Getting the Right Strategy MixBy BTM Institute Staff Writer | Posted 2008-07-01 Email Print
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An interview with Gary Masada, CIO of Chevron Corp.
Since becoming CIO of Chevron Corp. in 2003, Gary Masada has been on a mission to carry out a strategy to centralize and standardize many aspects of technology operations through a program called Global Information Link (GIL), which has returned about $200 million to the company. In the meantime, he focuses on achieving operational excellence, making constant improvements on all products and services delivered daily to customers, and managing a five-year strategic roadmap.
Masada told the BTM Institute what it takes to build a cutting-edge, highly efficient technology organization.
Q. Can you describe your technology executive structure and your governance process?
I’m the chair of the CIO Council, which reports to me. The council consists of CIOs from the various large operating companies across Chevron Corp. These operating companies include Global Upstream, which is the exploration and production arm; Global Downstream, which handles refining, marketing, supply and trading; and Global Gas, which consists of the midstream components, shipping and pipeline, as well as the gas business.
We also have a CIO from our IT corporate departments, such as HR and finance. Within those organizations, we have IT managers responsible for various areas.
Once we figure out what we want to govern, we set up various committees, such as the architecture review committee. It’s our strongest and most important governance committee because it sets the standard. If you want an exception to the standard, you have to go through an appeals process to that committee. It will either grant it or say that it affects other systems.
If the committee doesn’t grant an exception, you can go through another appeals process with the CIO council. In the past two years, we haven’t heard any appeals. The architecture council is working pretty well.
Q. You once wrote that to support a global business model, you need a careful mix of a centralized IT strategy and a decentralized IT model. Can you explain that?
The centralized model tends to gather the efficiencies of size. Because Chevron is a very large company, we can gain potential synergies if we do things in a standard manner. To balance those out, we need to find the sweet point in what things we should centralize, what things we should standardize, and what things we can leave to the discretion of the people in the field. That’s a moving target.
A decentralized strategy offers the advantage of allowing us to put more decision-making power out in the field where the important stakeholders might be. Stakeholders might include foreign governments, national oil companies, other oil company partners and customers. The decentralized model allows us to be more agile and quick to act.
Many times when you are in a decentralized model, you start thinking you should make decisions about everything. You end up with things that don’t fit together, but you aren’t thinking of the big picture, and you’re not looking at interconnectivity. You minimize the value of the investments.
The value of IT here is that it all fits together, and you can connect one end of the company to the other end of the company. Many things should probably be more centralized and standardized than what we have.
We started from a very decentralized strategy, and have been moving bit by bit into becoming more centralized.
Q. To get a stronger alignment between the business and technology, you’ve created a blueprint and an investment roadmap going out five years. How is this strategic framework helping technology carry out its business goals?
The concept has become even more productive than we originally thought it was going to be. One of the ideas I had was that if you lived in a decentralized world with only regional governance, you ended up with a system that was both ineffective and inefficient. Investment dollars need to be aligned with the major strategies of the corporation, but when we checked, we found that many of the technology investments were based on good ideas rather than sound strategy.
The first thing we did was to align the major technology investments with the major strategy of the corporation and the operating companies. We tested them against the strategy by identifying the gap. We then put the technology investments on the roadmap to fill in the gaps that existed. Not only did it align with the business, but it was also an effective strategy check for the business.
On top of that, the dialogue that occurred between technology and business leaders had not occurred at that high a level before. That was the additional benefit of forming a business partnership with technology, which will have even greater consequences as we go forward.
Q. How has this dialogue continued to help with longer-term planning?
The business units have been able to understand the magnitude of the technology investments they’re making and truly support them, even though it might take some time to get there.
They often heard about projects, but didn’t really understand how significant they were and the impact they would have on their business. The dialogue that now takes place enables them to have a deeper understanding of how their investments in technology are going to provide benefits to the business. In the end, it actually led to almost every business increasing its respective technology budgets, because for the first time there was a clear understanding of what they could expect as a return on their investment.
Overall, we’ve been delivering on the roadmap we set forth. Because it’s a five-year roadmap, it becomes critical that every year we continue to deliver on the promises of that roadmap.