Summary
BP Exploration company limited, a subsidiary of British Petroleum Company that explores and produces oil and gas decided to outsource all its information technology operations in an effort to cut costs, gain flexibility, achievement of higher quality IT resources and transform the IT department so they act like internal consultants for the firm. The firm took a different outsourcing approach as the senior managers were concerned about relying on one supplier to receive all services because they believed such an approach could make the IT department vulnerable to escalating fees and inflexible services. In contrast, concerns were raised about splitting up the IT department to different suppliers since previous experiments were not successful.
BP exploration was looking for a solution that would allow it to buy IT services from multiple suppliers and to have them delivered as if they came from one single supplier. Therefore, three contractors were hired (Sema group, Syncordia and SAIC) and required to work together as if the services came from a single supplier. All three suppliers were integrated as each one had its individual role like Sema group ran data center services, Syncordia managed IT facilities and SAIC managed all telecommunications. The senior managers at BP exploration came to a decision that the company no longer needed to own the technologies that provide business information to employees.
Over the years, BP exploration employed 1400 employees in the IT department which has been reduced to 150 employees through successful outsourcing through the 3 vendors. The cornerstone of BP’s IT strategy was selecting multiple IT suppliers that acted as one.
Strategy for successful change
The successful change would consolidate and outsource IT service to three suppliers who act as one. To implement this change, the firm had to first consolidate seven of its IT departments into a single global IT department with centralized financial control. The firm then began to standardize systems across geographical locations and eliminating costs by reducing the number of support staff maintaining different systems. BP exploration consolidated all data center into two locations and reduced the size of the staff in half which cut the costs by 25%. This made them as efficient as they possibly can be before handing them over to the three suppliers. The successful implantation lead to IT fixed costs to variable costs, greater flexibility in systems and high quality IT services. Business customers reported improvement in BP’s overall consolidated IT services.