For a global oil and gas giant like Chevron, technological innovation is essential. In the past, that meant engineering new pipelines or drilling techniques, but today information technologies such as seismic imaging, oil reservoir simulation and pricing analytics are just as important.
When Louie Ehrlich was appointed CIO in 2008, he initiated a programme to improve the value that the company derives from its IT innovation. The company had not lacked the ability to innovate before that, says Peter Breunig, general manager of technology management and architecture. Indeed, one of the problems in motivating people to engage with the programme was that there was no “burning platform”, he says, no dire emergency to be addressed.
However, it had not always been possible to compare the relative commercial potential of the company’s various IT innovation projects. This made managing project funding an inexact science. “There was no grand unifying theory, no connection between all the different things going on in IT,” says Breunig.
The value of IT innovation
The ability to articulate the value of IT innovation more precisely was one justification for developing a new governance framework for the IT function, based partly on IT service management guidelines ITIL and partly on the IT Capability Maturity Framework (IT-CMF) from the Innovation Value Institute (IVI).
One component of the new framework has been to map all of Chevron’s IT assets, to evaluate their contribution to the business, and to draw up a plan for each one. “We broke the infrastructure up into the network, end-user assets and data centre, and we broke the applications and data management processes into component assets too,” explains Breunig. “Each asset has a lifecycle plan that allows us to manage and prioritise them.”
Similarly, Chevron has also introduced new ‘portfolio prioritisation’ capabilities, to help the company decide which innovation projects to fund.
New projects are measured against the priorities laid down by the company’s recently created IT governance board, which consists of senior executives from the various departments of the business. The board has agreed an ordered list of eight strategic imperatives, including business growth and reliability.
“Now we judge projects against those priorities, and it has worked very well,” says Breunig. “For the first time, we can say that a certain project in human resources is more important than a certain project in marketing, or vice versa.”
Using components of the IT-CMF, Chevron has also developed a more strategic approach to hiring IT skills. “First, you map the skill sets that you need right now against how hard they are to recruit,” Breunig explains. “Once you’ve done that for the present, you then figure out what you are going to need in future.”
This, he says, highlights problem areas for recruitment in future and allows Chevron to address them today. In general, he says, employees with both IT skills and experience in engineering or earth sciences will be in increasing demand.
These measures and more have changed the terms of engagement between the IT function and the business at Chevron, says Breunig: “The whole process has allowed us to present ourselves and what we do in a more structured framework, and to show senior management that we’re running the business.”
This in turn gives the IT function more leeway to innovate, Breunig says. “Once you get to that state, you have the opportunity to do more stuff in an innovative fashion because you are viewed as a partner.”
Since the new framework was initiated, the attitude towards IT at the very top of the organisation has changed fundamentally. “When Louie Ehrlich came in, the then chairman told him, ‘You guys [the IT function] are irrelevant to me,’” Breunig recalls. “The new chairman has said, ‘I’ve seen what you’ve done in two years – I want you to be in control of your function and be leaders in supporting the business.’”
