The energy crises of the 1970s and 1980s and the ability to extract more high-margin gasoline and jet fuel from each barrel of oil prompted a number of challenges in the downstream logistics of transporting and trading oil. Once routinely available, ship owners could no longer get good, quality oil to fuel their ships, as the major oil companies began an exodus from the maritime fuel market and were replaced by hundreds of local and regional players scattered around the globe. Understandably, this created a logistical nightmare for ship owners.
Enter Paul Stebbins and Michael Kasbar. Recognizing an opportunity, the pair started a privately held company called Trans-Tec with a mere $100,000 in 1985 and never looked back. When International Recovery, a publicly traded company specializing in trading aviation fuel, acquired Trans-Tec in 1995, the name of the company was changed to World Fuel Services. Stebbins and Kasbar remained with the company and were eventually elevated to lead the company in 2002—Stebbins as CEO and Kasbar as president and COO. Today, the 24-hour, around-the-world, full-service “filling station” provides fuel and services to commercial and corporate aircraft, petroleum distributors, and ships at more than 2,500 locations.
The right executive for the job
Turn the page to early 2007. Rapid growth, including various mergers and acquisitions, had left World Fuel Services with a highly decentralized IT environment. The executive management team sought a global CIO with experience managing business-critical global trading systems as well as standardizing disparate, silo-based IT infrastructures. But proven technology expertise wasn’t the only criteria; the team wanted an executive who understood the importance of aligning IT with the business—and moreover had repeatedly done so in prior roles. They found the right person for the job in Massoud Sedigh.
As a partner and managing director of Global Technology at Cantor Fitzgerald Securities, Sedigh had overseen an effort to consolidate three disparate development groups located in New York City, Los Angeles, and London into one global team. He subsequently held roles as the Trading CIO for a joint venture between Shell, Texaco, and Saudi Aramco and as CIO and executive vice president at Global Signal, Inc.—both of which required tight integration with the business.
Technology + process fuels results
The importance of IT in driving execution and innovation is taken very seriously by Sedigh. “IT should be run as a business,” he contends. “We largely don’t have any assets in our business—and technology plays a huge role, differentiating our product offerings and giving us a competitive advantage.”
With parallel alignment between IT and the business a paramount concern, his role isn’t restricted to just the IT function; rather, he oversees the Technology and Process team. “We intentionally structured the team this way,” he explains.
This provides World Fuel Services with the ability to consolidate resources with the end result of driving operational excellence across all business segments and prompting more seamless change management. Sedigh summarizes the role of the team as follows: “We’re the glue that holds the business together and facilitates innovation across the different segments.”
The transformation of the IT organization revolved around three issues: processes, people, and technology. “All three of these are critical,” Sedigh emphasizes. “IT cannot work in a silo.” Integration of IT and the business is maintained by using a model that assigns IT business leads for each business entity. These individuals have the charter to learn that particular business segment as well as—or better than—the actual business owners themselves. “Our internal business partners are my customers,” Sedigh explains. “And we are focused on helping them meet their business goals and requirements.” He argues that he is not merely a technologist but “also a business partner who must look at everything through the lens of the business.”
Reducing total cost of ownership is also a key consideration for nearly every IT initiative. With this in mind, Sedigh instituted various business measurements. “We have a process in place that allows us to evaluate the return on investment for every project,” Sedigh says. As a result, working in concert with the business owners, he and his team retroactively assess the success—or limitations—of a particular IT project and then factor those lessons learned into future initiatives.
Standardization refines the business
The most pressing issue awaiting Sedigh when he arrived was the design and implementation of a next-generation Oracle-based ERP system. Rolled out in early 2008, the solution created significant operational efficiencies and business capabilities. For the remainder of 2008, Sedigh and his team spent much of their time stabilizing the solution; this included weekly production releases consisting of more than 20,000 changes to the application and IT infrastructure.
Concurrent with the Oracle ERP implementation, Sedigh began to look at the underlying IT infrastructure. “We needed an IT infrastructure foundation in place before we could truly transform the IT organization,” Sedigh contends. “Reducing our custom footprint would help us to reduce complexity, simplify maintenance, and facilitate timely upgrades.”
Standardization was the primary objective, according to Sedigh. And as part of this process, he and his team reduced the number of technology providers and solutions. “We are now in a position where we can quickly and easily integrate new technology components, including IT assets and business requirements of acquisitions, into our larger IT environment,” he says. “Previously, this was very difficult for us to do.” Indeed, with the prior IT infrastructure, World Fuel Services often acquired businesses and simply kept them as a stand-alone unit because the company did not have the capability to fold them into the larger business. Sedigh assesses the situation as follows: “I could not add bells and whistles to a house of cards.”
Strategic business agility
Greater business agility is a pivotal benefit of the different initiatives Sedigh and his team have spearheaded. When the 2008 financial crisis hit, World Fuel Services was well prepared, and Sedigh and his team were able to concentrate on addressing the new business challenges versus day-to-day management of the company’s IT systems. “We instituted real-time reporting of critical credit and collections data for high risk customers,” Sedigh says. This automated process reduced the days to collect by increasing efficiencies and reducing bad debt.
The fuel industry is only as successful as the unbroken chain that crisscrosses its three market segments—upstream, midstream, and downstream. A fracture between any of them results in an energy crisis. On a parallel note, World Fuel Services’ business is only as successful as the linkages that exist within its business. And the Technology and Process team is the glue—an agile compound—linking the different segments of the business together.
Patrick E. Spencer (Ph.D.) is the editor in chief for CIO Digest an The Confident SMB and the author of a book and various articles and reviews published by Continuum Books and Sage Publications, among others.