Rhodia IT boss on handling a merger

It’s all change at specialty chemicals firm Rhodia. The French company has been acquired by Belgium-based firm Solvay earlier this year and IT is an important aspect of the merger, so IT Decisions caught up with Rhodia’s infrastructure and strategy director Fernando Birman about the plans for technology for both firms in the next few months.

According to Birman – who has held senior IT management posts at Rhodia since 1999 and is currently the most senior technology executive  at the company in Brazil – the new organization chose to avoid a “big bang” merger when it comes to IT.

“We have started the merger process with the human resources, finance, communications and legal functions, while all the other functions – including IT – will only merge in two years’ time. We will then have to create a new technology organization, new processes, governance and so on,” Birman told IT Decisions.

“We may merge some infrastructure such as mail systems and wide area networks, as well as acquiring things together to get better deals, but we will not merge the IT organisation itself just yet,” Birman added.

Birman pointed out that the two companies are almost the same size and that executives “know that it is going to be a very complex merger”, so allowing two years to define the best approach is a good thing.

“We have some time to think about the business strategy and IT will align accordingly. If you start merging all functions together, you may make mistakes.” he said.

Seeking synergies

According to Birman, Rhodia and Solvay are exchanging a lot of information around their respective IT strategies with the objective of generating quick wins.

The idea is to negotiate or redesign IT contracts with third parties in areas such as communications, PCs and mobiles. Areas that may be more complex include applications: Solvay already uses Google products such as Google Mail and is planning a move to Google Apps, while Rhodia is a Microsoft shop.

“[Adopting Google products] is something very ambitious, because we have just renewed our deal with Microsoft. But we are having a very rich discussion around Google and Microsoft offerings and maybe we can combine things,” said Birman.

“We all use standard PCs though, so in that area we can have the same standards and buy from the same provider, either Dell or HP,” he added.

“On the communications side, we are both customers of BT , but the contracts are totally different, so we will renegotiate things. We will launch a new request for proposals (RFP) for communications area in early 2012.”

The future of the department

According to the IT executive, one of the big attractions of Rhodia to Solvay was its presence in emerging countries such as Brazil and China, so probably Solvay will probably maintain the current IT set-up in Asia and Latin America.

Birman also added that Rhodia and Solvay already have a bulging portfolio of IT projects and will probably start a large enterprise resource planning (ERP) implementation. Both companies use SAP products.

“We will also need people – and I am talking about hundreds – so there is no reason to fire anybody, on the contrary,” Birman pointed out.

In terms of sourcing arrangements, there could also be synergies to be gained from Rhodia’s contract with Brazilian IT services firm Tivit, but the future of the relationship with the supplier is still uncertain.

“[Solvay] does not have a software factory contract. They develop a lot in-house or through contracting external providers and there is potential for them to start using this contract, but in a couple of years we will launch a new RFP to renew it,” said Birman.

Birman implied that he does not have a particular preference for dealing with Brazilian IT companies, which do not offer a great deal of financial value.

“This [Tivit] contract came from an international bidding process. At the time, they were the best option, but I think next time around will be much tougher for Brazilian companies,” said Birman.

“I am not optimistic about Brazilian companies competing in a global bidding scenario. With our exchange rates,  it will be very difficult to compete – we are expensive,” he added.

The IT executive mentioned that, as an internal provider of IT services to Rhodia, the Brazilian team is competing with competence centers in Asia and Europe and that Brazil is not advantageous in terms of cost.

“We have a strong presence in Brazil, as well as a success story in IT. But in the long term, the concern is around whether this [IT] competence center can continue to be as huge and important as it is today. I am looking for ideas, but we will have to see what happens.”

Image by Josh Liba licensed under Creative Commons