BP CIO oils outsourcing future

Any doubts about the size and influence of the oil industry were assuaged by Dana Deasy, Global CIO for oil giants BP at a meeting in London on June 3, 2013. Addressing an outsourcing industry meeting hosted by CIO UK’s legal expert Alister Maughan, Deasy demonstrated how its 2008 outsourcing deal with the major players: IBM, HP, Wipro, Tata, Infosys, Acccenture and T-Systems is more than a typical customer and supplier relationship, it’s about the customer taking leadership.

Deasy operates a Captain’s Table where these suppliers must gather together, in India, to cooperate and bring innovation to BP. Typically these outsourcing vendors send their CEO to these meetings. The annual event has strict guidelines on what can and cannot be discussed, there is homework set by BP and regular calls by all concerned to ensure there is progress on the decisions made at the meetings. The upshot is that these seven competitors are cooperating.

Deasy admits this is only possible because of the size of BP and the size of the oil industry in our carbon hungry world. BP recorded revenues of $375 billion last year he told the meeting at the offices of law firm Morrison and Foerster.

On joining BP Deasy struck new major outsourcing deals with these seven providers in a move that at the time I described as indicative of the business centric scope of the CIO role. Back then each division of BP had its own deals with its own suppliers. Deasy leveraged the scale of BP, his own words, to cut organisational wide deals. Deasy admits this is nothing ground breaking and exactly what a good CIO should do. The move took $900 million of cost out of BP, which highlights my original argument for the business centricity of today’s CIO.

What’s really interesting is how Deasy readily admits this standardisation and simplification that his outsourcing and the vendor management, despite its benefits, will not be fit for purpose at BP in the next five years. The reason being these “typical” CIO moves as he puts it, do not deliver business outcomes. Deasy argues that the deals he and all CIOs have are about service, delivering to a service level agreement. I got the impression that Deasy believes the IT industry, both internal and supplier is hooked on a services culture.

Deasy used in his presentation and does so with his considerable IT team a metaphor of a business outcome. It runs along the lines of his need to be in a business meeting in Houston, in 90 minutes time from his flight landing. If the plane lands on time, gets to its gate, he passes through customs and immigration OK, he collects his hire car and is not delayed on the drive in, then he gets to his meeting on time, that is a business outcome.  But in his metaphor the car hire firm is 10 minutes late in delivering the car and he’s late for his meeting. A break in the service chain breaks down the business outcome.

In his presentation, Deasy argued that IT as a sector has to look at the ultimate outcome and ensure its service delivery never is the break in the chain.

This where the Captain’s Table that BP operate come in, gathered around a table with your fellow and rival outsourcing providers is demonstrating to the providers that they cannot provide an outcome on their own, they have to collaborate. The result for BP is that the seven are the foundations for an ecosystem of outcomes. An example of those outcomes is that at precisely 11am every morning BP has to deliver to the US government a report on every facet of its operations in the Gulf of Mexico following its catastrophic oil spill in 2010 that has caused major damage to the environment and economy in the region.

Deasy doesn’t pretend that operating this ecosystem and Captain’s Table is easy, but he describes a utopian ambition where the IT industry rids itself of its sales driven culture and moves to outcomes and relationships and where one day, one vendor recommends the staff member or another vendor to him for really enabling an outcome to be delivered.