Monday, August 30, 2010

smith integration

The Smith integration (very briefly mentioned in the last post) is going to be interesting to observe as an insider. Speaking generally about large scale mergers, I'm starting to see the difficulty of getting sizable groups to merge. Make no mistake, this is a large merger, with a combined workforce of about 100,000 this is no mere purchase of a niche company. With the merger officially closed last Friday, they've been busy rolling out good stuff like FAQs, ethics policies, HSE policies, identity guidelines, business guidelines.

It's very apparent where certain types of cost savings can be realized. Obviously, support functions can be consolidated and there's some overlap of business lines, though that's rather limited. The real gains in the short-to-medium term is using SLB's global reach to take Smith businesses to new places and vice versa. Additionally, SLB has much to learn from Wilson's (a Smith business) best-in-class supply chain organization, which I can definitely attest to being a significant area of improvement which CEO Gould already admitted to when the merger was first announced. (I would link to that but my bandwidth is already rather limited at the moment). In the longer term, the real value is going to come from the technology gains yielded, mostly in the drilling division.

It's also apparent how expensive a merger is with the type of re-branding that needs to take place, re-training in critical business functions, integration of IT, personnel, legal, etc departments, and the inevitable human toll it takes as some people walk away and others get let go. Some of these will be phased in over years, possibly many many years. Case in point, when Dowell became part of Schlumberger (a very long time ago), it's only been in the last few years that the old orange equipment has been either phased out of service or painted blue.

It seems like the integration is off to a good start. This is being taken very seriously by upper management and dedicated teams are working to pull this all together. I'll do what I can. Like no longer slashing the tires of Smith vehicles and restraining my juvenille vandalism to our core competitors. Or, I'll be friendly and welcoming with Smith people I meet. That works too.

1 comment:

gangsta said...

Slashing tires? Vandalism? Holy $h!t. How long have you been doing this?