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Do oil and gas IT staff have poor alignment with the business asks Dutch Holland

Wednesday, November 21, 2012

Oil and gas IT people have been criticised for having a poor understanding of what the operating side of the business needs from them. How can the situation by improved? By Dutch Holland

Consider this comment from a recent Digital Energy Journal:

'The oil and gas industry's IT systems are not able to handle many new data types, don't connect real time and static data well, and don't allow very good real time analytics of drilling data…When you talk about industry challenges with IT people, they are all surprised that we have some of these problems.'

The quote is from Jay Hollingsworth, director of oil and gas with Oracle, published in Digital Energy Journal, April/May 2012.

Should this be the case? Should the Information Technology (IT) vendor be surprising his customers with knowledge of the operating side's needs of the IT customer's own house?

Assuming the above comment is not a rare occurrence but represents today's upstream world, what does it mean?

How much do vendors, the company IT department and its operations department know about the company's operations technology 'vector' - the current trajectory and future development of operations work processes based on oilpatch physics and engineering, including the future of operations processes as enabling technologies become available.

Often, the operations department have a high understanding of the operations technology vector; the IT vendors have medium understanding, and the IT department has a poor understanding.

It might be a better business position to have the IT department very aware of the technology development vector of operations. In such a position, the IT department would be positioned to lead, not lag, IT vendors on whom they must depend.

IT departments should be able to deliver functional requirement from operations to the vendor community to enable more focused, competitive innovation as well as better targeted services.

But wait, there's more.

Would such a position by the IT department be optimal?

Optimal position comes when the IT department is ahead of operations in envisioning the future path of work processes, as both engineering and IT continue to fight their enemy -- Mother Nature's laws of physics. Is this an unrealistic expectation of an IT department?

It all depends on how the IT department sees itself in the business. And, unfortunately, many IT departments' own perceptions are strongly influenced by 'IT myths.'

Myths (unfounded or false notions) are alive and well in the world of upstream IT. Three Heroic Myths still persist despite obvious data to the contrary.

In the "IT business"

Myth One: An IT Department is in the IT business.

This article's author asked 200 CIOs at a conference, 'How many of you are in the IT business?' More than 95% raised their hands.

However, one CIO did not raise his hand. When questioned, he stood up and faced the audience, saying, 'My name is John Doe; I'm the CIO of Pirelli Tires … and I'm in the tire business.'

An IT department is in its parent company's business (e.g., tires, sugar, or oil and gas production), not IT.

Accepting Myth #1 influences the IT Department to develop its primary alignment with the ever-expanding IT universe and with IT vendors who develop and sell products, software, and services.

Taking the time and energy to stay in line with IT vendors detracts from the IT department's time, interest, and willingness to focus on aligning with the business they are actually in.

As a course correction, the IT department can join with the parent company's operations side to better understand directions, issues and solutions of upstream.

IT professionals can begin to see themselves as the people the company expects them to be: 'business men/women' in the 'upstream business,' not 'executives' in the IT industry.

IT is a separate company

Myth Two: An IT Department is like a separate company doing arm's length business with its parent company.

Under no circumstances is IT a real 'separate' company. Unfortunately, the notion of 'Shared Services' has strengthened, validated and (in some cases) formalized the separate-company myth.

This is especially so when Shared Services is itself set apart by the parent as a separate company which must pay its own way by selling its services at a 'token profit.'

Acceptance of this separate company myth convinces IT that failure of the business side to 'learn IT' is the root cause of poor alignment between IT and the business as well as poor performance by not meeting management expectations70% of the time.

Believing Myth #2 prompts IT to covet or claim 'partnership' with the parent company.

Accepting this myth influences IT to expect a seat at the executive table since the IT company must be 'players at the same level.' Accepting this myth convinces IT that the business should learn the IT business so it will be easier for IT to do its job.

The IT department can commit to learn the business of its parent company and learn to talk to the business side of the parent company in their context, vocabulary, and terms -- not in IT-laden conversations. IT needs to go back to 'who brung them to the dance,' as oldtime Texans say.

IT and company goal alignment

Myth Three: An IT department should align its goals with the parent company's goals.

Aligning company goals and IT department goals is little more than an expression of common values and aims and is not useful in 'producing business IT alignment.'

Proper alignment comes when IT aligns its goals and processes with the parent organization's work processes.

That is, alignment comes not from goal-to-goal alignment but from goal-to-process alignment.

According to a global survey of IT professionals, Indian CIOs are best at aligning with work their parent company needs done.

"The willingness of Indian IT groups to 'go where the business is going' and take concrete steps to pursue highly collaborative working environments'… should be the aim of every IT department."

"including implementing new projects based on corporate-not information technology (IT)-objectives, actively seeking opportunities to propose technology-based approaches to improving business practices [processes] and gaining more support from senior business managers for things like budgeting, change management and technology adoption [processes]."

Source - Aligning IT operations with business goals increases agility, cuts costs, By Dana Gardner for BriefingsDirect | August 14, 2008, referring to a study done by the Economist Intelligence Unit, London

Accepting this 'goal-to-goal alignment' myth negatively influences the IT department to burn valuable time trying to find traction to run their department by putting company and IT goals into similar language.

Unfortunately, once IT's goal statements are 'aligned' with business goal statements,' IT leadership and professionals still won't have direction and, therefore, 'won't know what to do on Monday morning.'

IT departments can only drive their contributions to the parent company with intimate knowledge of the firm's business process architecture. Understanding the parent company's vision, its work process architecture and vector, and its potential business improvement opportunities, allows IT to set its course and be ready to serve the business through effective and efficient process enablement and optimization.

Without some knowledge of the 'vector of work process evolution/revolution,' IT cannot single out and focus on new directions and capabilities of the IT business that can be most valuable to the parent company.


If IT departments can hurdle these three myths and focus on serving the parent by envisioning, enabling and optimizing processes, upstream may be able to take a giant step forward.

Associated Companies
» Holland Management Consulting
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