For five years, BP CIO John Leggate has managed people and IT systems in concert with his CEO's acquisition-hungry strategy. His mantra: Integrate always, outsource often, and make technology pay - or don't make it at all.
BP Vital Statistics
Headquarters: London
History: Anglo-Persian Oil was formed in 1909 by English adventurer William D'Arcy and Burmah Oil, and was the first company to strike oil in the Middle East. The British government took a 51 percent stake in 1914. In the United States, Amoco emerged from Standard Oil Trust, organized by John D Rockefeller in 1882. Anglo-Persian took the name British Petroleum in 1954. The English company merged with Amoco in 1998, forming BP Amoco, creating a new oil giant that agreed the next year to buy US-based Atlantic Richfield. Known as BP since 2000
Sales in 2003: $318 billion
Employees: 100,000 in more than 100 countries
IT spending: $2.3 billion per year
A Gusher of Mergers
In August 1998, with the energy industry reeling from a sharp drop in oil prices, British Petroleum's CEO made a daring move. John P Browne, the cigar-puffing, Cambridge-educated chief executive, took over Chicago-based Amoco in a deal worth $70 billion, turning his midsize British company into one of the world's energy giants, in a league with Royal Dutch/Shell and number-one Exxon Mobil. Browne promised that he would slash $2.7 billion a year from expenses - and that half a billion would come from IT, where he saw cost-cutting opportunities from overlapping staffs and systems. The acquisition set off a wave of industry consolidation as business magazines compared Browne to General Electric's then-CEO Jack Welch.
Amoco was the first of several high-profile deals for Browne, who had taken BP's helm in 1995 after heading its exploration unit. He had watched as British Petroleum, which ranked 27th in the Global 500 in 1996, had become dependent on maturing fields in Alaska and the North Sea. With a limited world supply of oil and gas reserves, Browne saw little alternative to growing BP except through acquisition.
So the M&A action began. After Amoco came BP's $36.2 billion purchase of US-based Atlantic Richfield in 1999; $6.3 billion to snap up British lubricant company Burmah Castrol in 2000; and a $5.4 billion takeover of Germany's Veba Oel. In August 2003, with BP ranked fifth in the Global 500, Browne invested $10.9 billion in Russian oil giant TNK, created during the Soviet Union's collapse.
IT has long been central to Browne's thinking - his commitment to IT outsourcing is cited in a business school case study and he's been an Intel director since 1997. But the idea that IT could enable BP's growth appeared to crystallize during this entrepreneurial surge. At Oxford University in 2001, he said: "It was only really two or three years ago that we started to see IT as a set of integrated technologies with a real business potential." Browne added that he sees IT "not just as a service function . . . but as an activity which could change the nature of the business itself. We think of this area as digital business - an activity which allows us to focus on the benefits that the business and technology can bring in combination."
As Browne set his philosophy in motion, a problem came up: BP needed a new CIO.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.