Merger and acquisition activity continues in the Oil & Gas sector, as value investors take advantage of “bargains” to round out portfolios and enter new markets. As noted in Oil and Gas Financial Journal in September, “in the current environment, as companies focus on capital productivity/efficiency, there may be a rise in mergers…as scale provides the opportunity to cut costs and boost efficiencies.” The IT implications include an opportunity to consolidate systems and ready for scale.
The M&A process often sets multiple initiatives in motion that affect how you approach content management. Typically there are personnel changes as staff redundancies are ironed out, which means important organizational knowledge – including partner contracts and customer lists – must be carefully maintained. Systems are evaluated for integration, emphasizing the need for safeguarding business content and possibly requiring data migrations and consolidation. Most importantly, merger activities are driven to a timetable to ensure the acquired company’s value has a positive impact as quickly as possible. This may mean the new company’s ability to ship liquefied natural gas (LNG) to more countries, or an opportunity to renegotiate supplier contracts based on a global procurement policy.
As we have witnessed numerous times from our vantage point as a content management provider, ECM systems and cloud services can deliver efficiencies at just the right time through the M&A event. Consider these three factors as you determine how to exploit merger activities for your competitive advantage:
1 – Company Culture – Decisions, Decisions
Just as initial due diligence efforts consider leadership styles and company cultures, so too must your content management strategy. Understand if the newly merged company style is top-down, with centralized decision-making cascading to local territories. Or, is the culture to “just get it done” and execute however necessary, leaving decisions to empowered individual plant managers.
Consider Amoco Corporation when it was acquired by BP in 1998. The merger strategy focused on replacing Amoco branding and operational approaches with BP as the lead. The new company thus developed an IT funding pool to expedite systems integration and invest in platforms of scale (like EMC Documentum). The top-down decision-making approach made it clear that implementing local content management systems first was not the right strategy. Aligning to corporate BP directives was more appropriate.
Strategic IT leaders in the new company were able to use the BP M&A-related corporate funding to centrally archive content and push forward projects like content capture. Projects that had been lingering in the wings for years found a fresh opportunity for implementation and leverage.
More recently, consider how divergent the company cultures of shale discovery firm Chesapeake Energy Corporation might be from traditional major energy enterprise ExxonMobil. The former was initially established by financial investors to exploit new gas opportunities from “unconventional assets,” primarily in onshore U.S. locations. Founded in 1985, it IPO’d in 1993. ExxonMobil has been around since the 1800’s, globally leveraging its position as the largest publicly traded petroleum and petrochemical enterprise in the world.
For content management to work in diverse cultures like these, it helps to have third parties objectively assess business goals and the state of current content workflows across the newly combined organizations. Those groups emphasizing rapid execution (with increased risk) can use automated approval cycles to expedite content management. More conservative groups can configure detailed audit trail features to support compliance, for example.
As you bring the two companies together, think about how each company decides upon and evaluates IT initiatives, and how they support project execution. Approaching content management will be more successful when the unique culture of each company is considered.
2 – Maturity of the IT Portfolio – Feast or Famine
Once you have carefully considered the culture, you are left to assess the technology feast or famine you find in the merged company’s set of systems. We have seen companies with no content management in place at all, and companies with disparate systems across dozens of groups.
When the BG Group exploration business was first spun-off from British Gas, the new organization had complete freedom to select and implement IT systems. None of the legacy content management systems were carried over. This offered BG Group IT leaders an opportunity to define workflows and associated metadata specific to the nature of their exploration business. Documentum was a logical choice, in part because it delivered a “single source of truth” content archive and one consistent platform across the organization. Choosing one vendor and one system would also help them move faster toward unifying the newborn business teams.
On the other hand, Royal Dutch Shell’s $70 billion acquisition of BG Group this past April brought together sophisticated and well-maintained content management systems with case-specific, niche content management instances. As far as we know, the multi-vendor systems continue to co-exist, which makes sense considering the acquisition strategy was to add a new liquefied natural gas (LNG) business to Shell’s portfolio. Adding content management for approximately 21 BP Group locations around the world might be overwhelming as an immediate integration step. It’s not uncommon for companies to run parallel systems in the first year of joint operations, until integration plans can be fully executed.
To inform your content management decision, consider the state of existing systems and whether they are well aligned to the newly merged company strategy. Often, you will find post-merger imperatives are to drive significant levels of cost-cutting and efficiencies. In some situations, it may cost less to consolidate the “newco” on one scalable platform. In other cases, the business may require co-existence.
3 – Implementation Timeframe – Ahead with Innovation
The trigger point of a merger or acquisition may also come with set deadlines. These might include duty handover for an offshore oil rig. Or regulatory compliance required by a defined date. These come at the same time that both entities are experiencing significant turmoil and disruption as they merge operations.
For content management, we often find that well entrenched and established content management systems must work together with ad hoc systems from newly acquired companies. The worst mistake companies make is leaving information in disparate silos across these different systems.
Instead, your content management strategy can alleviate merger pain if you innovate and fast-track system criteria, such as:
- providing a single source of truth to eliminate silos and enable reliable access to important information
- capturing and digitizing paper-based legacy documents to further eliminate siloes and hidden information
- supporting regulatory compliance in all regions served by the new company, not just one system per region
- enable secure channels to safely share content with employee and contractor resources at both companies
Interestingly, in those cases where speed of implementation matters, we have seen customers opt for the most advanced approach – a cloud deployment model. By migrating data to an altogether different “neutral” system, the new conglomerate eases change resistance while making a technical leap forward in service delivery. Ongoing, content management delivered as a service puts less pressure on the already-overloaded internal staff, while ensuring key content from both companies is retained and leveraged.
As you weigh the M&A situation in terms of company cultures, IT systems, and timeframe limitations, adapt your content management strategy accordingly. During these times of operational disruption, it is exactly those innovative technologies that archive and make accessible disparate digital content that can help the new company find its footing.