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According to British Petroleum website, BP is one of the largest energy companies in the world with 2003 revenues of $233 billion. It has 100.000 employees more than 100 countries and it spending on IT is 1.7$bllion per year. The global energy market is complex and competitive. Leading petrochemicals company, BP use Business Objects Business Intelligence (BI) solutions to deliver strategic information across the business to 35 countries and externally to customers via extranets. Information from an Oracle data warehouse supports day to day business activity and delivers support for strategy planning and business development. (Cooke 2003)
BP organisational structure, product and services and corporate mission has been assumed to appear as shown in appendix 1
The analysis of the rest report is organised as follows:
Section 2: Strategic role of information systems
Analysis of strategic position of the BP, in terms of the Porter's five competitive forces.
Section 3: Specific Social, Ethical and Legal Issues
Analysis of Social, ethical and legal issues arising from the implementation and use of information system at the BP.
Section 4: IT infrastructures and future emerging technology
Analysis BP IT infrastructure and BP future leading technology
SECTION 5 INFORMATION SYSTEM SECURITIES
Discussion about BP business process and IT security failures and their impact on the organisation.
Section 6: Conclusions and recommendations
SECTION 2: STRATEGIC ROLE OF INFORMATION SYSTEMS
A strategic information system is that support the competitive strategy of the organisation such as increasing a firm's bargaining power over its buyers and suppliers, heightening entry barriers, and deterring competitive rivalry .(zhanga & ladob 2001).
2.1 Analysis of competitive forces in BP
According to Lauden and Lauden, it is evident in Porter's competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four other forces in the industry's environment are new market entrants, substitute product, customers, and suppliers. let's analyse these forces at British Petroleum.
The mining, oil and gas industry is one of the most profitable. Even though there is a strong rate of growth within the industry, rivalry remains moderate due to the switching costs, size of competitors (oil companies) and similarity of those competitors and high price competition (yergin1992). In oil industry there are few major market leaders. Bain (1956) describe BP oligopoly structure is characterised by high interdependence between rivals. The decisions of BP are heavily based upon the decisions of their competitors. Due to the tight oligopoly market BP compete in it appears that BP they could be colluding with their competitors on prices. The products they sell are very homogenous; the price elasticity of demand is low. (Lipczynski &Wilson2001)
Threat of new entrant( low)
British petroleum (BP) operates in the energy industry. This is an oligopoly market - there are a small number of firms in the energy industry and enjoying a large market share. (Mankiw2008). BP is making enormous profits as a monopolist. BP remains able to survive in oligopoly market due to high barrier to an entry, capital requirement and economics of scale for new entrant. In free economy new companies are always entering the marketplace because of entry barrier are low. But in oligopoly market in which BP operating barriers to entry are high for new companies. (lauden&lauden2010)
The power of buyer grows if they can easily switch to a competitor's product and services. Product differentiation can attract buyer to switch another product (Lauden&lauden2010). Many existing players on the market; this makes the buyer bargaining power moderate. In case of very limited market leader in the market like oil industry in which BP operating. BP bargaining power of consumers as buyers is very limited. BP is operating in the chain of oligopolistic retailers who collude on prices, following barometric price level on the basis of the market price leader. ( Kolk&llevy2001)
Supplier power (high)
BP has no suppliers, as they supply themselves. The retailers purchase their fuel from BP, who extract and refine crude from several of their own locations around the globe although they are at the mercy of the market price of oil. The price oil is determined by mainly from the cartel of OPEC - the world's 13 largest oil producing groups (Charran2002).More detail explain about OPEC in appendix 2.
Threat of substitutes (low)
Threat of substitutes of oil at the current moment is really weak mainly due to the high prices of such Solar panels and other alternative energy include high switching costs and long waiting time, which makes them unattractive to the consumer. Although bloodies and bioethanol also exist, but there availability is low. (Aune,Mohn,Osmundsen&Rosendahl 2010). Even though for BP the threat of substitutes is weak, many of the substitutes for petroleum such as LPG are already distributed by BP. According to BP website, BP is well prepared for any potential threats from potential innovative substitute entering the market, partly because BP have large amounts of investment already in research and development to find oil substitute.
The role of government plays an important role in controlling the amount of profits received from sales of petroleum. Windfall taxes were introduced by the labour government in 1997 on utility and energy companies such as BP in an attempt to reduce the growth of the recently privatised industry. (Anon 2008)
SECTION 3: SOCIAL, ETHICAL AND LEGAL ISSUES:
The introduction of new technology has a ripple effect, raising new ethical, social, and political issues that must be dealt with on the individual, social, and political levels .These issues have five moral dimension: information rights and obligations, property rights and obligations, system quality, quality of life, and accountability and control .(lauden&lauden 2010)
BP social, ethical and political policies focus on five key areas: health, safety and environment; employees; ethical conduct, relationships; and finance and control.
3.1 Intellectual property and copyright:
Intellectual property and copyright includes: â€¢ Patents. â€¢ Copyrights. â€¢ Trademarks and service marks. â€¢ Other kinds of confidential business information such as: - Sales, marketing and other corporate databases, Business ideas, processes, proposals or strategies, - Software bought or developed by the company. - Information used in trading activities including pricing, marketing and customer strategies. (Babusiaux2004)
Misused of any confidential information, including computer records, from prior employers, load any unlicensed software on any BP computer, using anyone else's confidential information, copying documents and materials (including computer software) that are not copyrighted (for example, a government report), using copyrighted materials or third-party trademarks (for example, portions of audio, video and off-the-internet or off-the-air recordings) without specific permission from the copyright owner, knowingly infringe a valid patent of another party.(<www.bp.com/liveassest.html>,NOV2009)
Quality of life
BP believes in terms of quality of life that, wherever we operate:
Our activities should generate economic benefits and opportunities for an enhanced quality of life for those affected by our business, our conduct should be a positive influence.(Browne2003)
Oil spills (environment issue)
Oil and chemical spills can be highly damaging to the environment and to biodiversity, and cause business loss. In particular, marine crude oil spills remain a significant risk for BP.
Safety and plant operations: Safety of employees, contractors and the public, social issue arising at BP. (Browne2003)
'Inside information' means information that relates, directly or indirectly, to BP or its securities or to another company or other securities and is not available to the public.
Buy or sell shares in BP or any other company while in possession of inside information - even if you 'think' you are not relying on it.
Disclose inside information to anyone outside the company, including family members (e.g. your spouse), without prior approval.(www.bp.com/viewashtml.dO >nov2009)
3.4 Digital systems use and security
Digital systems and the information processed and stored on them. Who uses digital systems - employees, contractors, consultants and other people with temporary access - must ensure that these resources are used appropriately and in line with relevant security policies.
Use company electronic communications systems to transmit without authorization: - Confidential data about individuals. - Confidential company information. - Copyrighted or licensed materials.
Deliberately access, store, send, post or publish: - Pornographic, sexually explicit or sexually exploitative images or text. (<www.digitalenrgyjournal/bp.com>)
Accurate and complete data, records, reporting and accounting:
Honest, accurate and objective recording and reporting of information - whether financial or non-financial - is essential to BP's credibility and reputation, meeting BP's legal and regulatory obligations. (cambell2007)
Deliberately make a false or misleading entry in a report, record or expense claim.
Falsify any record, whether financial or non-financial.
Sell, transfer or dispose of company assets without proper documentation and authorization.
Privacy and employee confidentiality (system quality)
BP is committed to respecting the confidentiality of employees' personal
Information . It is BP policy to acquire and retain only employee personal data
that is required for the effective operation of BP, or that is required by law in
the places where we operate.
Access to company personal data without authorization
Provide personal employee data to anyone inside or outside of BP without proper authorization(<www.codeofconduct.bpweb.bp.com>nov2008)
SECTION 4: IT INFRASTRUCTURE AND FUTURE EMERGING TECHNOLOGY
According to lauden & lauden, Today IT infrastructure is composed of seven major components which are: Data management and storage, internet platforms, computers and hardware platforms, operating system platforms, enterprise software applications, networking /communications, consultants and system integrators.
4.1 Analysis of IT infrastructure ecosystem at BP:
Oil and Gas companies like BP are heavily dependent on their IT and networks, tasks ranging from off-shore drilling to transportation of the final goods are completed efficiently. Oil and gas companies are constantly looking outside of their own industry, seeking inspiration to reduce cost and improve efficiency. ( Helum2006)
HP Open view management software was implemented to monitor the workflow and alert the support engineer in case any sensor reports failure because of this implementation the engineer can start working on the problem within the 3 hour window. BP has implemented the cutting edge technology to meet with its IT infrastructure demands. BP has installed 2,000 Km of fibre cable to connect the oil fields to the remote servers. The company also replaced the traditional UNIX platforms to 64-bit Red Hat Linux systems to enhance processing power of the digital oil field. The digital oil field in BP consists of 3 layers - architecture at the bottom, then a middle layer where that data is turned into information, then a top layer, data infrastructure. At the data infrastructure layer, applications like SAP, Oracle, SQL are used to gather data, where the data is utilize for different tasks e.g. predicting the machine failures, creating historical production charts, calculate amount of oil and gas produced, etc. (Cross, Earl&Samplar1997) In 1999, the BP's chief technology officer (CTO) came up with the idea of inviting outside experts and end users to brief BP's top executives on emerging technologies. These meetings are known internally as "Blue Chalks" "Its 80 per cent about people, 15 per cent about processes and 5 per cent about technology" (Latin2009).
4.2 BP Future Leading Edge Technology
RFID and Sensor Network:
RFID (Radio frequency deification) is a kind of sensor. Which sensors several traits, both communicate via radio waves, contain a serial number and require the same basic IT infrastructure to aggregate analyse and distribute data to the people who can act on it.(Robert2004) In 2003, a meeting on RFID (Radio Frequency Identification) and on sensor network was held by BP and after detailed discussions, it was decided to test and use RFID and sensor network technology in supply chain and logistics; asset life cycle and maintenance; and health, safety, security and the environment. (Robert2004)
Field of Future:
BP has been constantly implementing newer technology in the oilfield as it is being developed and tested under the programme called Field of Future. The company employs about 30 in house staff and 70 consultants to work on the project. The Field of Future technologies are benefitting over 80 per cent of BP's wells. About 2 million data tags have been installed to support production, monitoring by providing real time information to the Operators. (<digitalenrgyjounal.com/featureartical.>may2010)
Remote performance management:
Remote management has lowered costs and increased production significantly. Gathering, conditioning, analysing and communicating information to and from the oil fields and wells are some of the tasks that are being performed using remote management software's. "Integrated Surveillance Information System (ISIS) is a BP proprietary technology that is at the heart of production surveillance. ISIS brings real-time field data to engineers sitting in the office, or anywhere else in the world. ISIS provides continuous monitoring and advanced alert mechanisms, presenting information and analyses that allow BP engineers to monitor production operations remotely in real time and make better decisions, faster, to address any problems. (Cross, Earl& Samplar1997)
Section 5: Information systems security
BP Information Systems Security
BP has been benefitting by digitizing the oil field and putting Information Technology infrastructure in place. Sure, there are countless benefits of IT in the oil industry and it reduces the cost of operations dramatically and increases productivity but there are pitfalls of using the technology, which are not hidden from these companies as we hear about the cyber-attacks everyday on different companies. A cyber-attack is nothing but an unauthorized access to the company's systems to either steal valuable data or perform disastrous tasks. (Macarthy2003)
The Network Protocols:
The US Department of Homeland Security Science and Technology Directorate initiated the US oil and gas security project. The main reason behind this project was to address the rising concerns towards the high usage of Ethernet and TCP/IP protocols in the oil and gas industry systems. Since most hackers understand Ethernet and TCP/IP technology, therefore the systems are more prone to cyber-attacks. Appropriate test systems and simulations are being created to fully test the systems against different types of attacks that may occur in future. The oil and gas control and monitoring systems are not as secure as other modern business networks. (LOGIIC2007)
The Email Security:
The majority of the information in BP is exchanged via emails like any other oil company. The emails from different employee contain different kind of information. The email servers are also very prone to hacking due to the availability of valuable data in the form of emails. Major precautions have to be taken in order to maintain the security of the email systems such as using encrypted protocols (POPS, IMAPS, etc.
Lack of Knowledge Management:
BP information technology department employs many in house employees and consultants. When an employee or consultant leaves the company, he/she takes the knowledge with him/her. It is very crucial to perform knowledge transfer with either the manager or the next replacement. It is also very important to revoke any access to the systems upon termination of employment of a worker. As getting fired or laid off can lead an ex- employee to attack the company's systems, which can result in business loss or any other type of catastrophic event.
One big example lack of knowledge management: The biggest disaster recently occurred is the massive amount of oil spill from BP's rig in the Gulf of Mexico. Some experts are analysing the situation by testing different theories on the available information. Greg Guam from Maverick Media presents his theory of related vulnerability to the Gulf disaster. "There were multiple "Panic Buttons" to hit, even a so-called "Dead man" fail-safe that should have been engaged automatically. None of these security procedures worked. According to BP's Dean Hayward, "It is the ultimate safety system on any rig and there is no precedent for them failing." In fact, Minerals Management Service records show that this BOP passed a test on April 10, less than two weeks before it failed. Thus far, no one has been able to explain it. (Guma2010)] If we consider the fact presented by Greg it is highly possible that an opponent company or a third party hacker intrusion occurred and managed to accomplish this horrible task.
Impacts of Cyber Attacks:
It is very hard to estimate the impacts of a cyber-attack because it all depends on the attackers capabilities. If some once hack the entire system the results can be catastrophic. In February 2010, simulated cyber-attacks were practised in Washington. "The Cell phone networks, landlines and the Internet quickly went down, followed by the entire East Coast electric power grid as mock bomb attacks targeted gas pipelines and power stations implementing technologies into a business model should be performed with intense care and the systems must be hack proof to avoid business interruptions. Where IT can take one company at the top, the cyber-attacks can sink a company within minutes of these attacks. (Garg,Cartis&Halper2003)
6 CONCLUSIONS & RECOMMENDATIONS
LIST OF REFERENCES
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References: task 4
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Appendix 1: BP STRUCTURE AND CORPORATE MISSION
BP was founded by William Knox's' Arcy in 1909 as Anglo Persian oil company limited. In BP has well established in Europe, North and South America, Asia and Africa. BP's business product and services are exploration and production gas, power and renewable and refining and marketing. Through these, BP provides its customer with fuel for transportation, energy for heat and light, retail services and petrochemical products for everyday items. BP has six master brands delivering excellence across the globe. Which are BP, Am Pm, Aral, Arco, Wild Bean Cafe and Castrol .BP owns or has an interest in 24 oil refineries of which 5 are in the USA, and 13 in Europe including 2 in the UK and 6 are in other parts of world. BP refines crude oil to produce petrol, diesel and Lubricate and also LPG. BP policies (code of conduct) that are the foundation on which its conducts its business. The policies focus on ethical conduct, employees, relationships, HSE, as well as control and finance. BP business strategy is to create a culture to which people from all over the world want to belong and contributes, where all employees are treated with dignity and respect and are able to succeed on their merit irrespective of gender or culture.