Bhupesh Arora, Vice President and CIO, Magellan Midstream Partners, L.P.: Driving Digital Transformation from the Ground Up

Bhupesh Arora isn’t one to back down from a challenge. Quite the contrary. In fact, when he signed on to lead IT at Magellan Midstream Partners in 2020 amid a global pandemic and revolutionary change within the industry, he was clearly bracing himself for a challenge.

He got several. Magellan is a 20-year-old publicly traded partnership with a $10.5 billion market cap. The company primarily transports, stores and distributes fine petroleum products and crude oil. Its refined products assets include nearly 10,000 miles of pipeline across 22 states with 54 connected terminals and 26 independent terminals (not connected to their pipeline) as well as two marine terminals. It also has 2,200 miles of crude oil pipelines and facilities that can store up to 37 million barrels.

But growth for the company—like others throughout the industry—looks different today than it has in the past. Amid major shifts in the oil and gas landscape, Arora has been in on discussions to rethink Magellan’s growth opportunities, such as utilizing technology to drive growth and enable new efficiencies. 

Arora’s challenges didn’t end there. Since starting at Magellan in May 2020, he changed the structure of the IT department, he built digital awareness among the company’s leaders, and he created a new technology vision, strategy and operating model that’s well on its way along a three-year roadmap.

In a recent HMG Spotlight interview, Arora spoke with HMG Strategy President and CEO Hunter Muller about how he’s shifted the culture at the physical pipeline company to embrace a growing digital pipeline.

Hunter Muller: What are your thoughts around digital transformation at Magellan? What are you doing that’s unique?

Bhupesh Arora: Digital transformation has different definitions depending on the company you are in. For us, it started with the question, “What is digital?” Earlier in 2021, we embarked on a journey to understand that meaning and the possible value that digital can create for us. We initiated the journey by creating digital awareness with key functional leaders. What does artificial intelligence mean? What do other digital concepts mean? Teaching the functional leaders to be digitally aware is the first step in the journey. It helps them to understand current trends and how technology can create value.

Once we created digital awareness, we held multiple workshops across a broad group of about 60 functional leaders in the company. We created digital aspirations for each function. What do we want to achieve in the next three years? We then generated more than 130 ideas that create true business value.

The ideas are spread across commercial, operations and technical services with three main themes: customer, asset, and data. When we think about that from a technology viewpoint, we find opportunities to automate our workflow and utilize advanced and intelligent technologies to become an automated and data-driven organization.

Our three-year road map is now set in stone. We are executing on that. We moved to the next stage, from strategy to delivery, and we are executing proof of concepts to validate the value that we estimated during our exercise in a very agile, design-thinking and rapid-prototyping fashion. What we’ve done with digital, in the end, has shifted mindsets. We’ve shifted the company’s thinking on how technology can create value, and to me, that’s the definition. We are also s

hifting mindsets by creating an innovative and agile-driven culture that is really looking at the tip of the iceberg. We are breaking down silos to create more and more connected value.

HM: What about talent management and retention strategies? We’re experiencing a great exodus. Has it affected you? How do you hold on to people?

BA: At Magellan, we have a very strong focus on talent development and management. It starts with some basic concepts. All employees have a career development plan, and we’re in sync with their aspirations. Our mentoring program is one of the best in the industry. We connect mentees with emerging leaders, who work with them to meet their goals. We initiated a hybrid work model, too, which has been very well received. It creates the right balance of collaboration and flexibility for a good work/life balance. We’ve received very positive reviews.

Beyond that, we believe in versatility and in nurturing and training existing talent to acquire adjacent skills. The technology field is very rich in terms of the various career paths you can pursue. We encourage our employees to choose tracks based on their experiences—systems analyst, DevOps engineer, developer, architect—and obtain proficiency across multiple roles instead of thinking about hierarchical career paths as the only options. They can pursue another track after spending quality time in a specific role. For example, you can be a developer one day, but if you really want to be an architect, we can train you to be an architect.

This keeps our employees’ work fresh and allows them to pursue their interests, and it reduces our risk in talent retention and development. They can gain experience in different career paths, which essentially, for the employee, sends the message that we’re investing in you. We’re giving you the flexibility. We’re investing in your career path. We’re understanding where you want to go, and we want to help you achieve that. That is a strong differentiator for Magellan.

HM: You seem very thoughtful to me. What’s your leadership style?

BA: I’m a collaborative leader, a transparent leader. We believe in the power of people—people who make a difference. People make our company. People define where we’re going. We are a company that’s shaped by the intellectual minds that drive us to the next revenue trajectory. Investing in our people is, for me, the most important thing, especially in the technology field, where innovation and ideation are keys to achieving the next goal.

HM: How do you structure your team for success, and how do you structure IT’s operational model for success?

BA: In 2020, the IT team and functional leaders collaborated to create a new IT vision and to develop strategic leaders who support the company’s growth and cost objectives. This led to a complete change in our operating model and structure. We were an organization that was set up in a traditional tower structure—applications, infrastructure and security. We completely overhauled that to meet our digital strategy, our vision—overall, how technology can create value for the company in a faster and efficient manner.

We’ve shifted to a product line model for many reasons. One is creating strong partnerships with our functions. We also built competency centers that support the product line model, such as architecture, business management operations, and security. I’m pleased to say that after a year in the model, we’re excelling and progressing in all areas. This shift works with IT and products, which are defined by how they are consumed rather than how they are produced or the functionality they offer. It’s a big shift.

We’re also building capabilities to become good product line leaders within our IT organization. Our competencies have improved our ability to determine what we should work on based on a good prioritization model and execute value-based initiatives—not just initiatives that we’ve been asked to do—in a disciplined and agile framework. The whole model of how we structure, how we partner closely with the business, and how we prioritize the work we do is a complete overhaul and is creating value.

We are also creating a simplified architectural future landscape—driven by our Architecture Center of Excellence—and ensuring integrity and trust in the data to create value, with a strong governance model to ensure the functions use data well.

It doesn’t just stop at IT. Yes, there is an operating model for IT, but we also partner closely with the functions. I think a bigger impact than just creating an operating model for IT is to bring change within the other functions to create the new world of technological possibilities for Magellan.

HM: We’ve covered a lot. Any parting insights you’d like to share about the digital transformation process?

BA: This is a great company, and the possibilities of how we can create value are just the beginning right now. I’m a year and a half into the journey (since I joined Magellan). The openness and the desire of the functional leaders to see what value technology can bring is really helping to take us to the next level.

If you’re not able to bring change with your executive leaders, you’re not going to get there. It’s a partnership that takes you to the next level. It’s a complete overhaul, initially fixing the house step-by-step in order to get an operating model for success. From there, it’s creating and realizing the digital strategy and vision, from soup to nuts.

Key Takeaways:

  • Don’t skip ahead. Digital transformation means different things to different people. Make sure all your functional leaders have a shared understanding of concepts such as “digital” and “artificial intelligence.” Once you create that basic framework, you can start generating ideas and strategies for how digital can create business value.
  • Invest in people. Create development plans with employees, pair them with mentors, give them versatile experiences and offer flexible arrangements such as hybrid work models.
  • Consider new ways of structuring IT. We moved away from our traditional set up of applications, infrastructure and security and toward a product line model, and we’re seeing value from that shift.