Marcus Frantz has been Chief Information Officer (CIO) at OMV AG for two years. He studied business administration at the universities of Constance and Trier in Germany, then worked as Experienced Manager and Senior Advisor for various international consulting firms. In 2004, Frantz joined what was then called Service Netzwerk OMV as Head of PMO (Project Management Office). During his career in global solutions, he held various executive positions in operative IT and was Head of Business Unit IT at OMV Solutions in Vienna until 2012.
With annual corporate revenues of more than EUR 42 billion (2013) and around 27,000 employees, OMV AG is Austria’s largest listed industrial enterprise. Founded in 1956, OMV has its headquarters in Vienna and is active in more than 30 countries worldwide. As an integrated international oil and gas company, the corporation relies on profitable growth in the three business areas Exploration & Production (E&P), Gas & Power (G&P), and Refineries & Marketing including petrochemistry (R&M). OMV currently operates 4,200 gas stations under the brands OMV, Avanti, Petrom and Petrol Ofisi, as well as three refineries.
Movie with Marcus Frantz
Successful Paths into the Cloud
The path into the cloud is indispensable for forward-thinking and innovation-oriented companies. But the actual procedure is distinct for every organization. For Marcus Frantz, CIO of the OMV group, cloud computing is an increasingly important element of the overall IT strategy. It allows more flexibility, speed, security and scalability – and also opens up new fields of business for the company.
Markets, corporate structures, business relations and communication channels are changing at increasing speed. In the area of globalized business, the cloud in particular symbolizes a paradigm shift occurring across industry and national borders, and frequently being referred to as part of the third industrial revolution. It includes the digitalization of companies, products, manufacturing processes and customer relations as well as the design and usage of extensive services and communication possibilities. Cloud computing is like a catalyst that is changing the development and operation of IT systems from an individualized, artisanal approach to an industrial and globally applicable one.
One thing is certain: The trend towards dynamic and flexible IT services in small and medium enterprises as well as international corporations is irreversible. But cloud computing is not simply an advancement in the provision of IT-based solutions, but has a positive influence on the core business of companies as well thanks to its lower costs and increased agility and competitiveness. Real-time provisioning of IT resources and IT services for business operations is an obvious competitive factor. Cloud sourcing allows many IT services that are required for business activities to be obtained as services out of the cloud. The decisive advantage over classic outsourcing is that companies’ requirements in terms of innovation, security, flexibility, speed and scalability can be met more effectively. Cloud services allow businesses and organizations to provide these capabilities more quickly and effectively to their business units and employees than ever before.
Cloud Solutions for Digital Branch Offices
For various internationally active corporations like OMV, cloud computing is becoming an increasingly important element of their overall IT strategy. As Austria’s largest industrial enterprise and global player with branch offices around the world, e.g. in Norway or New Zealand, OMV is traditionally a centrally organized concern. But despite this tradition, or maybe because of it, the company consciously chose the path into the cloud and has already travelled part of it successfully. Marcus Frantz, CIO of the OMV group, says: “Our starting point was the development of our ‘Cloud Strategy’ in 2011, which at the time was heavily infrastructure-oriented. While we call it a ‘private cloud’, it is actually a hybrid cloud. We rely primarily on the SaaS approach (Software as a Service), for example with a view to time to market. Everything that has to do with our business is of thematical interest, e.g. seismic topics. We are urging providers to adapt architectures so as to make such applications from the cloud environment usable for us.” Referring to the catchword Digital Branch Office, Frantz adds: “Depending on the respective surroundings and life cycle, I need to have the appropriate environment available locally; this includes the right architecture as well as the right software.” The importance of data mobility recently became apparent to OMV in the course of the Arab Spring: At the time, the company operated servers in the conflict areas. This made it obvious that it is not only essential to be able to provide data quickly, but also to be able to delete them quickly if necessary. Cloud computing provides the foundation for this capability. With the help of the cloud, employees will have the opportunity to access their data “anywhere, anytime”, i.e. with more flexibility and agility than before. This enables faster rollout of branch offices as well as faster withdrawal of employees and data if need be.
OMV is currently developing a new, overarching cloud strategy, Frantz explains: “Because it isn’t sufficient to define the topic of the cloud solely in terms of infrastructure. It must take into account the future requirements for active cloud brokerage.” The CIO intends to define this strategy holistically and across the entire service area until the end of the year. “In addition, we have created cloud checklists that support our employees, including those in demand management, in considering all aspects when planning or working with cloud solutions.”
Know-how Creation in the Company
For companies like OMV, cloud computing also means standardization in services, applications and processes, frequently also involving alterations to internal structures. As a result, the role of IT employees is also changing. But their function will neither become superfluous nor meaningless; on the contrary, their responsibilities are increasing in significance, but simultaneously undergoing lasting changes. IT administrators, for example, will likely transition towards IT service managers or service brokers, and the required know-how will consequently also change. Targeted education and training measures as well as transparent communication of knowledge are required to allow individual employees to handle a complex sourcing relationship like cloud computing effectively (including activities like provider selection, contract design or management of service level agreements). CIO Marcus Frantz says: “That is certainly one of the biggest challenges that needs to be faced. We do so by differentiating the individual requirement profiles and by striving to offer the best possible training and qualification measures.” Recently, OMV has established a “Collaborative Sourcing Function” that consciously approaches the topic in close cooperation between the procurement, operative IT and strategic sourcing departments. “Our checklists also serve to ensure that our staff in the specialist departments know how and where they can apply cloud sourcing. But the processes are also designed to enable employees to ask the right questions,” Frantz adds. Most employees, he claims, are aware that the cloud will bring about changes in their sphere of activity. “Some try to close their eyes to it, but the majority is open and some are actually very enthusiastic about the new developments, excited to play a proactive part in them.”
“Cloud computing is not a risk, but a question of conscious handling of data and processes.”
For OMV, the largest Austrian industrial enterprise and global corporation with branch offices in Africa or New Zealand, cloud computing is becoming an increasingly important element of its overall IT strategy. KURIER spoke with Marcus Franz, CIO of the OMV group and responsible for 18,000 users/clients in 25 countries, about technological developments, new challenges for industry and training, recent experiences from the Arab Spring, and the resulting development of a new overarching OMV strategy.
KURIER: In what way are you involved with cloud computing?
Cloud computing has been a core topic for us for some time now. The starting point was our ambition to support a flexible and agile working environment. Two areas are of particular interest: The first is the topic of data centres, which we intend to extend to the cloud in future – especially to improve cooperation with more distant locations. The other topic is the “Digital Branch Office”, where the required life-cycle-relevant services are available to a branch office on location, but the office can also be evacuated quickly – as in the case of the Arab Spring – without having to worry about the local infrastructure.
Where do you see the decisive advantages of cloud computing for your company?
Besides the mentioned flexibility and agility, speed, security and scalability also play a crucial role for us: The cloud is the fundamental requirement for developing and operating mobile work processes. Most of all, we require flexible scalability to be able to provide services quickly and tailored to market needs. In the area of analytics and information management in particular, certain applications – e.g. predictive maintenance, digital oil fields or digital gas stations – only become possible through the harnessing of cloud services. For mobile work, for example, a regional manager who visits gas stations in the field needs to have all relevant information available on his device.
How do you react to the frequent concerns voiced about cloud computing? How do you achieve “Trust in Cloud”?
Enterprise security is our primary concern in regard to important data as well as processes. Cloud computing per se is not a risk. It is a question of conscious handling of the data involved. And of course it is also an issue of the cost of attaining the necessary security standards. The central questions are ‘How much risk are we prepared to take and how much effort are we ready to make for it?’ Last but not least, it is important to ensure that the defined service levels are met and the required access restrictions are realized.
How do you ensure that the individual departments have the required knowledge?
The prerequisite is corresponding awareness among employees, e.g. about what types of data are involved and how certain information should be classified. Then a decision is made: Which data will we manage ourselves and which data can we provide through the cloud? The entire changeover and development process in regard to cloud computing can work only via measures that create awareness and consider both opportunities and risks. We do this in the shape of dedicated events during which our security measures are presented and explained, as well as via corresponding cloud checklists in our enterprise architecture. Their goal is to raise awareness in the respective departments through appropriately targeted questions.
What requirement profile would a new IT employee whose scope of duties included all these cloud computing topics therefore have to meet?
Future employees dealing specifically with cloud topics in our company will certainly need to meet extended requirements compared to today. It will no longer suffice to ‘only’ be a good IT engineer; candidates will need service and product knowledge as well as being a cloud broker. This means developing service concepts that incorporate external services from the outset.
That is also a central point in terms of training, by the way: The training market will have to take these requirements into account and adjust to them.
That means that existing training programmes will have to be adapted...
Yes, because the cloud is a further component of the delivery model. It is not just outsourcing. For example, I might want to add certain services or infrastructures that I don’t yet have today at a later time. Or take the example of storage: Due to the enormous increase in collected and processed data, storage volumes currently need to increase by about 30% every year. To avoid costs from running out of control, demand-based expansion through the cloud is sensible. Nothing and nobody is being outsourced here – instead, existing services are being supplemented.
How do you verify the quality of a potential cloud service before putting it to use?
We consult our cloud guideline, perform individual case studies for cloud services, coordinate with our staff in the specialist departments, evaluate integrability into our existing IT, and consult with our procurement and legal departments. For these processes, I expect further impulses in the future like greater standardization, i.e. that many of the arising questions can be answered automatically and a better basic framework is available.
In what areas are you currently considering cloud usage?
We are currently coordinating with our gas station management with the goal of offering parts of their services through the cloud.
What is your estimation of the cost factor, which is stated as one of the key advantages of cloud computing?
Standardized services are usually quite cost-efficient, but individualized or specific services are generally expensive. We do need certain special services and will continue to provide them ourselves. But the aspects required by the mass market must and will be provided via the cloud. The core question is always: What are the core competencies that we want to retain in-house, and what aren’t? This needs to be precisely defined as quickly as possible.