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What IT means to me: ‘Never start IT initiatives for the sake of IT’

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What IT means to me: ‘Never start IT initiatives for the sake of IT’

By Alan Cane

Published: May 28 2008 01:25 | Last updated: May 28 2008 01:25

Even the largest companies are being forced to look outside their firewalls for assistance with information technology as intense competition and the need to globalise take their toll of corporate resources.

Eight years ago, the mighty Royal Dutch/Shell embarked on an ambitious project to streamline and standardise its sprawling information technology infrastructure deciding, in the process, against the outsourcing option.

Late this March, however, the petrochemicals giant announced a $4bn, five-year deal through which its network and telecommunications will be managed by AT&T, its hosting and storage will become the responsibility of Deutsche Telekom’s T-Systems enterprise customer unit, while Electronic Data System will integrate its infrastructure and run end user computing services.

Some 3,000 Shell IT staff will be transferred to the newly appointed service providers leaving about 600 specialists to work on key strategic, architectural and standardisation issues. It is one of the largest outsourcing deals of recent years and innovative in its use of multiple suppliers.

Alan Matula, Shell’s chief information officer since 2006, explains that changing circumstances have forced a change in IT strategy: “Uniquely in the past 12 to 24 months, I have had to juggle three balls at the same time: to support the growth projects, to remain operationally excellent and cost-efficient, and keep the business running from day to day. I don’t think I’ve had to do all three at the same time before.

“We did think about outsourcing the infrastructure in 2001. But we made absolutely the right call not to outsource the problem, but to consolidate it, rationalise it, get it into the next generation of technology and then re open the conversation about whether we should outsource the things that are more ‘commodity’-oriented, that we can get from the market place, and keep internal the things that are of competitive value.”

You can almost sense the quotation marks when he says “commodity” or “utility” computing, arguing that such terms poorly reflect the nature of the systems on which Shell’s day-to-day performance depends. The staff on Shell’s trading floors, he says, are unlikely to regard the tools of their trade – the network, the computers and the resilience of the overall system – as mere commodities: “They view all that as core and essential to their business.”

But he continues: “Because of the environment we are in, because of the huge demand for IT to underpin our businesses and functions, we need to focus our critical resources on the most important things, while outsourcing the skills and agility we can leverage. It is clear to us that, given the amount of work and the scarcity of resources, we are going to have to rely on partners both for infrastructure and applications if we are going to make headway.”

Mr Matula, 48, has spent his entire working life at Shell and taken a leading role in shaping the company’s IT operations both at the business (divisional) and international level. Born in Chicago, he graduated from Indiana University in Quantitative Business Analysis – a degree with a special focus on mathematics and statistics – and earned an Executive MBA from Houston Baptist University.

He went to work for Shell after graduating: “I went to Houston and went through a number of IT positions, everything from emerging technologies, to projects, to support, in and out of some business jobs, into operations. That was the model for careers back in the early 1980s.”

A corporate planning assignment working for the board of the Shell oil company set the scene for his return to IT in his first CIO role: as CIO of Shell Chemicals, one of the four principal business classes which comprise the Shell group (Upstream, the search for oil and gas reserves, Downstream, the refining and delivery of products to customers, Chemicals, and Trading).

“That was right at the beginning of the globalisation of Royal Dutch/Shell,” he recalls. “Chemicals was the first business that we decided to take global and to try to understand what this meant.” He was CIO first for North America and then for Chemicals worldwide. It took five years and paved the way for his contributions to the transformation of IT in the Shell group from 2000 onwards. “If you were to look at my curriculum vitae, you would see me closely connected to a number of our big global transformations,” he says.

Essentially, Mr Matula has extended his experience of transforming Shell Chemicals to the rest of the group: “The first problem was the infrastructure. In the 1990s we did not have a connected, consistent, standardised computing infrastructure for the group.

“Out of the Chemicals experience we standardised our global desktops, our global networks, our ability to share and collaborate globally. That led to virtual teams working across the globe and set the stage for what needed to be done for the group as a whole.”

Standardising all the group’s business processes proved a second challenge, solved by installing a global enterprise resource planning (ERP) system, from the German company SAP, and tightly coupling it to some of the other critical applications across the functions and the businesses.

The third core challenge, however, was the human dimension: “The mindsets, behaviours and cultures that you have to pull together when you are taking a group of federated entities and trying to get them to work as one”, is how he describes it.

He speaks for almost everybody who has taken a leading role in a transformational project when he observes: “What was difficult was trying to get a feel for what you are replacing. When you get into these transformations, what you don’t know as you pull the pieces together is what you are going to run into globally as you replace something in a country or in a location. In some cases, it had been there for years. You do your best to plan and understand.

“You should never start an IT initiative for the sake of IT. Whether it’s a project or a transformation such as Shell Chemicals or Downstream, you have to start with the business at the centre. You have to understand the business model and create a strategy that underpins that model with technology.”

Mr Matula will remain answerable to Shell’s executive committee for all the company’s IT, but the responsibility for meeting the service level agreements will lie, from July this year, with AT&TDeutsche Telekom and EDS.

Mr Matula is confident the deal will provide the anticipated benefits: “That is not to say that it is not a challenge. Before this deal we outsourced a lot of things, but we did it in pieces. Until now, we never stepped back and loooked at the whole. By selecting a multisourcing strategy we are forcing our three partners to work as one ecosystem, as one delivery engine, not three delivery engines.

“Furthermore, the work that we have done from 2000 to 2006 in terms of consolidation, rationalisation and standardisation will serve us well as we go into the next phase.”

What has Mr Matula, at the top of the technology tree in one of the world’s largest companies, left to achieve? “If we can deliver to the business, improve the function and take the business into the top quartile and build a sustainable ecosystem internally and externally, well, that’s a journey that is going to take us the next three to four years. There will be plenty of opportunities in that time to deliver and to be proud of and to help Shell get to that next level,” he says.

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