Maximizing synergy: Insights from a water utility merger

• A successful merger in the water and wastewater sector achieved seamless operational separation and regulatory compliance.
• The implemented transformation strategy established a robust framework, ensuring continuity of services and enhancing operational efficiencies.
• This story exemplifies the significance of strategic partnerships and forward-thinking approaches in navigating complex structural changes.

In 2022, two leading water and wastewater utilities announced a definitive agreement to merge their operations. The objective for this strategic merger was to leverage synergies to improve resource management and operational efficiencies within the newly formed enterprise. As this merger progressed, the client faced the urgent task of implementing structural and technological changes to ensure seamless operations and compliance with regulatory requirements. Adding to the complexity was the requirement to keep both entities within the same environment, ensuring data and process segregation, while managing evolving regulatory demands.

In 2022, two leading water and wastewater utilities reached a definitive agreement to merge operations, aiming to capitalize on synergies that would enhance resource management and operational efficiency within the new entity. As the merger progressed, the client faced an urgent need to implement divestiture strategies and technology updates for its thermal energy business to ensure uninterrupted operations as an independent entity during the transition service agreement period, while also maintaining regulatory compliance and keeping the water and wastewater utility operations distinct. Further complexity arose from the requirement to house both entities within a single environment, ensuring data and process segregation between the water and wastewater utilities and the thermal energy business, all while adapting to evolving regulatory standards.

To gain regulatory approval for the merger, the client needed to divest one of its subsidiaries. The divestiture necessitated the restructuring of the organization’s Oracle Enterprise Structure, converting data to the new configuration, and extensive testing to ensure a seamless transition This complex process involved a comprehensive approach to operational and system separation, reorganizing 15 legal entities and 175 organizations, creating a new entity for the divested subsidiary, and moving assets between companies. Key requirements involved:

• Separation of systems and transactions: A crucial task involved disentangling data and operational processes associated with the new entity while ensuring that core functions of the remaining operations were preserved. This included isolating various systems and transactions to prevent data overlap and maintain distinct operational pathways.
• Maintaining operational continuity: Continue to provide support under a TSA, while ensuring the separation of systems and transactions related to the divested entity.
• Regulatory reporting preparedness: The merged entities required a robust framework to facilitate consolidated financial and regulatory reporting. Establishing compliance with governing authorities was imperative to the merger's success and required strategic foresight in system configuration.

As a result, Huron was engaged to design and execute an effective transformation strategy, further fortifying the integrity of operations amidst this significant transition.

Urgent and shifting regulatory deadlines necessitated a strategic and systematic plan to manage structural transitions seamlessly without affecting service delivery.

The project began with a focused effort on a global design and approach to reconfiguring the development environment. This was designed to mirror anticipated future state structure of the merged entities and the divestiture of particular entities. This foundational work established a robust platform, upon which subsequent modifications were executed. The clear articulation of systems architecture allowed the project team to delineate the boundaries between the new entity and the pre-existing operations effectively.

Data transformation and integration

Recognizing the importance of accurate data handling, , the team carefully identified data for the restructured entities in compliance with the divestiture agreement. They turned to Huron’s proprietary data transformation tool to efficiently capture and transform data sets, maintaining the integrity of transactional data. Moreover, the integration of various systems played a vital role in ensuring seamless interoperability. The project team meticulously developed integrations and conducted thorough unit testing, ensuring cohesive system operation without disruptions. As the implementation target date approached, changing values in mapped data became a challenge. The evolving regulatory and legal environment required continuous diligence to ensure accuracy and compliance throughout each testing phase and the eventual live deployment.

Testing framework

A comprehensive testing framework was instituted to support a successful deployment, ensuring all system aspects received thorough scrutiny. Every facet of the test plan was rigorously reviewed and confirmed. Ensuring the reliability of the merged system hinged on the meticulous validation of test scenarios, scripts, and data, setting a precedent for comprehensive test coverage. A structured test execution plan was then outlined, detailing each step of the testing process. This proactive strategy facilitated the early identification and resolution of any potential issues, thereby mitigating risks associated with system malfunctions or data inaccuracies.

User role and data access configuration

The project prioritized user access configuration to strengthen system security and operational efficiency. By clearly identifying user roles and establishing tailored data access protocols, the project fortified the system’s integrity, ensuring that stakeholders had the pertinent access necessary for maintaining everyday workflows post-implementation. Overall, this holistic strategy, which emphasized strategic planning, rigorous testing, and careful configuration, was designed to pave the way for a successful project outcome.

This project offered several important lessons that will shape future endeavors. One of the primary takeaways was the necessity of thorough testing. Rigorous testing protocols were essential for ensuring system reliability and identifying potential issues early in the process. The project also underscored the challenges of extracting HCM data to ERP systems. This complex task required careful planning and execution to maintain data integrity and ensure smooth integration. The project also demonstrated the ability to overcome regulatory uncertainty and manage extensive activities that resulted in changes to regulatory requirements. This adaptability was essential for maintaining compliance and achieving successful outcomes. The amalgamation of strategic planning, a proven methodology, and robust collaboration resulted in the timely launch of the new operational framework.

Achieving compliance and operational readiness

At the conclusion of the project, the client successfully achieved the operational separation requirements dictated by the divestiture agreement. Furthermore, the new systems were fully operational, ensuring the continuity of essential services without disruption to customers. The implications of this success extended beyond immediate needs; it established a strong foundation for future operations in a competitive market. The operational efficiencies gained through streamlined processes positioned the entity for enhanced service delivery and financial oversight, reinforcing its commitment to quality and compliance.

A forward-thinking success story

This project stands as a testament to effective change management during a complex enterprise redesign involving a divestiture and a merger. By leveraging a forward-thinking approach, the client not only met their immediate goals but also prepared for sustained growth and adaptability in an ever-evolving sector. The collaborative effort demonstrates the efficacy of strategic partnerships in navigating complex transformations.

In summary, this successful merger serves as a significant achievement. With systems firmly in place and all operational systems attended to, the client is poised to thrive as an integrated entity while continuing to uphold the highest standards of service to its consumers.