As troubles loom in the oil and gas services sector, larger, less nimble conglomerates will be carving out parts of their business to remain competitive. The less nimble operations under the conglomerate must adapt and become more efficient once sold to new investors. Core to operations are company systems and processes. However, the large company’s legacy systems and processes are encumbered with complex configurations, integrations, and customizations requiring significant resources to support the technologies. Once the company is carved out and sold to an investor, complexities must be eliminated to allow the new company to achieve efficiencies.
This means massive technologies must be uprooted and replaced with fit-for-purpose solutions. This sounds easy, but the transition to new, fit-for-purpose systems requires time and energy from the newly formed company. As new investors look to the acquisition target company to acquire, we recommend the following three keys to ensure success:
The process improvement vision will define capabilities the new organization seeks to achieve. For example, the new carved-out leadership team might want to automate the field ticketing process while eliminating the expensive data quality management processes in IT. A well-thought-out process improvement vision will quickly reveal which processes require technologies and which processes do not.
This requires thinking about what level of detail and rigor is required in calculating profitability. For example, we worked with a well services company that had a complex set of allocations to calculate asset profitability under the larger organization. The newly carved-out company sought to keep profitability calculations simple. This had a direct impact on the new ERP system and allowed the carved-out company to implement a much simpler accounting system. The data model should include key metrics, calculations, granularity requirements, and information needed to make important business decisions. This also includes rationalizing and eliminating unnecessary reports to reduce wasted time.
Don’t try to force fit or accept legacy IT staff into the carved-out organization. Unfortunately, most IT staff are accustomed to working at a larger-company pace with a narrow set of skills. Your new IT staff will need to be fungible IT professionals. They must be able to quickly pivot between updating databases, providing end user support, and creating new reports. First and foremost, don’t build a full-time or dedicated IT help desk (either outsourced or insourced). There are IT technologies out there that require a minimal IT help desk footprint.
Creating a lean IT application, data, and resource footprint for the carved-out company is achievable and necessary in this competitive environment. Trenegy has helped many companies eliminate complexities associated with a carveout and become more efficient along the way. For more information, feel free to email us at info@trenegy.com.
