Mergers & Acquisitions (M&A) have been a steady phenomenon in the Oil & Gas industry. Primarily engaged in to drive growth, divest non-core business and sometimes for combining strengths for survival, M&A also offers opportunities to maximize profits and spread the risks. However, in most M&A deals, the focus of the participants is on financial strategy and not so much on the technology integration. And this approach is a recipe for disaster.
Today, like every industry, Oil and Gas is also going digital. Technology is becoming the systemic backbone and data - the lifeblood of all organizations. Added to this, with the uniqueness of this industry and the complexity of the processes and operations, it becomes vital to ensure synergies in the IT systems.
ERP systems in the Oil & Gas industry are tightly integrated with a plethora of legacy applications. For the M&A participants the challenge lies in handling the ownership of these applications and carving out the new ERP system post M&A.
For a newly merged entity (or the parent organization in case of an acquisition) it is important that the inherited technology applications align with the long term business goals and IT strategy. Therefore, IT organizations of both sides must engage early on in the long drawn process of M&A.