BP Case Study Essay

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BP was having a problem with the amount of contractors they were employing and the amount of money that was being funneled to these contractors. The extent in which BP was relying on contractors caused them to lose control over the projects that the contractors were completing. This in demonstrated with the company not even having a number of how many contractors they had employed, to the point where they had to stop counting (O 'Brien & Marakas, 2013). Having too many contractors puts projects out of the view of managers which can cause problems if the project goes overdue or over budget. Essentially, the dependence of PO’s IT organization on external contracts resulted in difficulties in maintaining control of the IT department due to the majority of them not actually belonging to BP.
When a company needs to focus on its core business it might be wise to use contractors to address IT issues not directly
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There were there too many contractors and they weren’t properly managed. Managers weren’t ensuring that the work that was contracted out was being done in a timely manner and that the work remained within budget. When Deasy was hired as BP’s new CIO in charge of restructuring the IT department, he cut the amount of contractors while centralizing the management of those that remained. The budget was found to be overinflated due to management not having an oversight of where the money went. The fact that Deasy was able to cut $1.5 billion shows that management did a poor job of evaluating where the money went and what it was used for. According to Flinders (2011), “BP spent 65% of its $3bn annual IT budget with 3000 suppliers in 2008 but now it outsources to only seven and has reduced its annual IT budget by $800m as a result.” The steps taken by Deasy was a direct catalyst that led to this amazing

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