SAP project leads to successful career at Tesoro
Earlier this year, Michiel Espach was promoted to vice president and CIO for IT at Tesoro. Headquartered in San Antonio, Texas, the Fortune 500 company is an independent refiner and marketer of petroleum products. Recently, he spoke to Network World about how he worked his way up from a contractor to a senior executive in the company.
Can you tell me about your education?
I have a bachelor’s degree in industrial engineering from the University of Pretoria in South Africa.
Why did you go into IT?
Very early in my career I came in contact with information technology, and it interested me as a very powerful tool for enhancing business. With my industrial engineering background, it was a logical fit.
How did you come to join Tesoro as a contractor and what IT projects did you work on?
Tesoro embarked on implementing an ERP system, SAP R/3, in 1998 to provide the enterprise an information technology platform for future growth. I joined Tesoro’s project team in 1998 as a contractor providing SAP R/3, supply chain and project management expertise.
What were the advantages and disadvantages of working as a contractor?
The biggest advantage was that I was able to bring expertise and experience from a number of different clients, across industries and continents, to the table. It provided me the ability to not have preconceived notions and blend some of the best practices from the outside with some superb in-house knowledge from Tesoro to provide customized solutions for the company.
The biggest advantage of being a contractor – independence – is also its biggest disadvantage. There are always certain very specific nuances of a business opportunity, or challenge, combined with cultural aspects of the organization that are very hard for an outsider to understand or consider in their solutions. This, combined with the fact that insiders sometimes have better visibility on the relationships that need to be leveraged, can reduce the effectiveness of an outsider to effect change. But it can go both ways.
When did you join the company as a full-time employee?
In 2002 – after four years as a contractor – I fell in love with the company, its people, its culture and the city of San Antonio. It also became very apparent that Tesoro was a growth company with tremendous potential. I wanted to take more ownership, and felt that I would be able to effect more change as a full-time member of the organization.
How did you move up through the ranks, and what IT projects were you involved with?
During my tenure at Tesoro I have played many roles: I worked in the trenches as business analyst and system configurator, which was valuable experience that taught me what does and what does not work. I shared the stress and joy of project management, had to make the challenging transition from individual contributor to middle manager, and then again from middle to senior management.
What have been your greatest IT accomplishments during your tenure at Tesoro?
The most important thing you learn as you make the progression from any individual contributor role within IT to that of a leadership role is that you are not able to accomplish anything by yourself anymore. Your ability to be successful is almost always dependent on someone else’s assistance, contribution or knowledge. It sounds like a cliché, but you truly learn very fast that you are only as good as the people around you.
The accomplishment I am the most proud of is being part of building a team of tremendously talented individuals that built our organization a secure, scalable technical and application infrastructure from the ground up that helped Tesoro to grow from a $944 million company in 1998 to a Fortune 150 company with revenues in excess of $18 billion in 2007.
What IT challenges do you face that are specific to your industry and overall?
There are many information challenges specific to independent refiners, and I can summarize them in three broad categories: regulation, reconciliation and margin capture.
Regulation: The energy and refining industry is a highly regulated industry. In order for our organization to remain true to our core values of honesty, integrity, safety and environmental stewardship, it is important that we not only know internally that we are compliant but can also consistently demonstrate to our shareholders and the outside world that we take our corporate responsibility very seriously.
We play a significant role in enabling regulatory compliance through technology solutions, such as emissions management applications, materials safety data-sheet solutions, comprehensive governance, and risk and compliance solutions.
Reconciliation: A large number of our transactions are based on formula-based estimates, with final pricing, quantity and location information only known days or weeks after completion of the physical movements. This causes major challenges in terms of a constant need for after-the-fact reconciliation and adjustments. We continuously invest in fine-tuning our systems to make the estimates, reconciliation and adjustments easier, and continue to move towards near-real-time information where available.
Margin capture: As an independent refiner, the prices at which we sell our final products and the cost at which we buy our raw materials are determined by very efficient markets without us having control over these prices. What we do have a degree of control over is what portion of the spread between these two prices we are able to capture and turn into a profit or a return for our shareholders.
Information technology is a tremendous enabler in helping us do this. Having a scalable infrastructure allows us to integrate acquisitions quickly, expand business operations and increase market share.
We also enable Tesoro to reduce the cost of doing business. By providing access to information to make informed business decisions; orchestrating and automating processes; and replacing repetitive, manual tasks with technology innovations, the company can focus on activities that increase value.
External customer satisfaction is increased by providing our customers with fast, easy and secure methods for transacting business with Tesoro over the Internet. Leveraging the Internet also reduces operating costs, establishes long-term channel-partner relationships and supports our brand attributes.
People are Tesoro’s most important asset. Because Tesoro is a fast-growing company, we must use technology as an enabler to the organization’s ability to manage and empower employees and foster a culture of creativity and entrepreneurship.
We also hope to eventually fully utilize the [intranet] and Internet to not only provide information, but also powerful tool kits and groups of online communities to allow geographically dispersed personnel to share information and collaborate effectively to further empower our people.
What is the most rewarding aspect of your job?
Due to the tremendous growth the organization has experienced, more than half of our team has tenure of less than 24 months. Integrating our new team members, developing our team and seeing the team progress up the learning curve towards becoming a high-functioning, unified team is extremely satisfying.
Ultimately we are not in the business of technology, but in the business of customer service, solving business problems and capturing business opportunities. The times when our team partners with the business, overcomes challenges and uses technology to ultimately solve a business problem, or collaboratively captures a business opportunity, are what makes my job worthwhile, fires me up and gives me the energy to keep going.
How many IT workers are on your staff?
We pride ourselves in running a lean shop for our organization’s size. We have around 200 full-time positions that we supplement with around 100 contractors for a total workforce of around 300 [full-time equivalents].
Do you try to promote from within?
Developing a unified, high-functioning internal workforce is a very high priority for me. Not only do we actively promote aggressively from within, we also strongly encourage people to seek internal opportunities within our team; and as a result, we move people around for development opportunities all the time.
What are your IT goals for the company?
For this year, we have set three goal themes: Delivering our customer commitments, improving our customer service, and developing and protecting our people.
Every one of our tactical goals for this year, as well as a substantial portion of our team’s compensation – including mine – is tied to how well we accomplish these goals. My leadership team shares responsibility across departments and teams for delivering our cornerstone projects to the business.
Over the next two years the majority of our incremental investment will be in improving information delivery, system integration, improved first-call resolution, information sharing and collaboration, usability and user experience, and improved support for refining applications.
What advice do you have for those have IT executive ambitions?
To be successful in any IT leadership role, including executive leadership, there are three things you have to learn: First and foremost, you have to learn that it is not your knowledge about technology that will make you or your team successful. Technology is very important, but ultimately it is the means and not the end. You have to reach out to the business [and] understand what the business opportunity is and how exactly technology will capture that opportunity to maximize your success and ability to positively impact the organization.
Second, you need to learn that it is not about technology, but all about people. You might be leading a technology group, but your team’s success is dependent on your ability to reach out to your team, your customers and your business peers [and] foster relationships and a culture that allows people to connect and collaboratively capture opportunities. Your job as IT leader is far more about people than it is about technology.
Lastly, you have to be resilient and able to bounce back from challenges and disappointments. Unless you are internally driven and motivated, and can bounce back from the constant challenges and sometimes unrealistic pressure and expectations of doing more, faster with limited resources and increasingly complex technology will wear you down and you might find yourself facing burnout.
However, as a mentor once told me: “Get comfortable or get out.” If you embrace these three things and use it to energize yourself it makes for a very exciting, fast-paced, very satisfying career path.
