adopted in BP. Apart from these distinct divisions, a fourth division namely Strategy and Integration which hosts business functions Human Resource (HR), Information Technology (IT), Finance and Technology and ensures integration among the core three divisions and functions. In 2010, organizational strategic realignment in BP was done by the Chief Executive, Bob Dudley in Exploration and Production division after considering the competitive market. 2.2 Reason for Choosing BP Over the years, many organizations had changed their existing information systems due to advancement in technology, overspending of IT budget and overhead in maintenance. The increase in thrust in leveraging IS assets towards their growth has led to Strategic Information Systems Planning (SISP) (Pollack, 2010). As stated during mid-90's, BP's mission is to become the best upstream company in the world.The foremost change in BP was done to IT
  • 5. division. This report analyses the BP's strategic plans in achieving their business mission using the ISS triangle. The main objective of BP transformation is to change the existing organization to a more dynamic, scalable and adapting to changing environment and economic demands. Since IT was used extensively throughout the organization in the business processes, changing IT will have a direct impact on their business strategy. An organization to realise this fact and re-architecture the information systems to achieve their business strategy is British Petroleum (BP). Early 90's, CEO John Browne realised the potential change needed for the IT functions in the exploration division of BP. There have been three broad generations of changes in IT functions, First generation focussing on the cost-savings and efficiency; Second generation started during late 80's with the objective to maintain IT as a strategic resource, the primary aim of this era is to have IT aligned with or supporting business strategy.Unfortunately strategic benefits yield from second generation is less sustainable hence third generation principles focus changed to outsourcing and decentralising IT functions. The principle change from third generation in IT function is discussed in this paper to understand the alignment between IS and business strategy. Also the recent technology implementations and integration of new information strategies after lessons learnt in the recent oil spill crisis is understood to analyse how BP leverages IT to create business value. 3. Theoretical frameworks and reasons for choice To better understand the importance of organization's information system which is not an island within a firm, rather it is the core functioning part in enabling the business engine. We have used Information System Strategy (ISS) triangle, a simple framework for understanding the impact of Information System (IS) in organization as depicted by (Pearlson& Saunders, 2009).
  • 6. Alignment: The definition for alignment provided in the paper "Winning 3 legged race"(Hoque, Sambamurthy, Zmud, Trainer, & Wilson, 2005) is used for this study; "the situation in which a company's current and emerging business strategy is enabled, supported and unconstrained by technology". When an organization is able to achieve proper fit between the IT functions and organization's business strategy, it is said be in strategic alignment. Hence, alignment has become a prime concern for senior executives. Over the years, BP has undergone technology transformation to accomplish their business goal and to sustain the inevitable economic market. The most recent critical events in BP‟s calendar found to have a massive impact on business, operations and revenue is the 2010‟s oil spill by BP in the Gulf of Mexico followed by 1980 oil glut (Refer Appendix Figure 4). 3.1 Information System Strategy Triangle framework A framework that helps to understand the importance of information systems in current organization trend is the Information System Strategy triangle (Pollack, 2010). Figure 1: Information System (IS) Strategy Triangle The three elements of the triangle are as follows (Pearlson& Saunders, 2009);  Business strategy is the mission of the organization; what the business seeks to accomplish; a clear boundary that shows the steps taken by an organization to achieve the goal and objectives.  Organization strategy is focussed on the people, process, and purpose to achieve the business goal.
  • 7.  Information systems strategy is the service provided by the organisation to complement the business goal. For a successful organisation, these three vertices of the triangle should be aligned and complement each other. 3.2 Hypercompetition Framework The main focus is to understand the alignment between BP‟s information system strategy and business strategy. This framework helps us to identify different aspects of BP's business strategy and helps us to analyse the alignment of IS in the strategy triangle. With the economic changes faced by BP over the years this framework is useful in understanding the changes made in sustaining the business strategy during the tough times. The approaches used in this study are Strategic soothsaying and Positioning for speed 3.3 IT Value Chain model A framework created by BP is the IT value chain model or Jacob's ladder. This framework has helped BP better distinguish between areas to be maintained in-house and outsourced. The four main components of this framework are; Figure 2: IT value chain model Business process delivers business outcomes; it provides a level to measure the business performance.Information is an important component in an organization, every decision
  • 8. making process is made based on the information available and accessible. Application often called as information systems, the medium in which information is transported. Infrastructure provides the base for the information system, this allows organization to easily measure the cost, value but it is difficult to measure the outcome of information, application development. Organizations sometimes fail to satisfy their business strategy due to lack of understanding core business process rather focussing on nice applications which results in no return on investment (Baets, 1992). 4. Related Frameworks available in aligning strategies During the IT transformation era 1989 to 1995, BP's has framed new principles to manage IT activities. Seven elements (Pearlson & Saunders, 2009) identified in their transformation agenda which acted as a framework for other organizations in IT transformation(Refer Appendix: 1.1). Zachman framework is an enterprise architecture framework, it provides a structure to analyse and define the architectural artefacts. It provides a two dimensional matrix logically analysing an enterprise information systems along the lines of What, Where, When, Why, How and Who. 5. Applying frameworks in BP The frameworksare applied to analyse the role of information system in ISS triangle. BP's approach in competitive environment using technology changes is discussed in this section;
  • 9. 5.1 Hypercompetition framework 5.1.1 Strategic soothsaying BP's approach towards seeking new knowledge that can predict or create a new window for opportunities to achieve the business strategy is seen during the technology transformation. The traditional models were useful only during the environmental stability era, these models were not able to sustain the continuously changing market and were not flexible to adapt during economic changes. BP was one of the pioneers in forming new management principles such as seven component model for IT transformation (Refer Appendix Table 1) and IT value chain modelfor outsourcing. Further over the years, BPhas implemented various enterprise systems and use of social media during crisis management to align IS with their business strategy. Following are the few strategic moves highlighted during the different phases; Buy, not build:The key decision to destroy the current IT functions and strategically plan for outsourcing is implemented. The core business of BP is basically exploring oil and not application development or infrastructure management, hence value creation to the business are held by in-house expertise. Activities like application and infrastructure management are cost drivers rather than value creators hence in order to reduce cost and achieve business strategy outsourcing is followed. BP's pursuit of realising their goal to "buy, not build" policy was a unique initiative in creative external software market (Cross, Earl, & Sampler, 1997).Selective outsourcing: BP strategy to reduce the dependency on specific suppliers and implemented the mixed sourcing strategy, increasingly moved to selective outsourcing (hybrid model)(Lacity, Willcocks, & Feeny, 1996). Since 1986, it had outsourced selected services in the form of renewable contracts with providers like SEMA group, Syncordia, SAIC, I-NET and CTG (Cross, 1995).IT value chain or Jacob's ladder model was used to draw guidelines to identify the IT functions to be outsourced.
  • 10. Strategy to manage outsourcing:The foremost transition took place in the core working strategy of IT division, traditional role of system analyst are changed to business consultant. Realigning traditional job responsibilities of IT analyst from mere solution providers to redesigning and optimising business operations were carried out. Managers were involved in coordination roles like vendor management, change management, post project evaluations rather than software development and management. This transformation in IT personnel skillshas provided a best-of-class solution for the problems and also sets an equal balance between business, people and technical skills (Cross, et al., 1997). Centralised IT system “plug and play” The decentralized IT systems have resulted in fragmented and duplicated information due to which managing information had become increasingly cumbersome. The strategic move to define a global architecture planning was designed, regional IT divisions are allowed to select applications "plug and play" in the global architecture. This architecture led to the design of a number of services shared among divisions. Since IT resources has short-life span, redesigning and updating infrastructure was a constant process to meet changing business solutions. The main goal of IT implementation was to avoid the complexity involved in the existing systems (application reduced from 175 to 75, with no complaints from business), and outsourcing of the value realization IT functions. This strategic move has eventually allowed IT division to pursue value creation, cost reduction and oversee infrastructure. Technology implementation in BP - Evolution of a dedicated IT stack:Technology evolved in BP over years. By now, they have stacked the IT in three different layers with four different kinds of technologies.
  • 11. Figure3: IT Stack at BP (Rao, 2007) Foundation:BP achieved secure, seamlesscommunicationand basic processing capability Enables business by providing the firm wide basic back end and system capabilities. Enterprise data centres and servers are managed by HP since 2010. Cisco manages the wireless LAN Communication links and network services with over 20 collaborative projects since 2001 to access control, plant operational data and to connect their operating offices. Commodity:BP increased productivity with improved process planning and materials management triggered by a common user level electronic platform for collaboration and collaboration available as a commodity.IBM Maximo Asset Management enables BP to connect its business processes with over 1500 suppliers to co-ordinate the maintenance, operation and repair of specialised exploration and production equipment.BP uses shared data systems based on common data standards such as XML (Holland, Shaw &Kawalek, 2005).Plum Tree‟s Content Management Systems enables BP to manage its organizational memory and help in dissemination and diffusion of processes and operations knowledge. Table Stakes:BP maximized asset efficiency by outsourcing the functionalities to specialized vendors or by purchasing the license of the software. BP improved business process
  • 12. management with SAP and IT business applications with competing IT vendors since 2009 (IBM, Wipro, Tata, Infosys, and Accenture). Microsoft provides Business Intelligence services for the BP management to gain insights on the business processes since 2006. Oracle Siebel CRM systems provides downstream operations management. Seebeyond‟s ICAN and Tibco are the Enterprise Application Integration (EAI) systems used to connect with different platforms, architecture and technology.SoftwareAG‟sWebmethods enable enterprise work flow modelling used to process transactions, avoid conflict at different layers of the organization. (Vemmestad, 2008)Google Search Appliance enhances BP‟s enterprise search engine capabilities with more intuitive searches with multi-lingual options for the employees and website users and enhanced search speed five-fold, increasing internal and public searches by 80% Differentiating:IT guided BP in overcoming the upstream challenges in transforming the oil rigs to digital oil platforms, oil recovery to optimized oil recovery. Process simulations with advanced imaging and visualization in real time helped BP to ensure the best quality and safety standards in their operations and delivery. Specialized and competing oil field service providers helped BP to achieve operational efficiency in the fields of exploration. BP outsources most of its operations at the previous levels in the stack and it relies on specialized Supplier performance Management solutions providers like Biznet Solutions tuned for energy companies with integrated energy metrics since 2000.3D Visualization and simulation helps in risk analysis and to ensure operational capabilities like deployment, change management. Extensive video monitoring ensures safety levels, fire and gas detections. Real time web based information processing helps in solving issues confronted in operations and to serve as a self-diagnostic platform. Augmented reality based simulations help in intuitive and realistic core exploration and production process design. Transocean, Halliburton, Cameroon, Schlumberger and Baker Hughes are the major oil field service and
  • 13. simulation software providers employed by BP now. To exploit the ingrain talent of human capital in BP, it has launched an „Idea Aggregator web tool‟ to propose, vote and promote ideas to market after validation since 2006. It has also launched a crowdsourcing platform to tap on collective intelligence from the external communities. BP has also invested on next generation web search based on semantic web to be on the top of the competing ladder. Field of the future (FOTF) portalis an in-house state-of-the-art system consisting of the use control systems, sensors, real time data distribution and the use of advanced optimization and control modelling. (Source: www.bp.com, Frontiers Publication, Dec 2006) ACE (Advanced Collaboration Environment) is used for control rooms offering real time off shore monitoring and “see and talk facilities with always-on video link”.One touch tool works using a web browser pulls and combines information from 24 different databases about reservoirs, geological maps to generate easily consumable mash ups, visualizations for comparison and instant decision making.CMS (Crisis Management System) gathers and visualizes the information from Geographical Information Systems (GIS) about the weather, environment , ocean currents and also various other internal and external sources and monitors the safety of environment and people.ISIS (Integrated Subsurface Information Systems) gathers the down hole information from the wells using sensors in real time that measures critical parameters such as temperature and pressure. Starting from the third generation (transformation) stage wherein BP's focus is to align Information System towards their business strategy. Pitching with outsourcing strategy to reduce cost, downsizing IT resources and implementing various enterprise and innovative technology has made BP attain a position of competitive advantage in gaining new knowledge and creating a window for opportunities.
  • 14. 5.1.2 Positioning for speed Though BP had a winning streak in positioning its IT transformation and reacting to the change in technology and process as fast as possible in its competing circle, it has clearly lost the game in the Information Communication perspective during the Oil Spill Crisis in 2010. This part critiques the negative aspects of BP‟s reactions to social media during the early days of the spill and how BP progressively incorporated the social media strategies in their Information Strategy soon after the lessons learnt. On April 20th 9.46pm: The Deep-water Horizon, the sub sea oil drilling system exploded off the Louisiana coast in the Gulf of Mexico. Impact on environment and people: 11 dead, 16 injured and 115 workers rescued. BP had released about 4.9 million barrels of crude oil causing the ecological imbalance in the surrounding coastal areas and affected tourism and fisheries industry to a great extent. Impact on corporate image and brand:BP had employed Ogilvy & Mather as their Public Relations (PR) consultants. During the spill, the corporate communications was not positioned for speed to reveal BP‟s realization of the mistake and commitment in the reformation activities. Failure to leverage Social Media during Crisis Management Social Media by then added a new layer of communication. Environment activists, local artists trying to popularize them with BP‟s context used YouTube video channel to criticize BP‟s poor actions to resolve the crisis. “When BP spills coffee” 1produced by UCB comedy reached 2.5 million views by June 2010.On 16th May, a parody twitter account for BP named @BPGlobalPR opens with the tweet: “We regretfully admit that something has happened off in the Gulf Coast. More to come”.By June 2010, @BPGlobalPR (parody) had 125,000 followers whereas @BP_America (official) had 10,000. „Boycott BP‟ facebook page had 1 http://www.youtube.com/watch?v=2AAa0gd7ClM&ob=av3e
  • 15. 233,000 fans while the official BP page had 18,000 (Andersson & Macdonald, 2010). Greenpeace, the global environmental non-governmental organization (NGO) initiated a "Rebrand the BP Logo" contest in Internet and asked the contest entrants to submit their entries on Flickr.com, the social photo sharing site. There were approximately 2,500 entries and about 600,000 views of the logo rebrands entered, just in a few weeks by June 2010. The stock price of BP fell by 15% in 43 days partially due to the disruption of its corporate image in social media .2 BP started off communicating very late even for the first time. It came up with a tweet from its official page only after 10 days from the start of the spill. BP also ignored the parody twitter account @BPGlobalPR activities and the unofficial logo redesign competition organized internally in the micro blog. @BPGlobalPRsold $10,000 of „BP cares‟ t-shirts and donates all proceeds to the recovery mission (Refer Appendix Figure 5).These activities should have been recognized and supported by BP officially, but it underestimated the value of social media and social networks.From the start, BP was not sharing the feedback about the reformation activities openly in social media and BP wasn‟t open to public criticisms and comments about the disaster or recovery. It imposed extensive commenting policy that warns any "ad hominem attacks" will be removed. This to some extent provoked the social media users to start online campaigns against BP. Its sole strategy of purchasing more “Google Ad words” , search key phrases and Youtube overlaying ads related to the oil spill which redirected to the BP‟s video channel or website about reformation activities was not able to save their corporate image. 2http://www.propublica.org/article/congressmen-raised-concerns-about-bp-safety-in-months-before-gulf-spill http://abcnews.go.com/WNT/video/conversation-twitters-satirical-bp-star-10849258Don't http://mashable.com/2010/06/09/bpglobalpr-changes-bio http://mashable.com/2010/06/02/social-media-gulf-oil-spill/ http://www.nytimes.com/interactive/2010/05/01/us/20100501-oil-spill-tracker.html http://www.businessinsider.com/bps-crisis-pr-strategy-unprepared-inefficient-and-incomprehensive-2010-5 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7804922/BP-chief-Tony-Hayward-sold-shares-weeks-before-oil- spill.html http://www.fastcompany.com/1644053/infographic-of-the-day-what-the-heck-is-a-relief-well-bp-explains
  • 16. BP's strategy towards Social media monitoring and reputation maintenance Followed by criticism, an aggressive social media strategy which formed a part of their recovery strategy was devised. BP outsourced the social media monitoring to Social360, a corporate specializing in monitoring social media content to selectively respond and engage online discussions of users for seven months following the spill. It identified relevant conversations on social web (blogs, Twitter, Facebook, forums, etc.) and results are filtered and analysed by a team of human editors into concise reports for client consumption. More than 10.5 million individual social media posts were processed. The marketing team at BP directly coordinated with the social360 team in generating interactive content to the public. New posts on social media and collaborative activities connected people withBP activities like reformation, executivepublic speeches about the pace of relief activities and investigation results for the cause of spill. (Source: Social360 BP case study3). BP partnered with Radian6, a social sentiment analytics organization to constantly report on the social media sentiments permanently after the oil spill.BP started engaging online reputation management consulting to guide on their social media and online brand management strategies along with the PR consulting firm Oglivy&Mathers. The competitive advantage attained by BP in the strategic soothsaying approach with the insight in analysing the current IT functions and using the IT value chain model for outsourcing has tried to align IS towards their business strategy in ISS triangle.But the delayed action from the corporate communications perspective during the massive environmental disaster created by BPmadethem completely pull back from the competitive market. The poor performance in responding to the crisis and poor planning has lost credibility among customers and stakeholders. BP has a tough recovery mission for its corporate image and it‟s still going on. 3 http://social360monitoring.com/case-studies-bp/
  • 17. 6. Research findings BP has rightly envisioned the IT transformation early in the competitor circle (1990) and framed a customized strategic plan to align information system with business strategy. Outsourcing is one of the key elements in the transformation phase which has provided BP with a tremendous cost reduction results. The selective IT (hybrid) outsourcing for cost reduction and business process improvement right from the start of IT transformation provides least bargaining power for suppliers.Using the IT value chain model by making the right choice of competing vendors and differentiating their core and non-core processes has led to align their information system with business strategy. Starting with a complete strategic information system planning to transform their business strategyto an architecture and then to infrastructure implementation has set an example for other organizations in IT implementation. BP chose the best-in-class enterprise systems for its operations and business process facilitation.BP enabled best collaboration between virtual teams across geographies to share knowledge and expertise by choosing and installing the best and secure communication, collaboration and content management software and hardware. Ignoring the social media sentiments during the greatest BP crisis, oil spill and underestimating the power of network effects, user generated content and web 2.0 for corporate communications led to the destruction of its corporate image in the market comprising competitors, customers and stakeholders. BP uses Knowledge Management (KM) and Business Intelligence (BI) to turn data and information into contextual knowledge and generate insights to the top management about the customer trends and business. BP also tuned its global information systems to provide both autonomy as well as decentralization to facilitate context based decision making in the operating locations across geographies.Advanced in-house Information processing systems in
  • 18. real time providing simulations in multiple dimensions enabled BP to exploit their operational capability and gain competitive advantage. The use of balanced score card, an intellectual capital management framework helps vendor's to focus not only on providing service but to contribute to BP's core business process. 7. Lessons Learnt BP learnt from the mistake of underestimating the power of social media during a crisis. BP then strengthened its social media strategy by partnering with consulting firms providing specialized sentiment analytics and online reputation management solutions. The official YouTube channel for BP was launched only on May 18, 2010, soon after the disaster and it is very unfortunate to see such an industrial giant in oil and gas had no clues about the emerging information and communication platform and social media. The in-house IT team of BP need to have research collaboration with universities, offered to attend latest technology conferences and subscribe to IT journals, consumer and market trend reports from Nielsen, Ipsos and integrate research databases like Forrester inside BP‟s library. The oil spill‟s investigation also proved that technology wasn‟t the sole reason behind the disaster, but also due to the negligence of the employee at site, who ignored the early warnings raised by the system about the defect. Knowledge Management can be a viable solution in long term to avoid such risks by codifying the scenarios, discussing in communities about the problem and exploiting collective knowledge to solve it.
  • 19. 8. Conclusion The strategic planningby British Petroleum‟s during IT transformation to carry selective outsourcing, enterprise system implementationshows how BP leverages information systems towards their business strategy. To specifically drill down and understand the business strategies with Information systems, D‟Aveni‟s hyper competition model – Strategic soothsaying and positioning for speed approaches were used. Value chain model helped us to appreciate their selective outsourcing strategy retaining the core differentiating state-of-the- art systems in-house. Improper initial response during oil spill through social media shows their set back in handling new technology. Late recovery strategy post oil spill showed the protest arose due to negligence of the mass in social media. Information systems and technology has been and is a key value creator and business process enabler for BP. The success lies in understanding and catering information systems to the needs of the business strategy.
  • 20. References Hollier, A. (1992),“Computerised finding aids at the British petroleum archive”, Journal of the Society of Archivists, 13(2), 124-131. doi: 10.1080/00379819209511677 Pollack, T. A. (2010), “Strategic information systems planning”, ASCUE Proceedings, 47-58. Pearlson, K., & Saunders, C. S. (2009), “Strategic management of information systems”, Keri E. Pearlson, Carol Silverman Saunders: Hoboken, N.J.: John Wiley & Sons, c2009. 4th ed., International student version. Hoque, F., Sambamurthy, V., Zmud, R., Trainer, T., & Wilson, C. (2005), “Winning the 3- legged Race: when business and technology run together:” Prentice-Hall, Inc. Baets, W. (1992), “Aligning information systems with business strategy”, The Journal of Strategic Information Systems, 1(4), 205-213. Cross, J., Earl, M. J., & Sampler, J. L. (1997),“Transformation of the IT function at British Petroleum”,Mis Quarterly, 401-423. Lacity, M. C., Willcocks, L. P., &Feeny, D. F. (1996), “The value of selective IT sourcing. Sloan management review”, 37, 13-25. Rao Vijay (2007), “Future Challenges Facing BP, How technology can help”, available at http://www.bp.com John Cross (1995), “HowBP Exploration achieved seamless service from multiple suppliers”, Harvard Business Review Frontiers (2006) ,“Virtually there”, Frontiers publication, available at http://www.bp.com C.P. Holland, D.R. Shaw, and P. Kawalek (2005), “BP's Multienterprise Asset Management System”, Information andSoftware Technology 47(15), pp. 999-1007. Andersson Liri and MacdonaldJonathan (2010),“An overview of the BP crisis from a communications perspective”, available at www.thisfluidworld.com John Vemmestad ( 2008),“Mature fields technology”, available at http://www.bp.com Tony Hayward, Andy Inglis, Byron Grote and Iain Conn (2010), “BP Strategy Presentation”, London, available at http://www.bp.com
  • 21. Appendix Table 1: BP IT transformation agenda with 7 component model From To System Provider Infrastructure Planner Monopoly Supplier Mixed sourcing Business Standard Industry standards Decentralized bias Centralized topsight System analyst Business consultant Craftsman Project Managers Large Functions Lean Teams Figure 4: Uncertain price environment, Source: BP Statistical Review of World Energy, 20114 Figure 5: @BPGlobalPR(Twitter Parody Account) statement by its founder, Leroy Stick (MacDonald & Andersson,2010) 4 http://bp.com/statisticalreview