Mini Case: Managing Technology At Genex Fuels 640221

Mini Case Managing Technology At Genex Fuels4 4 Smith H A And J

Reproduced by permission of Queen’s University, School of Business, Kingston, Ontario. “You have got yourselves into a terrible predicament,†said V. R. “Sandy†Sandhuramen, his soft Indian accent belying the gravity of his words. “You are incredibly lucky you have managed to do business as well as you have, but this situation cannot be allowed to carry on.†Sandy, a high-priced technology consultant, had been hired by Genex Fuel’s new CIO, Nick Devlin, to review the company’s technology portfolio and help him and his newly appointed IT architect, Chuck Yee, get a handle on the firm’s technology needs.

Genex, a major producer of crude oil and natural gas, is the largest marketer of petroleum and petroleum products in the region. It is structured into three distinct business divisions, each comprising a number of functional segments. Until recently, IT had been decentralized into the three divisions, each with its own director of IT who reported to the divisional executive vice presidents (EVPs). Devlin, formerly the director of the corporate division, had been appointed CIO and given the specific mandate to bring in SAP as the primary technology platform for all the divisions. “We have to start behaving like we’re one business,†said the CEO when he appointed Devlin.

“I want a much more agile and responsive IT organization than we’ve had in the past. It seems to me that every time I ask IT to look into something I’ve heard or read about, they always come up with a thousand and one reasons why it won’t work. We need to be able to use technology competitively, and that won’t happen unless you can get ahead of the curve.†Devlin’s excitement about his new mandate had lasted just about a week, until the true scope of the challenge became clear. He had asked each divisional IT director for an inventory of hardware and software currently in place and to briefly outline the work that was in their plans for the coming year. “We must have one of every piece of hardware and software ever produced,†he groaned as he scanned their reports.

On the one hand, there was a new customer management system called COMC, which had been implemented to improve real-time information exchange between the company’s 135 bulk fuel sites and Genex headquarters. On the other hand, IT was still running an archaic DOS-based marketing system called MAAS to provide customer service and reports. “And they want to bring in SAP!†he groaned. “We need a plan, and we need it soon.†That was when Devlin had engaged Sandy to work with Yee. “First, I want a no-holds- barred assessment of our current situation,†he had said, and now they were in his office, outlining the “terrible predicament.†“The biggest problem you face at present,†said Sandy, “is the fact that you have absolutely no standards and no integration, as you discovered for yourself, Nick.â€

There was a lot of technology out there—both old and new—and it was a political hot potato. Almost every system had its group of advocates, some very senior in the company. All the EVPs had invested their individual technology budgets in the hardware and software that they felt could best support their work. The problem was that maintaining this mishmash was now costing an arm and a leg. And it was highly doubtful that the company was getting true value for its technology investment. “We should be able to leverage our existing investments so we can invest in new technology,†said Yee.

“Instead, almost all our budget is taken up with holding these systems together with toothpicks and tape.†“One of the most challenging situations,†Sandy went on, “is Price One.†Obsolete but absolutely essential, Price One is the fuel-pricing system that stores the pricing algorithms for all fuels marketing functions, including aviation, marine, retail, branded associates, and industrial and wholesale. Although pricing is an integral part of marketing, Price One cannot communicate with COMC and is not easily adaptable to changes in the business environment. Price One perfectly reflected the business and technology that existed ten years ago, but this has now become a real drawback. To get around these limitations while continuing to use Price One, staff manually feed information from pricing requests in COMC to Price One to get approval because both systems use different terminology in coding products for different pricing methods.

Price One also lacks the ability to link information from different systems to ensure data integrity. As a result, Price One has accumulated some irrelevant data groups under pricing for products, and such corrupted data can be detected only by an experienced individual who has been dealing with that product group for decades and who would know at a glance the validity of the data. One of Price One’s critical flaws is its inability to link with other systems, such as COMC, and to pick up competitive market information in order to approve price. Previous plans to rewrite this system have been resisted strenuously by management because of the expense. Now the system is on its last legs.

“And like most oil and gas companies,†Sandy observed, “you have automated very few of your information assets as other types of organizations have done.†Typically for the industry, Genex had grown by acquiring other, smaller firms and had inherited an enormous amount of physical data. It now has more than two million items of paper and microfilm. It has one hundred twenty thousand tapes of data. Some items date back to the 1940s and came from numerous sources. The company’s seismic assets, on which it bases many of its decisions and which has a replacement cost estimated at more than two billion dollars, are stored on a wide variety of media from analog tapes, magnetic reels, and cartridges to optical discs to paper, film, and microfilm.

They are spread out across five conventional physical warehouses. This system of data management is problematic for two main reasons. First, with land sales occurring every two weeks, it is extremely difficult to make timely decisions based on all known information about a property. Clearly, the more seismic information a company can bring to bear on its decisions, the better it can decide where it wants to do further work. Second, the company’s data assets, on which its future depends, are extremely vulnerable.

There is no backup. When needed, the only copy of the information requested is physically transported to Genex’s offices. The tapes on which the data reside deteriorate further with each reading. Furthermore, much information resides on obsolete forms of media and is getting increasingly difficult to access. “Finally, IT is getting a lot of pressure from the executive office,†reported Sandy. “These guys have seen what’s going on in other companies, and they want to see Genex move into the twenty-first century. Staff at Genex cover vast territory and must work from home, from local facilities, or on the road. Not only does Genex need to provide a virtual working environment for these workers, but it also needs to consider how they can work together as a team without having physical colocation for communication.†“Well, I guess we have it all,†said Devlin. “Integration problems, outdated hardware and software, inconsistent data, expensive workarounds, pressure to modernize, and substantial budget limitations.†Turning to Yee and Sandy, he smiled. “Now what are we going to do about it? Where do we start?—and if so, how?

Paper For Above instruction

Managing technology in large organizations like Genex Fuels requires a strategic and integrated approach to overcome diverse challenges such as outdated systems, data silos, and resistance to change. The case of Genex exemplifies the complexities faced by companies in the oil and gas industry, where legacy systems, fragmented IT infrastructure, and extensive physical data assets impede operational efficiency and strategic agility. This paper explores the evidence indicating that Genex is not leveraging technology competitively, evaluates the necessity of external consulting, and proposes a comprehensive strategy for enterprise-wide system implementation, such as SAP, to transform its technology landscape.

Introduction

The rapid evolution of information technology (IT) demands that organizations remain agile and proactive in adopting innovations that confer competitive advantages. In the context of Genex Fuels, a leading petroleum producer and marketer, the existing technology environment reveals significant deficiencies, including isolated legacy systems, disjointed data repositories, and obsolete infrastructure. These issues hinder operational efficiency and strategic decision-making, ultimately questioning whether Genex is utilizing technology as a competitive differentiator.

Evidence of Non-Competitive Technology Use

The case underscores multiple indicators suggesting that Genex’s technology is not being used competitively. Firstly, the diversity of systems—ranging from modern customer management tools to archaic DOS-based systems—reflects inconsistency and a lack of standardization. For instance, while COMC was implemented to enhance real-time data exchange, Price One remains a relic of older technology that cannot communicate with newer systems, leading to manual workarounds and increased operational costs. Secondly, the absence of integrated data hampers timely decision-making; seismic data stored across different media without proper backup or access limits the company’s ability to react swiftly to market changes. Furthermore, outdated pricing systems like Price One cannot adapt rapidly or provide competitive market intelligence, placing the company at a strategic disadvantage. Overall, the fragmented and legacy-heavy IT environment signals a failure to harness technology effectively to sustain and enhance competitive advantage.

The Role of External Consultants

Despite the apparent disarray, the hiring of Sandy, a high-priced technology consultant, was instrumental in diagnosing core issues within Genex’s IT landscape. While it may seem obvious that internal teams should identify technological shortcomings, the extent and complexity of the problems often necessitate external expertise. Consultants bring an unbiased perspective, industry best practices, and specialized knowledge that internal teams may lack due to organizational entrenchment or political dynamics. In this case, Sandy’s assessment illuminated the critical need for standards, integration, and modernization, which internal staff had overlooked or avoided because of vested interests and political barriers. This underscores the importance of external consultants in facilitating strategic IT transformations, especially when internal capacities are limited or organizational politics impede change.

Strategy for Enterprise-Wide System Implementation

Implementing enterprise-wide systems like SAP is a substantial undertaking, requiring a clear, phased approach emphasizing alignment, stakeholder engagement, and change management. First, a comprehensive current-state assessment, led by external experts if necessary, identifies critical gaps and prioritizes initiatives. Second, governance structures should be established, with strong executive sponsorship to champion the integration effort. Third, a detailed roadmap must outline phased deployment, beginning with core modules such as financials and supply chain management, followed by functional enhancements in marketing, sales, and operations.

Furthermore, a standardized data architecture should be designed to facilitate data integrity, seamless integration, and real-time analytics. Training and communication plans are essential to prepare staff for system migration and to foster acceptance. Change management strategies should address resistance stemming from cultural inertia and legacy system dependencies. Additionally, leveraging cloud technologies and scalable architecture can mitigate costs and technical risks associated with large-scale deployments.

Finally, continuous evaluation and iterative improvements are crucial to ensure the system’s effectiveness and adapt to evolving business needs. Success metrics should include operational efficiency gains, data accuracy improvements, and enhanced decision speed. By adopting a strategic, phased, and stakeholder-centric approach, Genex can successfully navigate the complexities of enterprise-wide system implementation and realize significant competitive benefits.

Conclusion

Genex Fuels’ technological challenges exemplify the broader difficulties faced by resource-rich industries in modernizing legacy systems and integrating disparate data assets. The evidence compellingly indicates that the company is underutilizing its technology and losing competitive edge through fragmentation and outdated infrastructure. External consultants like Sandy play a vital role in diagnosing and steering strategic change. Implementing enterprise-wide systems such as SAP requires meticulous planning, stakeholder engagement, and phased deployment, with continuous monitoring to ensure success. Embracing comprehensive modernization and integration strategies will position Genex to leverage technology effectively, enhance operational agility, and sustain its competitive advantage.

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