Growth is the name of the game at ConocoPhillips. In the past 20 months alone, the energy behemoth has embarked on a $4bn-plus (£2bn-plus) programme to expand its US refining operations, acquired Burlington Resources, a major oil explorer and producer, increased its ownership stake in petrol processing firm Duke Energy Field Services and launched a large liquefied natural gas project that supplies natural gas from Qatar to the US.
All this comes on the heels of a five-year diet of acquisitions and mergers, beginning with Phillips Petroleum's 2001 acquisition of Tosco, one of the world's largest oil refiners.
Today – and going forward – the main challenge for IT at ConocoPhillips is building and operating a gigantic yet standardised technology infrastructure that can integrate these and other new acquisitions and business projects quickly and cost-effectively.
"It's not real sexy," acknowledges Marty Schoenthaler, general manager of information services at the $183bn (£91.5bn) company. "But scale is what is so key in our industry. For almost four years [since Conoco and Phillips merged in 2002], we have been working on driving integration and converging systems." The ultimate goal, he says, is to create a technology foundation that can be used worldwide to support a comprehensive set of global business processes.
The ticket is standardisation – or even hyper-standardisation. Today, The whole company runs on a single SAP enterprise software system. The company has also standardised on Dell hardware and Microsoft Office software and tools. This is a long way from the dozens of different email and desktop systems that existed across the two pre-merger firms in 2002.
"As we go through acquisitions and otherwise grow as a company, it makes it that much easier to build off that foundation," Schoenthaler notes. "When we acquired Burlington earlier this year, we were able to drop it right into our [global SAP] system."
ConocoPhillips is in the process of further standardisation, this time focusing on the creation and adoption of global business processes. A recent success story is the ASAP - "aligning systems and processes" – programme in the company's European downstream business, which deals with the refining, marketing and transportation of products. The programme encompasses 10 business units in 15 countries.
"The whole purpose of the programme is to converge as many common business processes and their supporting IT systems [as possible] across all of these European businesses," Schoenthaler explains. "We want an efficient, low-cost operating environment."
It worked. The European downstream business's retail marketing group went from 14 standard processes, with 42 variations based on country and location, to 20 processes in all. These are supported by 22 IT systems, down from 35.
"Now we have common processes in place for light oil pricing and retail site surveys, plus standard information interfaces for [all] sales," Schoenthaler says. "What that all means is we have much better management of all of our stock categories. We can get a much better global idea of the business, and we can see one overall picture of our business in Europe and Asia."
Despite its global presence, which allows relatively easy access to offshore IT skills, IT at ConocoPhillips is strictly an in-house organisation. The company employs 1,600 permanent IT staff and 400 contractors. About half of the permanent staff are devoted to centralised, or "leveraged", IT services – such as desktop support, datacentre operations and major enterprise application development and support services. The rest of the IT staff are at business units worldwide.
"We're trying to separate out as much leveraged service delivery [as we can] because we fully charge out all of those costs," Schoenthaler explains. Charging also helps boost awareness of costs and builds support in the business units for global processes, he adds. Nevertheless, there remain some very specific services, such as geodata management, that have to be performed at individual locations.
But even in those areas, ConocoPhillips is driving standardisation by adopting common software tools that geoscientists anywhere can use.
The downside of ConocoPhillips' post-merger size is that "not every one of our processes scales to the level we need it to", Schoenthaler says. Geodata management is still handled in a decentralised way, with individual business units processing their own data. Application development processes do not scale well, he says, adding: "Our development processes aren't consistent."
The company has also faced a major challenge finding both IT and business professionals with the mix of skills it needs. "We can't get enough resources – business people especially – to do projects. We'd be doing a lot more projects if we had the resources," Schoenthaler says.
He declines to give any specific details of ConocoPhillips' current IT budget, except to say that it "was brought down significantly from when we were Conoco and Phillips".
But considering that ConocoPhillips made $5bn (£2.5bn) profits last quarter, "no matter what they're spending on IT, it's a rounding error comparatively", says Fadel Gheit, an analyst at Oppenheimer & Co.
The same goes for all the big oil companies, Gheit says. "Oil companies have no control over pricing. Only the market does. So they need every tool in the toolbox to operate efficiently. That requires being the lowest-cost producer, which requires the best information."
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