As costs continued to escalate and IT was not creating any significant cost reductions through efficiencies, the focus shifted to outsourcing non-critical functions that were routine in nature and could be therefore replicated easily. In 1991, BP senior executives chose to begin outsourcing operations, telecommunications, systems development and IT maintenance. This strategy, along with the recentralization of IT led to the company eventually cutting their IT budget in half from $360M to $170M. BP also was able to redefine their entire centralized spending strategy for IT, with 70% of their budget going for core applications critical to their business including geophysical analysis software and core technologies to help the company be more effective in discovering new energy sources (Cross, Earl, Sampler, 1997). What had been so elusive for BP for decades of IT spending had been hidden in the high costs of duplicated enterprise software licenses that were spread across their global enterprise (Cross, Earl, Sampler, 1997). With IT centralized the company once again worked to redefine the structure of IT so it would be more aligned to strategic planning and execution objectives for the long-term. The company soon learned that effective strategic planning is never a one-and-done process (Kannabiran, Sundar, 2011).
One of the most valuable lessons learned during this time period was that streamlining core process areas while ensuring a high level of ownership on the part of IT personnel lead to much greater levels of productivity and performance, a point made often in the research of Dr. Michael Porter (Porter, Millar, 1985). Once BP shifted IT to be more focused on demand management while also having systems analysts shift to business consultants with a project management (and accountability-based) mindset, IT began to take ownership for results and for the first time, IT and groups were synchronized. Creating a more demand-driven strategy can drastically reduce overhead and quickly cut unnecessary costs, especially in IT (Barrett, 2007)....
Strategic Planning in IT IT Impact on Service Industry Performance Cooperative Competitive Competitive Advantage Implementation of IT Innovations 1992 U.S. VALUE-ADDED AND EMPLOYMENT BY INDUSTRY AVERAGE ANNUAL GROWTH IN GDP PER HOUR, MAJOR SECTORS OF THE U.S. ECONOMY Management TASKS IN BUREAUCRACY VS ADHOCRACY ORGANIZATIONS This paper addresses the following problem statement: "Without information technology (IT), a business will not be able to compete globally in any industry, nor in any market it wants to enter. It will
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