Shell Reorganizes Management and IT Functions

Computerworld UK — Shell is reorganising its information technology workforce in a move that could see further heavy job cuts.

The move is part of a company-wide overhaul that will reportedly see up to 24,000 jobs moved into shared business areas, and overlapping roles may be cut altogether.

Information technology is expected to be heavily affected, and may be combined with other functions including finance and human resources.

The oil giant has already announced plans to lay off 3,200 staff after signing a £2 billion (US$3.24 billion) outsourcing deal with EDS, T-Systems and AT&T. It also has an application support deal running with IBM, Logica, Wipro and Accenture.

But it wants to do more to achieve cost savings, as well as improve its ability to react to changes in the market.

Additionally, the company is attempting to make individuals more accountable for successful project delivery and for the performance of different functions.

Shell will create a new arm, focused on project management and delivery. The new Projects & Technology operation will combine all of its project capabilities, including the services and technology focused on individual projects. The division will be led by Matthias Bichsel, Shell executive VP for exploration and production technology.

In contrast, back office IT functions servicing the whole group, from networking to standard applications, are expected to come under the umbrella of finance, eventually reporting to chief financial officer Simon Henry for board-level representation. Some functions may be pushed out to individual areas of Shell's business.

Shell declined to give exact details of how IT roles will be affected or put a figure on potential redundancies.

But an oil industry source told Computerworld UK: "The functions could be better planned and organised and this is about changing that. Shell wants simplicity and better decisions."

The IT overhaul is part of a company-wide shake-up announced this week by incoming chief executive Peter Voser, who has promised a dramatic overhaul of the business to help it cope in the recession. Voser takes the helm at Shell on 1 July.

The changes began with an announcement on Tuesday that the head of Shell's gas and power operation, Linda Cook, is to step down as a director within a week, "by mutual agreement".

"The industry, and Shell, faces considerable challenges, from high costs, volatile energy prices, and competition for new projects," said Peter Voser, the incoming chief executive. "We will speed up our decision-making, and increase both personal responsibility and personal accountability."

But the overhaul, a year after a shake-up at rival BP, is too little, too late, some analysts have said. Jason Kenney at ING said the "desperation" at Shell is "obvious".

Further details of changes are expected to be announced by Shell in July.