NESTE OIL

Esa Kokko
Guillermo Avila
Jürgen Suls
Teresa Luoma-ah

Report
Introduction to IT strategic
thinking
BUS4TF007
December 8, 2021
Abstract

 Background or point of departure

 Score & objectives op report
 Methodology employes
 Timeframe
 Result and conclusion
TABLE OF CONTENTS

1 Introduction..............................................................................................................1
2 Neste Oil....................................................................................................................1
1.1 History..................................................................................................................................1
1.2 Activities...............................................................................................................................1
3 Neste's definitioin of Strategy..................................................................................2
4 Stucture.....................................................................................................................2
5 IT Enviroment..........................................................................................................2
6 Building IT strategy & vision..................................................................................3
7 How IT strategy is related to company's strategy.................................................3
8 Plans for IT department in the future....................................................................3
9 Sub-strategies for the IT strategy...........................................................................3
10 Focus areas................................................................................................................4
11 Key Performance Indicators...................................................................................4
12 Risk Strategy.............................................................................................................4
13 Preventing Risks.......................................................................................................5
14 Outsourcing...............................................................................................................5
15 Conclusions...............................................................................................................6
16 Bibliography..............................................................................................................7
HAAGA-HELIA Report 1 (7)

1 Introduction

How does Neste Oil stay ahead of its competitors and keeps itself on the top of the Finnish
oil market and Baltic States? Neste Oil is one of the larger Finnish oil refining companies,
which strive to advance further and sell the most innovative products. In this report you
can find most strategy element with which a company like Neste Oil has to deal with.

2 Neste Oil

Neste Oil Corporation is a Finnish oil refining and marketing company. Their main activity
is producing low-emission and high-quality transportation fuel; they also produce other
refined petroleum products like…

1.1 History

Neste Oil exists since 62 years ago; it was founded in 1948 to fulfill Finland’s need for oil.
In that year they bought their first tanker, named “Neste”, and with this they started to
import oil to Finland.

In 1954 the company emerged with one oil refinery at Naantali and with the following
years its capacity increased and more oil refineries were built. They started researching in
Natural gas, chemicals and exploration and production in the 60’s and established as a
retail service station brand.

Later on, they continued to grow and expand their business to the company they are today.
Now they try to achieve world’s leading supplier of lower-emission traffic fuels. At the
moment Neste Oil has approximately 5200 employees and is active in more than 10
countries around the world.

1.2 Activities

The company is active in 3 business areas: Oil products, Oil Retail and Renewable fuels.
Neste Oil produces, refines and markets oil products. It also does the shipping, the
engineering services and the licensing production technologies.

For the Oil Products they procure that the crude oil and other raw material is processed at
their own refineries and sold or traded after that.

The Renewable Fuel of Neste Oil is called NExBTL diesel which is produced and sold by
the company. It is one of their strongest rising products.

Neste Oil’s Oil Retail is the leading station chain in Finland and part of the top three
largest retail stations in the Baltic States, St Petersburg and Poland. It sells the most
important oil products.
HAAGA-HELIA Report 2 (7)

3 Neste's definitioin of Strategy

Neste Oil’s vision is to be the world’s leading supplier of lower-emission traffic

fuels. Neste Oil’s strategy is based on its ability to use its unique refining
expertise to produce premium-quality, lower- emission traffic fuels from a
broad range of low-cost feedstocks. Specialization and a strong skills base are
central to the success of a small oil company like Neste Oil in the highly competitive
international marketplace. Neste Oil’s strategy is seen as the best way to increase
shareholder value.

4 Stucture

Neste Oil is an international company; therefore Neste Oil has a certain kind of
"global structure". They are basically manufacturing the same kinds of products
and services around the world. However, there are several differences in laws,
regulations, styles and habits in this field.
Each of the Neste Oil Company´s operational business areas has its own
management team. Although their head office is located in Finland, they
need to adapt with the country they are doing business with. Therefore
there is a need of understand how global thinking is done in a country, industry,
strategic levels and styles and how those are applied within the company instead
of copying for example Finnish laws etc.
Based on the size of the company, it looks like the structure of the company is the
result of a long process of marketing evolution, driven by the need to find a balance
between global direction and coordination.
HAAGA-HELIA Report 3 (7)

5 IT Enviroment

IT as layer (support, enhancement etc.) it is the same in everywhere in Neste Oil.

Although there is a need to consider local area laws, but then again systems
are more or less the same. Physically systems are located in Finland and other
countries are using those as well. For example Customer services, invoicing
and accounting as well as HR are located in Finland, although you need to divide
accounting per country for the bookkeeping reasons.

There are used also ‘local systems’, e.g. payroll, automation systems that
physically are located in country that is using those. Maintaining these systems
locally is much easier to do.

6 Building IT strategy & vision

Company's strategy is yearly process and it contains long term and short terms goals and
targets. Because Neste's IT department doesn't have their own strategy they try to follow
company's strategy and set their goals and activities that supports Neste's strategy. In
company's strategy there are set of principals which are not changed.

IT department have example this kind of targets: to be proactive and trusted partner with
business. Have a professional project implementation, operational efficiency and reliability
of services.

7 How IT strategy is related to company's strategy

IT department doesn't have their own strategy, but they try to build their goals and targets
to support business units and from that way support company's strategy IT
strategy is part of company's strategy.

8 Plans for IT department in the future

They want to start using cloud computing, this consists in a net that is based on internet
service so this way the users can have access to different services without the need of
having this information saved on their computers they only need to be on the company’s
domain.
This will help to the company in many ways since they will be able to make more efficient
processes, share information within other Neste Oils in the world saving a lot of time in
requests and applications, have all the information saved in the same place as a support in
HAAGA-HELIA Report 4 (7)

case if anything happens and save money on hardware (since they would share the same on
from the “cloud”) between other advantages anyway they will have to be careful because
they will “always” have to be in the “cloud domain” to work in a company project, they
will always need the connection (internet via cables or Wi-Fi), they would have to upgrade
the security issues to avoid any kind of stolen information and they have to be aware of the
possibility of the servers to overload due of many people using it at the same time.
 

9 Sub-strategies for the IT strategy

They are changing focusing on the services they provide and the tools that are needed for
the business; for example:
 The service strategy is being developed to get a stronger link between company and
users, this will help the company to improve their existing products and at the same
time develop new ones adapting to the market requirements and possible trends in
the future
 The architecture strategy is guided to make many applications that are close
between them into a one big process. This way the same persons will be involved
with the whole process making it easier and faster; for example, there are many
applications between the when the fuel is done until it gets to the gas station or
from there to the cars/trucks.
 The HR part they are making research of the skills and competences that will be
needed in the future so they can focus on them while hiring or developing in their
own employees.

10 Focus areas

They are focus by the time in learning to manage in different ways the partnerships that
they have and their own vendors so they can find the best way to do it with each one. Also
they want to make a better hierarchical control in the projects managing the information in
a discriminative way to see what’s important or not so they can make the best work-time-
money relation. At the same time they keep the focus in reliable production and on the
products that made them the big transnational company that they are now-a-days moving
forward with new businesses and expanding the company, for example right now with the
newest head office at Singapore or a similar project in Rotterdam that’s in process.
The Singapore project is the world's largest renewable diesel plant and it was a project that
spent the planned money (550 million) and time. Here they will ve doing Neste Oil's
NExBTL renewable diesel, between its qualities it can be used alone or mixed up with
fossil diesel enabling 40-80% reduction in greenhouse gas emissions (comparing wit fossil
diesel).

"We are very proud of the new plant and the NExBTL technology behind it, which is based on our
in-house R&D. NExBTL represents a major Finnish innovation in the field of renewable fuels and
we believe that it has excellent potential in the global marketplace"
President & CEO Matti Lievonen.

11 Key Performance Indicators

HAAGA-HELIA Report 5 (7)

When we talked about Neste Oil’s Critical Success Factors (CFR), it immediately became
clear that they do not use that term often. But they rather use the term Key Performance
Indicators (KPI). Although these terms have total different meaning it still is interesting to
hear what the KPIs of Neste Oil are. KPIs (or just PIs) are a term to measure performance
of an organization. It is used to evaluate the organizations or of a certain project/activity
success.

KPIs when correctly developed should be providing all staff with clear goals and
objectives and how they are responsible for the success of the company. They can also
strengthen shared values and create common goals internally.

Neste Oil IT department uses mostly following KPIs:

 Application maintenance cost
 Cost related
 Performance
 Personal and end user satisfactions
 Project cost
 Reducing number of applications

12 Risk Strategy

Neste Oil doesn’t call it Risk Strategy, but “Corporate level risk”. Every year they decide
what do they need to avoid and make a list of these risks. They talk about things like what
information risks exist, vendors to avoid and problems with data communication.

From this information they make a document to be prepared for these risks and to be able
to respond correctly each one.

The document contains elements like:

1. policys, principals.
2. information security risk.
3. business continuity planning (risk department is running, it is supporting)
4. project management risks (depending of the project, also project has its own risk list)

13 Preventing Risks

They collect all the risks and the amount of risks in a database, where they compare all the
risks and their possible impact on the business. They categorize every element of the list in
normal, critical and top critical. The higher the impact and probability the higher category
it gets. If a risk is a dangerous big threat, then they will allocate more resources to prevent
such a risk.

From all this data they make a recovery plan, which contains the most important risks and
their category. The recovery plan also contains how to respond to those risks to minimize
their effect. This last part is especially important, because when a risk occurs, that recovery
plan can prevent huge costs and loss of time.

The company has 4 potential risk strategies from which they can choose from.
 Accepting the risk: taking the chance that the risk will occur
HAAGA-HELIA Report 6 (7)

 Avoiding: Use resources to prevent risks from occurring

 Mitigate risk: Try to minimize its impact
 Transfer risk: Outsource it to a third party

14 Outsourcing

Neste also use outsourcing for certain projects, but to outsource has its risks and sometimes
it could become quite a challenge. Outsourcing is way to focus important ICT things like
developing systems and be more business driven department and get rid off daily from
daily operations.

The biggest challenge is that they still have to recruit a lot of people to manage outsourcing
projects. The control is lower with outsourcing and Neste realizes that. They aren’t always
sure if they will get the best service and solutions because the outsourcing company
doesn’t always understand Neste Oil’s business.

The company does their outsourcing on 3 different levels:

 Operation level: daily operations, maintenance groups
 Tactic level: invoice, volumes, developing groups
 Strategic level: how to develop relations
HAAGA-HELIA Report 7 (7)

15 Conclusions

Presenting key findings + conclusions

Personal opinion

Neste have entrprise leveled IT departmend key findings is to be proactive with business
departments, key targets are to provide services to business units to support their business
and stratgies. It departments role are support and it isn't Neste's core business. Even that
Neste's ICT is critical point to success everyday business.
By outsourcing daily to daily operations they can focus to develop systems and processes
with businesses.
HAAGA-HELIA Report 8 (7)

16 Bibliography

Author(s). 2010. Title of page. URL: http:// . Quoted: 17.10.2010.

Neste Oil. 2010. Corporate Info: History. URL: http://www.nesteoil.com/default.asp?

path=1,41,537,2396. Quoted: 20.11.2010.

Neste Oil. 2010. Corporate Info: In Brief. URL: http://www.nesteoil.com/default.asp?

path=1,41,537,2455. Quoted: 20.11.2010.

Neste Oil. 2010. Business Areas. URL: http://www.nesteoil.com/default.asp?

path=1,41,11991. Quoted: 20.11.2010.

Wikipedia.2010. Risk Management Plan. URL:

http://en.wikipedia.org/wiki/Risk_management_plan. Quoted 21.11.2010

Reh J. 2010. About.com: Key Performance Indicators (KPI). URL:

http://management.about.com/cs/generalmanagement/a/keyperfindic.htm. Quoted
21.11.2010

Interview

Mr. Keskiivari Kari. 29.10.2010 CIO. Neste Oil. Representative - Finland. 14.10.2010.
Interview. Helsinki