Abstract
This Energy Insights Perspective discusses information technology's role in
mergers and acquisitions (M&A) at utility companies. This document is based on
interviews with a dozen CIOs at major utilities involved in major merger and
acquisition activity. The perspective also draws from a panel discussion - the
panel included CIOs and directors from Tucson Electric, National Grid, and
Alliant Energy - presented May 2006 at the Energy Insights Energy Forum in
Chicago.
Utility mergers and acquisitions are expected to continue, despite some
roadblocks. This is because there are limited paths to growth available for
utilities. Getting information technology (IT) right is important at every
stage of the M&A activity for the following reasons:
- IT costs decline with economies of scale of a merger. This is true for IT costs per megawatt, transmission and distribution mile, and, with some limitations, per customer.
- Participation in M&A at conception of M&A strategy, target identification, and initial discussions is important for setting appropriate expectations for IT synergy savings.
- Producing the expected business benefits requires a longer-term focus on enabling business process improvements by employing applications and infrastructure technologies such as business process management.
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