John Cross, a former Group Vice President and Chief Information Officer for BP plc has recently been appointed non-executive director for ServiceTec, the independent managed IT support provider. He argues that outsourcing frees a CIO to use IT to leverage business advantage.
Has information technology lost its strategic importance?
I think not. Technology has been used aggressively by the oil industry for the last 50 years. The beauty (some would say the frustration) of technology is that it is ever changing. In doing so it continuously places fresh demands (and opportunities) on businesses to adopt and adapt - not to do so is to ultimately to lose competitive advantage.
As Chief Information Officer for BP, I was responsible for re-structuring the IT service model and an early pioneer in the concept of outsourcing (1990). As a result the cost of IT was halved and the company used new technology to achieve more new oil discoveries than its competitors. These radical changes contributedto BP becoming the oil industry leader.
IT later played a major role in allowing BP to restructure itself into a flat global organization and to use the early promise of the Internet to facilitate the flow of information acrossthe traditional hierarchy of the organization. As an earlier adopter of technology BP was able to seize a strategic advantage.
Earlier technology adoption carries its risks, and I would see outsourcing asone way of alleviating those risks. An eager, well-managed supplier can bring improvements in the quality of services to your own internal customers. By allowing them to bring in technologies that have been proven and implemented with other clients you can feed off the market's R&D investments and avoid having to take internal gambles on new technology.
Outsourcing allows the internal IT organization to focus on its key advantages - company and business knowledge and to leverage IT for new business opportunities. Not everyone can do everything well and access to 'best of breed' suppliers brings access to new skills and technologies.
There is also a saving in the time and management attentiontaken with managing an army of staff; when BP merged with US Amoco in 1998, Amoco had an inhouse IT team of 5,000.
For a CIO, knowledge of the technology and all that is going on in it is paramount, partners that can keep you informed of the latest developments and trends are a valuable asset and enable you to bring real value to the business.
At the end of the day, all organizations are human and interpret and perceive opportunities in different ways. Strategic distinctions have always come from those who not only see the opportunity and its potential business value butalso seize the moment and execute it well. These are far from universal qualities in an organisation, which is why some are so much better than others.