For oil giant Exxon Mobil, which has a presence in 200 countries, technology and business process standardisation are the keys to success. "We already have developed a suite of systems that deploy best practices. Technology is a critical enabler to that," says Patricia Hewlett, vice president of global IT at Exxon Mobil, which is the world's largest energy company.
Exxon Mobil's IT efforts differ from those of its competitors in the extent to which it focuses on standardisation and achieving economies of scale, Hewlett says. That focus allows the company to do more with less and to be more agile when responding to changing business needs, she says.
The strategy has clearly benefited the company's upstream business unit, which focuses on oil exploration, extraction and transportation, Hewlett says. A common platform, dubbed the "upstream suitcase", integrates everything Exxon Mobil needs to move into a new market, including the enterprise resource planning (ERP) system and tools that monitor equipment, track personnel and manage work permits. "It's a suite of standard computing applications we can use anywhere in the world," Hewlett says. Last year, Exxon Mobile used the “suitcase” to quickly set up new operations in Russia and Angola.
The commitment to standardisation played a critical role during Exxon's merger with Mobil, allowing the combined companies to reduce staffing by about 15,000. "Some of that couldn't have happened if we hadn't standardised the IT suite," Hewlett says.
The corporation's most ambitious recent project has been its tenacious pursuit of a common, global ERP platform for its chemical business. The initiative eventually consolidated business unit operations onto a single implementation of SAP software. Gartner analyst Dan Miklovic says substantial technical hurdles and integration complexities were overcome through a "brute-force effort", with those involved hammering away until the project succeeded. The result is one of the world's largest SAP implementations. "They're doing a good job of standardising on a large chunk of SAP. Other companies are not doing that well," Miklovic says.
"It helped improve the quality and timeliness of data, and we've gotten even greater benefits than forecast," Hewlett says. But the move also represented a trade-off. "By pushing so much SAP, they are in fact giving up some best-of-breed functionality," which has allowed some of Exxon Mobil's competitors to adopt more cutting-edge capabilities, Miklovic says.
"By using tools that are not as good as best of breed, at the very least they have to spend more and work harder to do as well as competitors that use better tools." For Hewlett, however, establishing a set of common global processes is paramount, and SAP provided a means to that end.
Despite its fixation on standards, Exxon Mobil does support the use of leading-edge, best-of-breed technology when the business value is high and the technology can be narrowly deployed. "There's the constant balance you have between sustaining these standards that give you the flexibilities and economies of scale [while] also being responsive to the needs of the different business lines," Hewlett says. "Making the trade-offs on when it is appropriate to make an exception to the standard – and why – is a challenge."
For example, scientists use specialised research software to develop catalysts that help break down crude oil for use in creating plastics and other products. But for products that are widely deployed, Exxon Mobil sticks with the most mature, scalable technologies. "You can't afford to be out there pulling down the productivity of 100,000 people while you mature the product," Hewlett says.
She says Exxon Mobil wants to deal with its technology suppliers around the world in a consistent way, but its global process standardisation puts it ahead of most of them. Nitty-gritty details, such as consistent order processes from one country to another, are often lacking, Hewlett says. "It's hard to find truly global vendors that deal with our scale," she adds.
In some cases, Exxon Mobil's demand for scalability and standards has meant staying on the sidelines rather than adopting technology that does not measure up. That was the case with identity management. Exxon Mobil requires a role-based approach that can scale to support 84,000 employees in about 200 countries. "We were frankly disappointed by the inability of the IT industry to have a full solution set that would meet our requirements," Hewlett says. Exxon Mobil has shelved the project for now, and Miklovic thinks this was the right move. "The scope of what they were trying to do went way beyond what the technology is capable of at this stage," he says.
Exxon Mobil's IT budget represents less than 1% of the company's overall revenue – roughly on a par with others in the energy sector, says Miklovic. Organisationally, Exxon's IT staff is split among its business units: the upstream and chemical businesses and the downstream operations, which include oil refining. About 20% of all IT personnel work within those business units, with IT representatives included in each unit's leadership team.
The remaining 80& of the IT staff work for the corporate entity, where they focus on delivering IT and services on a global scale. "We have a global infrastructure organisation, a global application support structure, a global approach to planning, where it's corporate-wide, and a global project centre of excellence," Hewlett says. This structure allows for some agility and the adoption of leading-edge technology within local business units while maintaining the company's commitment to global standards. "We can get the economies of scale, [and] we can enforce the standards," she says.
Exxon Mobil does not outsource a significant portion of its IT operations, but its global reach has enabled it to put its own spin on the concept of offshoring. In some low-cost areas, it has expanded the use of IT staff who support day-to-day computing activities, such as helpdesk and applications, to also support users in higher-cost locations. "In essence, we have a captive offshoring centre that helps us to do our IT work," Hewlett says.
With more than 2 petabytes of operational data now online, Hewlett's next challenge is applying knowledge management techniques to make the best use of that information. The company stores detailed data on process operations in refineries, production facility operations and other areas of work. "That's millions of characters of information that years ago we couldn't afford to collect," says Hewlett. "There's a real opportunity to help business professionals make sense of all of this data."
The first order of business has been to review and organise it. "We were quite surprised to see just how much of the data was either unused or duplicated somewhere else," Hewlett says. She estimates that consolidation could reduce the amount of storage needed by half, which would save money. After doing that, the company plans to better index and archive the data and make it more searchable.
The ultimate payoff from standardisation is not just cost savings from achieving economies of scale, Hewlett says. The efficiencies made possible by adopting consistent platforms and business processes add flexibility to the business by allowing rapid movement into new markets and enabling Exxon Mobil to adjust workloads among offices worldwide, she says, adding: "We think it offers a competitive advantage."