Expat oils megamerger wheels

Merging the IT systems of two multibillion-dollar companies was the task served up to expatriate Kiwi Alan Nunns when his employer Chevron bought fellow oil behemoth Texaco last year.

Merging the IT systems of two multibillion-dollar companies was the task served up to expatriate Kiwi Alan Nunns when his employer Chevron bought fellow oil behemoth Texaco last year.

Nunns, who is general manager of technology and strategy for the newly formed $US100 billion ChevronTexaco, is also a member of the Kiwi Expatriates Association. KEA, which was an initiative of last year’s Knowledge Wave conference in Auckland, aims to help New Zealanders or Kiwi firms expand offshore.

In Auckland last week, Nunns outlined the company’s merger strategies, saying the IT departments had a year to prepare because IT wasn’t considered to be critical to the business and there were no securities restrictions on working together before the merger.

“We came up with plans to standardise across the three companies, Chevron, Texaco and Caltex — a joint venture between the two.”

These covered networks, security, directory, servers, databases, data warehouses, ERP — SAP and JD Edwards — e-business systems, business applications, communications links, and technical and control systems.

“On day one, because we had put plans in place, we were able to have complete integration of the networks, files, email and intranets.” Six months later the company had integrated its US SAP financials and HR systems and was working on regional IT. It also rigorously renegotiated all major contracts with telecommunications, software and hardware suppliers. “All this has led to significant savings and taken about one year,” says Nunns.

Four years before the merger Chevron embarked on a project to standardise its desktops and servers. Chevron created a standard desktop that eventually ran Windows XP and a server of Windows 2000. “Patches and virus fixes can be sent out worldwide and people can download software they need from a central software panel,” says Nunns. “This move saved about $US30 million a year.”

With the merger Chevron-Texaco extended the project to the global network. It strengthened the backbone, upgraded and standardised all the LANs worldwide using Cisco hardware, put in a meta-directory and a public key infrastructure for security and adopted e-procurement for IT. The IT merger is halfway through and Nunns believes the savings will be significant.

For day-to-day operational IT ChevronTexaco has three main strategies. All IT is defined along product and service lines including WAN, LAN, voice and remote access; applications and data server management; web-based development; and ERP support.

“We literally sell our desktops. We have global and US rates and can, if necessary, explain these rates. There is no cross-subsidisation of products.”

The second strategy is that although the business structure is radically decentralised the company has steered a middle path with regards to IT. “Decentralised IT is bad because of the cost, but when you’re too centralised you’re unresponsive and can tend to live in an ivory tower.”

One third of Chevron-Texaco’s IT is centralised. In his role Nunns has responsibility for functions which are shared across the enterprise. He reports to the enterprise CIO. There are CIOs for each operating company.

The third strategy is project management using a phased and “gated” method. “Gated means you don’t go to the next phase until you have complete sign-off. Any significant project must have the value identified up front.”

The process has been a learning experience for a fellow from down under. “As a New Zealander, the culture I grew up with was start something small and grow bigger. This is the opposite. It’s take on something big but make sure you have the buy-in and the value identified right at the start.”

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Tags Chevron

More about Caltex AustraliaChevron AustraliaCiscoJD EdwardsLANSAP Australia

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