Interview with Head of Gazprom Neft’s IT, Automation and Telecommunications Department, Konstantin Kravchenko
The Gazprom Neft IT, Automation and Telecommunications Department holds no truck with “second tier” projects: all are equally important. Department Head Konstantin Kravchenko operates not on the basis of individual, separate projects but, rather, across key areas of focus —such as, for example, how to formulate a single, unified strategy in production management; developing a basis for integral and transparent collaboration with the business, and much else.
— When did your professional interest in IT first start?
— My earliest memory is of a programmable calculator, given to Dad at work, which I used to try out some programming. After that, obviously, university and postgraduate studies. I graduated from Voronezh State Technical University (the former polytechnic), and then started my postgraduate programme there too. I was studying in the faculty of Radio Engineering, specialising in the design and production of electronic and communications equipment. For my final course I studied Communications Engineering within the Faculty of Materials Science, and as a postgraduate student studied materials management and technology, working in super-conductor technology and writing my thesis research on “Delivering thin-film high-temperature super-conductors for use in solid-state microwave electronic devices”. This was all during the — less than straightforward — years of
— And what then?
— At that time three promising sectors were clearly coming to the fore in terms of developments in IT. The first was oil and gas, and the second — telecoms. The first mobile operators were starting to appear, and they needed qualified staff. The third area was — trade. I thought “Well, I’m no oilman, I’ll go into telecoms.” To start with I worked at Mostelecom and then in systems integration, before I was invited to join Svyazinvest to work on establishing multi-service networks. People were only just starting to talk about this then. You only had telephone lines — local, inter-zonal, inter-city, and international. The Internet and smart TV (IPTV) was practically non-existent, and discussion of these wasn’t taken seriously. But it was at Svyazinvest that I really became a “manager”. You can form your own view of those years, but nobody can dispute the claim that Russia is, today, one of the most developed countries in terms of its communications industry. I joined the telecommunications department, and after a short while was heading it up. I was responsible for network development, from Kaliningrad to Magadan. We achieved a great deal. I was late in going into the private sector, but at one event I met the owner of a major Internet company. He told me they were gearing up for social networking, since this was where the future lay. That conversation took place in 2003. But if we, in our turn, had not built the networks, we wouldn’t have succeeded in bringing the Internet into every home — there’d be no “Odnoklassniki”, no Facebook, and other social networks just wouldn’t exist. IT without infrastructure and networks is just unimaginable. You can design loads of great programmes and services, but you have to have the framework — the “base” — for this. Today there’s a lot of discussion about how government can support development in IT. The most important thing the government should be doing is to get infrastructure in place. Infrastructure is what gives the impetus for the business to develop.
— And when did you go into the oil and gas sector?
— Five years ago. To start with, I joined a department within Gazprom Neft involved in developing the filling station network. The company needed a specialist who understood large-scale customer-service operations, customer relations, and how to monetize the customer base. We began developing a loyalty programme, connecting all filling stations up to a single multi-service network, and then began some projects connected with online monitoring, and so on. Ultimately, I was invited to head up the entire IT department within Gazprom Neft. And I’ve been working in that capacity for the last three and a half years.
— What key IT projects have you implemented at the company over the past two years?
— Our work is organised in such a way that we don’t run “second-tier” projects. As early as 2011 we initiated the development of an IT strategy and, in that context, tried to identify what the business needed, and corresponding IT capabilities here. Where does the IT budget go? How effective is what we are doing, and what impact does it have on the value of the business, and on customer satisfaction? All of these questions were there to be addressed. As far as we were concerned, we understood that IT goes through three “life stages”. The first stage involves initial installation, the second — maturity. At this stage, certain basic elements are automated. And the third stage begins when IT systems start to support the business and help managerial decision making. The majority of today’s companies are somewhere between the first and second stages. And our project management system was formulated on the basis of how the business could best be described in terms of a set of processes. Ultimately, we developed an “IT landscape”, and understood where our main areas for development were. “Red” areas designated those areas where absolutely nothing had yet been done, “yellow” those where something was ongoing or being implemented, and “green” — those areas that had already been automated, and were operating normally. All information was plotted on a timeline, and our activities planned several years ahead. We even came up with our own word for it — “landscaping”. Now, some years on, I can say that the landscape is certainly “planted” — although new business requirements have come to light during that time, and there are, once again, things that need to be done in that respect.
— What is your IT strategy characterised by? What sort of time-scale does it cover? And what principles is it based on?
— Business strategy at Gazprom Neft covers a period of 10 years, IT strategy — five years. How often should IT strategy be updated? IT develops very fast. Something that only yesterday seemed completely fantastical is today becoming a reality — and will, tomorrow, be completely outdated. For that reason, it’s essential that strategy is updated every year. Under our five-year strategy, our key areas of activity were all set out. We became business partners, assuming responsibility for the final result. And that’s more than just a mere statement: we have launched a range of projects that form basis for such support. So, as I say, all our projects are important. Gazprom Neft is a pretty major company. Added to which, we are firmly focussed on effectiveness, on the ultimate outcome. But, in terms of the company’s business structure, we are quite typical. We drill for oil in wells, process it in refineries, and sell it as oil products: the project portfolio is formulated consistent with this. There are projects to improve the effectiveness of operations management in production, refining, packaging and sales. There is a full range of projects, related to HR, finance, procurement, capital construction, safety, and so on. Our previous projects were directed at developing templates for company management — financial models, accounting functions, management of the property portfolio, and so on. We made some serious advances in inventory and logistics management, procurement management and capital construction. We’re resolving a whole range of issues in managing various corporate functions. Upstream, we have developed a range of solutions, covering the entire cycle from exploration to production. It’s the same situation in improving efficiency in refining. We’re now close to tying this all up in a single, unified strategy in production management.
— Tell us about your retail business.
— Initially, our filling stations were scattered, and unconnected — without even the most basic network connections; the best we could hope for was the existence of 3G channels. We built a single, multi-service network connecting all our filling stations, (offering clients free WiFi throughout all of these), and modernised the management system, improving its functionality in line with business needs, and making it easier and more comfortable for operators to do their business. We were also able to offer clients a loyalty programme, and discount cards. Since we didn’t, at that point, have any network connections between individual filling stations, the cards work offline, with a chip and an app that allows them to be used as a sort of “electronic wallet”. A further, separate project involved improving the quality of oil products. The business had launched a new product — its own branded fuel — and we needed to ensure quality throughout the whole supply chain. We subsequently received a governmental instruction for the establishment of a framework system that would track and account for our oil throughout the whole supply chain — from bringing crude to the surface to delivery at the pump. We called this project “Neftekontrol (oil control)”. We implemented it successfully, and it was well received. It is, thus far, a pilot project, the aim of which is to ensure the highest possible degree of control throughout the value chain. And that’s the reason I didn’t start by citing specific, major projects — outlining instead the main areas of our work, overall. This means basic automation at all levels, implementation of business applications, delivery of essential information to support reporting and managerial decision making — the priorities for workplace automation are already clear to management.
—How widely is mobile technology used throughout the company?
— Ours is a big company, we work throughout Russia and the countries of the CIS, with assets in Europe, the Middle East and elsewhere. Those functions most essential to the business have, already, been addressed. We’ve established remote access to e-mail — and other essential resources — for all users. Our internal clients can access their own desktop remotely, from anywhere in the world. This, moreover, is delivered via standard communications channels (although we have, of course, provided for encryption and confidentiality).
— Your IT-services project management system was recognised at the GlobalCIO awards last year. Which represents major acknowledgment from your peers. How are you going to top that?
— We won our award for IT systems management (ITSM), but we could have won it for other projects, if we’d put them forward for nomination. What’s important is that processes are properly organised and prescribed. You mustn’t automate chaos! When we were doing the ITSM project, we restarted various processes. The fact is, we, as a function, had become more mature, and now have a number of subsidiary service companies. We had to articulate a number of integral processes. Thanks to the ITSM project we now have the instruments necessary for managing these processes. We re-launched not just the processes, but also the team — some we sent for further training, others we redeployed. But, it seems to me, the most important thing was that we brought people together, involved them in the project. What next? We’re currently building a service resource model, and will continue working on this, but we also want to construct a cost-management model, a model for managing IT-assets throughout their entire lifecycle, and to improve our competencies in change management. We’re looking at all of this through the prism of “IT4IT”. This is an innovative model, recently endorsed by the international Open Group organisation, which looks at IT from the client’s point of view. Our ITSM project, as it happens, was also directed at achieving a deeper understanding of the IT function.
— Many of your colleagues complain about the lack of training for IT specialists. How do you resolve that problem?
— Any problem can be solved in three ways: organisational, technical or organisational and technical. We have to find a balance between these. We, the IT function within Gazprom Neft, represent a part of the company making its own contribution to the broader business, and bearing responsibility for the final outcome. So we, too, need a professional toolkit — the ITSM system, a monitoring system, and so on. All of which should be in place. Which then leaves the problem of qualified staff. And, for that reason, many companies — ourselves included — have begun to set up their own IT academies. We’re starting to collaborate with technical higher education institutions, to that end. We’re now developing a “profile” highlighting the key competencies every IT professional ought to have. Indeed, even after a specialist institution, an individual has to study and study. And, I believe, it’s no less important to also train IT-service professionals in order that they are able to set the right objectives for IT.
— Which priority tasks are lined up for the near future?
— We have now, already, developed the company’s second successive five-year IT strategy. Continuity is integral to this. Each new generation should make use of the experience of the one before. You shouldn’t strip everything back to basics every time, but, rather, re-build or build on top of what was there before. When I came to work at this company, I sketched out the entire business, its whole structure. And this gave me an understanding of something very important — specifically, that an IT specialist today has to understand the business he or she is working in extremely well. The IT guy is the “key” that brings together the various constitutional components to make free-flowing, integrated business processes. Only senior (board-level) people have that sort of vision. Which means that the customer in that sort of approach to IT can only be the CEO or a member of the board. That principle was integral to our first five-year strategy, and we’ve developed it for the second.
The most important area of focus in the next few years will be data management. Data is a much an asset to the company as oil wells or equipment. Data has a value and a cost, and needs to be maintained, modernised and updated too. They’ve completely come to grips with this in the west — where a new concept (that of the Chief Digital Officer, or CDO) has come to light. We need this, so that we end up with a system of predictive modelling that allows the IT function not just to support us in working out what’s happened in the past, but also in getting a glimpse into the future.