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Smart Enterprise: Greater Expectations

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under Triplett, Baker Hughes has a single, centralized IT department that owns all of the company's IT assets. Its goal: to pres- ent customers with a unified image, rather than separate product entities. "I joined a company that is willing to try new things," Triplett says. "Baker Hughes is looking to IT to be a core member of the team." IT at Baker Hughes under Triplett's leadership has developed a strong entrepre- neurial spirit. Like most IT groups, Triplett's is expected to suggest cost-reducing proj- ects. But they are also expected to provide new ways of generating revenue. "Some- times the responsibility lies with IT, and sometimes with the company. But it's clearly within our bounds and expectations to bring forth revenue generation." Those expectations also extend to Triplett's compensation and performance reviews, he explains. The CIO's job perfor- mance is measured, in part, by how many new services he delivers — and the amount of new revenue his department enables or generates. New services, new revenues — these benchmarks are very much the way any entrepreneur would expect to be measured. For these reasons, calling Triplett an entrepreneurial risk-taker is no stretch. Industry watchers say this new approach fits well with the company's reputation for being analytical. "Baker Hughes takes a very thoughtful, very mathematical approach to business," says Stephen Ellis, an Equity Analyst at Morningstar. "It's a fierce numbers approach. The company looks for value [in its business operations] and approaches IT in a similar way." Sharper Focus That's important as Baker Hughes refo- cuses its business, industry analysts say. "Baker Hughes is moving from having a product- and service-line focus, to more of a geographically focused approach," says Stephen Gengaro, Managing Direc- tor at investment firm Jefferies & Co. With the acquisition of BJ services, another oil- field services provider, Baker Hughes now employs about 45,000 people in 90 coun- tries, and has facilities in more than 70 of those countries. BEACON's current service offerings are merely the first in a series of entrepreneurial offerings from Triplett's IT department at Baker Hughes. Triplett says his group is currently evaluating other concepts that will advance the service possibilities from Baker Hughes. To further encourage entrepreneurship, and to foster a variety of viewpoints and expertise, Triplett has hired several of his staff from outside the oil industry. One of his IT executives previously worked in food services. Another worked for a copier manufacturer. Still others came from the automobile and telecom industries. Triplett himself has a diverse back- ground. Prior to joining Baker Hughes, he worked in several other industries, including autos, tractors, electric utilities, telecom and aerospace. Triplett was also deeply involved with the move of a regulated utility into the market for the public sale of telecommu- nications services. In another position, he ran a global services business for a telecom company; there, he was responsible for both establishing a market identity and growing revenue. Triplett has also been co-chairman of the board for a startup in India. Of course, as anyone with experience starting or running a business knows, entre- preneurship involves risk. And Triplett says he's "big on being willing to take risks." Major projects at Baker Hughes can cost as much as $50 million to $100 million; such offerings would require the sign-on from not only IT, but also Baker Hughes business departments. Although smaller risks, such as an investment of $20,000 to $50,000, Triplett can likely do on his own. "It's very important to encourage employees and to reward them for exploring new options." To keep "exploring new options," Triplett has ensured that innovation is pursued aggressively and systematically. He looks for innovation in three ways. The first he calls "managed innovation." When someone has an idea, it is registered with the chief architect's office, which then publishes a notice to everyone in the IT department. Anyone interested in pursuing the idea is welcome to join the project's team. The department, in turn, works to support and exploit innovative ideas that come from such managed innovation. "We often get a spark of an idea that turns into a much big- ger idea through this process," Triplett says. The second innovation strategy is called "planned innovation." For example, when someone says, "I need to solve this prob- lem," Triplett will convene a diverse group of people to brainstorm solutions. The team members will ideally represent IT, business groups and geographic divisions. "That usually develops into three or four fantastic ideas that we can build on," Triplett says. Triplett's third approach to innovation is called an "innovation workout." Here, a chief technology officer or other executive from an outside company is invited to Baker Hughes to discuss a topic of mutual interest. "We'll talk about what we're doing in that area, and they'll talk about what they're doing," Triplett says. "We typically come up with six to 10 great ideas." Such a systematic approach to innova- tion is essential to the entrepreneurial IT at Baker Hughes, says Triplett. He warns, "If a deliberate approach to innovation isn't part of your culture, you will be challenged to become entrepreneurial." Also, Triplett says, the culture created by an entrepreneurial approach provides IT with substantive benefits. "We in IT used to be order takers, where we would sit and wait for someone to ask us to build something," he says. "Now, we are bringing the ideas to the table, and we are taking far more of a leadership role. Our aim is to work 'faster than the speed of business,' because we do not want the business to be waiting for IT." He continues: "All of which is quite dif- ferent than [it was] before. It's building a much stronger relationship with our busi- ness partners." ■ ALAN S. HOROWITZ is a San Mateo, Calif.- based freelance business and technology writer. Baker Hughes at a Glance ■ BUSINESS: Oilfield services ■ HEADQUARTERS: Houston, Texas ■ CIO: Clif Triplett ■ NUMBER OF IT EMPLOYEES: 500 (out of a total of 36,000 employees) ■ NUMBER OF PCs AND LAPTOPS: 28,000 ■ REVENUE (2009): $9.7 billion ■ OPERATING INCOME AFTER TAXES (2009): $421 million ■ OPERATIONS: 90 countries ■ HISTORY: Result of 1987 merger of Baker International, founded in 1907, and Hughes Tool, formed in 1909. DATA: Baker Hughes, 2010 )'('SMART ENTERPRISE 25

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