Leadership Insight > Gary Masada

Chevron CIO Talks About the Challenges of Getting the Right Strategy Mix for One of the World's Largest IT Shops

By Elizabeth M. Ferrarini

Since becoming CIO in 2003, Gary Masada has been on a mission to carry out a strategy to centralize and standardize many aspects of technology operations through a program called Global Information Link (GIL), which has returned about $200 million to the company. In the meantime, he focuses on achieving operational excellence, making constant improvements on all products and services delivered daily to customers, and managing a five-year strategic roadmap.

The BTM Institute sat down with Masada to discuss what it takes to build a cutting-edge and highly efficient technology organization.

I'm the chair of the CIO Council, which reports to me. The council is comprised of CIOs from the various large operating companies across Chevron Corp. These operating companies include Global Upstream, which is the exploration and production arm; Global Downstream, which is the refining, marketing, supply, and trading; and Global Gas, which consists of the midstream components, shipping and pipeline, as well as the gas business. We also have a CIO from our IT corporate departments, such as HR and finance. Within those organizations, we have IT managers who are responsible for the various pieces of it.

Once we figure out what we want to govern, we set up various committees, such as the architecture review committee. It's our strongest and most important governance committee because it sets the standard. If you want an exception to the standard, you have to go through an appeals process to that committee. It will either grant it or say that it affects other systems. If the committee doesn't grant it, then you can go through another appeals process with the CIO council. In the past two years, we haven't heard any appeals. The architecture council is working pretty well.

Q. In an article, you wrote that to support a global business model, you need a careful mix of a centralized IT strategy and a decentralized IT model. Can you explain that?

The strategy has its own advantages and disadvantages. A decentralized strategy offers the advantage of allowing us to put more decision-making power out in the field where the important stakeholders might be. Stakeholders might include foreign governments, national oil companies, other oil company partners, and customers. The decentralized model allows us to be more agile and quick to act. The centralized model tends to gather the efficiencies of size. Because Chevron is a very large company, we can gain potential synergies if we do things in a standard manner. To balance those out, we need to try to find the sweet point in what things we should centralize, what things we should standardize, and what things we can leave to the discretion of the people in the field. That's a moving target.

Many times when you are in a decentralized model, you start thinking you should make decisions about everything. You end up with things that don't fit together, but you aren't thinking of the big picture, and not looking at interconnectivity. You minimize the value of the investments. The value of IT here is that it all fits together, and you can connect one end of the company to the other end of the company. Many things should probably be more centralized and standardized then where we have it.

We started from a very decentralized strategy, and have been moving bit by bit into becoming more and more centralized.

Q. To get a stronger alignment between the business and technology, you've created a blueprint and an investment roadmap going out five years out. How is this strategic framework helping technology carry out its business goals?

One of the ideas I had was that if you lived in a decentralized world with only regional governance, you ended up with a system that was both ineffective and inefficient. Investment dollars need to be aligned with the major strategies of the corporation, but when we checked, we found that many of the technology investments were based on good ideas rather than a sound strategy. The first thing that we did was to align the major technology investments with the major strategy of the corporation and each of the operating companies. We tested them against the strategy by identifying the gap. We then put the technology investments on the roadmap to fill the gaps that existed. Not only did it align with the business, but it was also an effective strategy check for the business.

On top of that, the dialogue that occurred between technology and business leaders had not occurred at that high a level before, and that was the additional benefit of forming a business partnership with technology, which will have even greater consequences as we go forward.

Q. How has this dialogue continued to help with longer-term planning?

The business units have been able to understand the magnitude of the technology investments they're making and truly support them, even though it might take some time to get there.

They often heard about projects, but didn't really understand how significant it was and the impact that it would have on their business. The dialogue that now takes place enables them to have a deeper understanding of how their investments in technology are going to provide benefits to the business. In the end, it actually led to almost every business increasing their respective technology budgets because for the first time there was a clear understanding of what they could expect in return of their investment.

Overall, we've been delivering on the roadmap we set forth and because it's a five-year roadmap, every year it becomes critical that we continue to deliver on the promises of that roadmap.

Q. Can you describe what you did in the first two phases of the GIL project to return the cost savings to the company?

In GIL1, which was about five years ago, we standardized more than 50,000 desktops in about 1,800 company locations, and the enterprise software associated with them, which happened to be Microsoft. That was a big change initiative because everyone had his or her favorite desktop and laptop.

In GIL2, we standardized the network by ensuring connectivity, standardized the data centers, and moved to the next generation of desktops and laptops. This move gave people the ability to work anytime, anyplace, and anywhere. That was the tagline for that project. We gained tremendous productivity advantages, along with the savings associated by being able to leverage our size. That's another benefit of centralization. We have a standard desktop and a standard laptop and are increasingly moving towards, a standard configuration. We have a very well managed infrastructure, which bit by bit has become global.

Q. What is the third phase of GIL about?

GIL3 is about refreshing the desktops and laptops to provide more power and greater mobility. We now have 90,000 desktops in even more locations. Mobile devices have become an absolute necessity tool for many of our folks. We haven't really figured out what the productivity gain is here. While I go on vacation, I might spend an hour or two each day going through email on my Blackberry. I would not have been able to do this so easily five years ago. The company gains additional productivity from such an ability.

GIL3 is also about improving information management by using new technology to tag information so it can be found, shared, retrieved, and archived. We're also carrying out policies for data retention.

Q. What type of metrics do you have for measuring technology projects?

We're working on the metrics piece now. It's one of those areas we would prefer to avoid getting into too much detail over, leading to a lot of work. On the other hand, how do we measure our impact? Each project has its own scorecard. We can decide what to pull up from the various projects to measure whether it was on time or on budget, and whether it delivered what it said it was going to in terms of cost reduction, and synergies. You have to pick the right metrics to make sure the right things get extended.

When you say you've generated, for example, $150 million in benefits, the business usually doesn't understand how and when that happened. Technology doesn't have a bottom line figure that affects pieces of the business, such as sales, but technology affects many things. However, it's counterproductive to wind up in a discussion such as: technology was this part of the value of improving your sales processes. I like to hear the business tell us why they liked what we did. Some times business leaders tell us that it's a great project because it allowed them to do certain things, which might not be the things IT planned to deliver, but that's what the business leaders value and that's what gets them anxious to do the next project.

Q. How do you drive technology innovation to keep the company competitive?

We take a process approach to everything we do, which is the nature of the company. We, however, have not taken a process approach to innovation. Many people say innovation is different and you don't need a process approach for it. If you think about the scientific method, you go by a process. You look at the opportunities, figure out what is the greatest value to the business, and start to focus on those. Next, you say, 'What ideas do we have and what ideas can we bring in from the outside that would improve these business processes?'

We've contacted other major companies, such as Intel, Procter & Gamble, and IBM, to learn how they are managing innovation. We want to know how they organize it, what processes they have, how they make innovation more productive, how they eliminate roadblocks, and how they foster an innovation culture. We have created a small team called Innovation Services. We say services because we don't want to give the impression that innovation happens here. It's a group that supports and encourages innovation everywhere in the corporation.

On the one hand, we don't like the idea of innovation being about just keeping our IT infrastructure running because that sounds so mundane. On the other hand, our business is very complex and technology-intensive, but we always have the challenge of keeping our infrastructure running efficiently. We look at innovation as a way to deliver a higher level of products and services, and reliability, but at a lower cost. We strive for small innovations and large gains.

We focus on operational excellence, constant improvement on all the services and products we deliver, every day, to the customers. At the same time, we manage a long-term, five-year outlook on the major things that are going to have the biggest impact for our businesses. Next, we look at innovation in terms of how we can bring the best and the brightest internal and external ideas to the company and create business advantage around those findings.

Elizabeth M. Ferrarini is a writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.