Shell games

Shell games

The international fuel giant is looking anorexic in the IT department

In the era of downsizing, few can pick an organisation that has shrunk its IT department to the near-disappearance levels of Shell New Zealand.
Until just a few years ago Shell operated a determinedly in-house operation on two floors, the sixth and the seventh, in the trademark Shell House on Wellington’s Terrace. They teemed with people who operated within a strict hierarchy with an even stricter sign-off regime. You approached the sixth and the seventh with more than a degree of trepidation. Whatever you wanted was not going to be easy, you sensed.

Picture the scene now. Shell New Zealand has left its famous green glass tower on The Terrace and is based on two floors on Wellington’s Queens Wharf in what was once a leisure and shopping centre. The decor is not corporate at all. Its off-the-wall bright colours befit the seascape setting and the work environment is open-plan — so much so that you have to look hard to see where one department ends and the other begins. You have to look especially hard for the IT side because it has now shrunk to 15 people, most of them contractors.

David Moreton is the IT team leader — not manager, note. He has presided over what many believe the most visible downsizing in this country to date. Long before the move to the seafront headquarters this shrinkage can be traced to the end of Shell’s mainframe — an IBM 4381 — and the arrival in the same year, 1995, of JD Edwards. These two events signalled the end of the bespoke era. Until that time Shell in New Zealand, as elsewhere, had firmly adhered to a customised policy in which it carved its own intricate localised systems around its business.

The arrival of JDE brought most things under the ERP umbrella, though some of the surrounding systems have been built in-house — most notably a front end system for the call centre. This was written, incidentally, using Powerbuilder, a programming approach in which Shell locally has built up plenty of experience. Nowadays, though, outsourcing prevails.

Indeed, one of Moreton’s seven staffers (the other eight in his team are contractors) concentrates exclusively on contracts administration. Sequel Software looks after the Oracle database administration.

Hewlett-Packard does the hardware in New Zealand as it does everywhere else in the world for Shell under contract. Telecom has responsibility for the wide area networks. Computerland does everything else.

Computerland’s role at Shell deserves extremely close definition. The Shell IT world is described as being in two distinct halves. There is the “legacy” world, as Shell describes it. But this does not refer to elderly inherited equipment moved across from the old Terrace HQ. In Shell terms legacy means, simply, local applications and support. Global Infrastructure refers to the standardised systems that are used locally. So standardised are these Global Infrastructure (GI) systems that the interface tape and disc racks are brought in built up and ready-to-go with minimal local handling beyond plug-and-play.

A Dutch firm, Getronics, has the worldwide partnership contract for the installation and maintenance of these GI systems. But Getronics, a public company, has no New Zealand office, which leaves Computerland to do the work under a subcontract.

Computerland’s task seems a straightforward one. It is to support the IT-services arm of Shell Information Technology International (SITI) in creating and maintaining a common unified desktop computer and server environment across the group’s worldwide operations.

However, and I am the one commenting on this, no-crinkles standardisation across the board is often hard to achieve in New Zealand, a country where users have a positive genius for finding reasons why they have to have something just a bit special, and then successfully forcing it somehow through the standardisation firewall.

The enforcer at Shell is the mild mannered Moreton, of course. His patient demeanour probably comes from his previous career as a secondary school teacher dispensing computing and mathematics lessons. He taught at Linwood High in Christchurch and then at Queen Elizabeth College in Palmerston North. There he was given some responsibility for the school's timetabling. He so enjoyed the operational work that 17 years ago he applied for and got a job at Shell as a programmer. He started in 1985 working on programming in Cognos Powerhouse.

Giants of commerce

On the face of the earth there are three defining multinationals. They are Nestlé and Unilever in foods and Royal Dutch Shell in energy. Shell and Unilever are Anglo Dutch and Nestlé is Swiss. Shell, though, is generally credited with developing the multinational model by blending the techniques used to hold together the British and Dutch colonial empires and modifying them for the imperatives of the emerging corporate era.

This involved putting the right people on the ground in its far-flung domain and then giving them their head. Up to a point.

Thus, David Tudhope, the country manager of Shell in the 1960s and 70s, is often credited with forcing through the development of the Maui field, using influence he had built up in the immediate post-war period with Shell’s legendary chairman, Sir David Barran.

Historians believe that one of the reasons the British and Dutch empires lasted as long as they did was that these empires, benign by the standards of their day, listened to the voice of individuals.

So it is not exactly a surprise to learn that the headquarters of Shell in New Zealand routinely handles calls from farmers requiring a tractor-full here or there of fuel. True, these calls are routed via the bespoke front end, through JDE, on their way to local district distributors. But the calls still go through country headquarters.

Similarly, every evening, from the data centre housed on Computerland’s third floor, there are automated dial-ups to all Shell service stations seeking fuel requirements. Likewise, a bespoke system records every Crunchie bar sold along with everything else that has moved across the counter of the swelling consumer-goods side of the energy retail sector.

Under its Oracle-based systems, it spins off the numbers for a separate company, also in the Queens Wharf building, in which Shell has only a shareholding. That company is Loyalty, which collects and consolidates the consumer loyalty purchase points.

The global standardisation matrix appears to be behind a certain reluctance for Shell to go the browser way. Though New Zealand is well advanced in internet applications, many of the other 130 countries in which Shell operates are further behind.

One area in which Shell locally does go the “legacy” or local way is in its use of the internet to manage its Shell fuel card. For example, customer fleet operations can add or delete card validation as new drivers come on stream or depart. In general, notes Moreton, “you can say that in our business, which is distribution, we have taken the full ERP path.”

Royal Dutch Shell in its administration has an institutionalised aversion to theory. Risk-guessing, estimating and theorising is accepted by Shell only as part and parcel of exploration and the market. The risk must be squeezed out of every other element of the organisation’s activities.

In freezing out theory, Shell relies in large part on two types of knowledge. There is the explicit or engraved knowledge of case studies and other measured events. Then there is the tacit knowledge; a kind of institutional knowledge contained in the collective memory of the staff.

So when Shell states that global infrastructure standardisation of its “computing environment” is expected to achieve a reduction of 30% in its “average desktop total cost”, then we should all take careful note.

Shell’s institutional nose for spiking costs in relation to return was demonstrated just last year when the giant company pulled out of a scheme to go into the worldwide information business. The scheme was broadly to follow the General Motors-EDS model in letting its information side free-float as a profit centre, serving in-house and external customers.

On Queens Wharf the area planned for the IT outfit has been taken up by Synergy, which will do itself no harm at all by living cheek by jowl with the most avid outsourcer in the major league business community.

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