He gained the executives' buy-in by getting them to quantify the anticipated project benefits. "I would ask them, 'If we did these seven retail projects, what would be the bottom-line benefits for you?'" says Steinhorn. "We did that with each of the business areas, and suddenly the costs were a tenth of what all the benefits were expected to be."
Hess' IT strategic planning structure has been divided into three components. The so-called B initiative represents a business application or business process improvement effort that's aimed at increasing revenue or generating cost savings.
Enabler, or "E," projects correspond with foundational efforts used to better support Hess' business applications. These include the implementation of business intelligence and analytical systems, the creation of a master data management system and the establishment of an integration framework to connect the common systems used by various business divisions within Hess' marketing and refining group.
A third area encompasses process, or "P" improvements within the IT organization itself, including efforts to create a standard approach to application development.
Within the first nine months of Hess' IT strategic planning efforts, Steinhorn's group has kicked off 17 projects and completed seven of them, including a major SAP upgrade and a reconfiguration of its retail energy system.
On the IT process side, the group developed standardized application development, project management and IT governance methodologies, and it implemented a performance tracking and scorecard system. Computer Sciences Corp. played a supporting role, serving as the project management office for the initiative.
Through the first year of the five-year IT strategic planning effort, Hess' IT organization has already seen improvements by having a more consistent application development methodology applied across the different businesses it supports, says Schwartz. Business-related projects are expected to deliver tens of millions of dollars in business benefits once they've been completed, adds Steinhorn. He pegs the start-up investments for the IT strategic planning effort at a few million dollars.
From a long-term perspective, the planning initiative "is giving us the platform and the environment to improve our ability to grow with the business and become more agile as the business opportunities change," says Schwartz.
With a heightened emphasis on standardizing hardware and software across the multiple business units that make up Hess' marketing and refining group, the strategic planning structure also provides the company opportunities for achieving economies of scale. For example, the group's three energy trading units (oil, gas and electric) currently run separate wholesale systems to help them manage their respective risks.
But that structure requires separate IT supports staff for each system. Plus, "it makes it very difficult from a marketing and refining standpoint to manage risk across three different systems," says William Hanna, vice president of electric operations at Hess and a program sponsor for the IT strategic planning initiative.
Now, Hanna and other members of the IT steering committee are working with Steinhorn and his team to evaluate commercial wholesale systems that could support all three energy groups and determine whether it makes sense to adopt a universal system. The improved IT-business alignment that has already resulted from the IT strategic planning initiative "has really elevated the decision-making to help decide where it's best to invest IT dollars to get the greatest returns," says Hanna.
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