study the case study and answer the 5 questions in 2 pages
CASE STUDY 6
Chevron Corporation (www.chevron.com) is one of the world’s leading
energy companies. Chevron’s headquarters are in San Ramon, California.
The company has more than 62,000 employees and produces more than
700,000 barrels of oil per day. It has 19,500 retail sites in 84 countries. In
2012, Chevron was number three on the Fortune 500 list and had more than
$244 billion in revenue in 2011 [STAT12].
IT infrastructure is very important to Chevron and to better support all
facets of its global operations, the company is always focused on improving
its infrastructure [GALL12]. Chevron faces new challenges from increased
global demand for its traditional hydrocarbon products and the need to
develop IT support for new value chains for liquid natural gas (LNG) and the
extraction of gas and oil from shale. Huge investments are being made
around the world, particularly in Australia and Angola on massive projects of
unprecedented scale. Modeling and analytics are more important than ever
to help Chevron exploit deep water drilling and hydrocarbon extraction in
areas with challenging geographies. For example, advanced seismic imaging
tools are used by Chevron to reveal possible oil or natural gas reservoirs
beneath the earth’s surface. Chevron’s proprietary seismic imaging
technology contributed to it achieving a 69% discovery rate in
Supervisory Control and Data Acquisition (SCADA)
Chevron refineries are continually collecting data from sensors spread
throughout the facilities to maintain safe operations and to alert operators to
potential safety issues before they ever become safety issues. Data from the
sensors is also used to optimize the way the refineries work and to identify
opportunities of greater efficiency. IT controls 60,000 valves at Chevron’s
Pascagoula, Mississippi refinery; the efficiency and safety of its end-to-end
operations are dependent on advanced sensors, supervisory control and data
acquisition (SCADA) systems, and other digital industrial control systems
SCADA systems are typically centralized systems that monitor and
control entire sites and/or complexes of systems that are spread out over
large areas such as an entire manufacturing, fabrication, power generation,
or refining facility. The key components of SCADA systems include:
Programmable logic units (PLCs) that and remote terminal units (RTUs)
connected to sensors that convert sensor signals to digital data and
send it to the supervisory system
A supervisory computer system that acquires data about the process
and sends control commands to the process
A human-machine interface (HMI) that presents process to the human
operators that monitor and control the process.
Process meters and process analysis instruments
Communication infrastructure connecting the supervisory system and
RTUs and PLCs.
These are illustrated in Figure C6.1.
Data acquisition occurs at the PLC or RTU level. This includes meter
readings and equipment status reports that are sent to the supervisory
system. The collected data is compiled and formatted by the HMI to enable
the operator to make determine whether adjustments to normal PLC or RTU
settings are needed. Current data may also be compared to historical data in
a SCADA database to assess trends or perform analytical auditing.
In addition to Chevron refineries, SCADA are extremely important in
national infrastructures such as water supplies, pipelines, and electric grids.
Because attacks or damage to SCADA systems can affect large numbers of
people, ensuring adequate security is important.
Business Infrastructure Transformation
Because of the complexity of its operational processes and the IT that is
needed to support them, Chevron has traditionally been more infrastructure
than business focused. SCADA systems and digital industrial control systems
are critical IT infrastructure at Chevron’s refineries and will always play an
important role in monitoring and managing facility-based processes. These
also are among the first IT systems needed to support Chevron’s new value
chains for LNG and shale oil extraction. However, like any large corporation,
Chevron relies on a wide variety of business applications to run its
As it is for most global businesses, SAP ERP is a key transaction
processing system at Chevron. Chevron has been using SAP for more than
two decades and it has played an important role in the development of SAP’s
vertical solutions for the hydrocarbon industry. There are more than 50
instances of SAP used by Chevron [SCRI11]. Most of these run on Oracle
databases. Some other key enterprise applications at Chevron include Ariba
Buyer, EMC Documentum, Informatica, MicroStrategy, multiple Oracle
Going forward, IT executives at Chevron would like to flip the company’s
traditional IT priorities so that the majority of the IT staff’s time and
attention is focused on improving business capabilities [GALL12]. To do this,
Chevron’s IT leaders have increasingly turned their attention to Web
services, software as a service (SaaS), and cloud computing to help it run its
business. Chevron considers mobility to be a game changer in how it
delivers information and provides solutions and it is convinced that it can do
both without sacrificing security or reliability.
IT infrastructure at Chevron pervades every facet of its operations.
However, Chevron’s executives have not lost sight of the fact that IT is not
the company’s core competency. By moving business solutions to the cloud,
Chevron executives hope to help the company maintain its focus on its core
Chevron has used business-oriented Web services for several years.
Ariba Buyer, Salesforce.com, and Ketera’s price negotiation system are just
a few of the SaaS solutions that Chevron has woven into its IT architecture.
Chevron is interested in developing an integrated information network
that includes all of its major supply chain partners, both upstream and
downstream. Identify management has emerged as a priority at Chevron to
ensure secure data transfer among its business partners. A generic example
of an identify management system is illustrated in Figure C6.2. When users
at Chevron partners need to access Chevron’s intranet and/or SaaS data or
solutions, they are first cleared by an identity broker. The identity broker
authenticates the user and transparently provides a single sign on (SSO)
token that enables the partner to access Chevron’s intranet (2) or the
company’s SaaS solution providers (3).
Chevron hopes to better align its operations with those of its business
partners via its migration of business applications to the cloud. It hopes that
the business infrastructure transformation that is currently underway will
also lead to better IT and business alignment. As a global company, the
cloud may be an ideal platform for running the business.
In the years ahead, Chevron’s IT leaders expect mobility, analytics and
visualization, and social media to become critical aspects of its business
infrastructure. At the facilities level, advanced sensors and deeper
embedding of RTUs and PLCs within operations are foreseen [GALL12].
Technical appreciation of convergence network infrastructure will continue to
be important, but business literacy/savvy will be most important to the long-
term success of Chevron’s IT leaders.
1. Do some Internet research on Chevron’s use of seismic imaging
technology. Briefly explain how it works and how it has helped
Chevron discover new oil and gas reservoirs.
2. Do some Internet research on security vulnerabilities associated with
SCADA and digital industrial control systems. Summarize the major
security concerns associated with these systems and steps than can be
taken to enhance their security.
3. Discuss the pros and cons of moving enterprise-wide applications that
have traditionally been supported on premises to the cloud.
4. Do some Internet research on identify management and single sign on
systems. Briefly explain how these work and why they are important in
business intranets and extranets.
5. Why is it increasing most important for a CIO or IT executive who
oversees geographically distributed enterprise networks to be business
[CHEV12] Chevron.com “Seismic Imaging.” Retrieved online: at
[GALL12] Gallant, J. ”Chevron’s CIO Talks Transformation and Why IT
Leaders Should Smile.” April 12, 2012. Retrieved online at:
[SCRI11] Scribd.com. “Chevron Corporation CRUSH Report.” August 17,
2011. Retrieved online at http://www.scribd.com/doc/62481977/Chevron-
[STAT12] Statistic Brain. “Chevron Company Statistics.” February 12, 2102.
Retrieved online at: http://www.statisticbrain.com/chevron-company-