How to merge P-card programs for long-term success
Integrys Energy Group details its merging of two companies' procurement card programs
By William Atkinson -- Purchasing, 6/18/2009 2:00:00 AM
When two companies merge and begin the long, complex and arduous process of combining and synthesizing departments, policies, and procedures, a lot of pride can come to the forefront. Human nature is such that the people in each company tend to think their ways of doing things are better, and that people in the other company should realize this and agree to "fall in line." The problem, of course, is that the people in the other company believe that exact same thing—that their ways are better. The only real solutions to this problem are open minds and a spirit of compromise.
In early 2007, Wisconsin Public Service (WPS) merged with People's Energy Corp. to become Chicago-based Integrys Energy Group, an electric and natural gas utility company. The merged companies now own a number of utility providers, including Peoples Gas, North Shore Gas, Wisconsin Public Service, Minnesota Energy, Michigan Gas, and Upper Peninsula Power. And combined, as a holding company, Integrys operates utilities around the country, from Maine to California, as well as parts of Canada. The company now has over 5,000 employees.
While executives in various departments from the merging companies busied themselves with integration strategies, Rick Seymour, who, at the time, managed the purchasing card program for People's Energy, became the corporate card coordinator for the newly-formed Integrys Energy Group. His first task was to work with his own people and their counterparts at WPS (which also had its own p-card program) to centralize p-cards.
The first step was to create a cross-functional team composed of representatives from both companies' supply chain organization (which owns the program) as well as the tax department, auditing, compliance and accounts payable. First, the team listed the two p-card programs' similarities and differences and then started to merge the similarities and negotiate the differences.
The most important similarity was that both companies, coincidentally, used the same bank. "We were fortunate in that we both shared the same issuing bank and were both on the same platform with MasterCard," says Seymour. "So [selecting a card] was one obstacle we didn't have to address."
After that, the team began comparing their internal policies and procedures, which were similar since both companies were utilities. However, there were some areas of debate, as well as philosophical differences on what each thought the p-card program should accomplish but an open and honest debate was successful in finding common ground in these areas.
One critical area that had to be addressed was which online settlement tool to use. At the time, People's Energy used the issuing bank's online settlement tool, but WPS had its own homegrown version. "We weren't on the most current version of the issuing bank's platform," notes Seymour. "As such, we looked at whether it was a good time to jump up to the latest version, or just begin to use WPS' homegrown version."
One factor driving the decision to use WPS' settlement tool was Integrys as a whole was going to use WPS' ERP system, which was PeopleSoft at the time, and WPS' online settlement tool was already tied into PeopleSoft. Seymour says upgrading with the issuing bank's online settlement tool would require the company change everything over from its existing ERP to PeopleSoft eventually.
Another difference between the companies was that People's Energy was allowing employees to use p-cards for T&E expenses, while WPS was not. "They liked the controls we had with T&E, so we ended up incorporating T&E into the new p-card program," Seymour says. Still, there was some additional negotiation. With People Energy's previous program, all p-card users for materials automatically had the T&E feature.
In the combined program T&E is available, but no longer automatic. When a card is issued to an Integrys employee, the cardholder has the option of asking for T&E, and, if this request is approved by the cardholder's manager, the T&E feature is added for that cardholder.
Prior to the merger, WPS' p-card program had a rebate feature. People's Energy program did not. But just prior to the merger, People's Energy had been getting ready to look for a rebate program. "Since WPS already had a rebate program, we saw the opportunity to use it," Seymour says. The benefit: The new p-card program would end up doubling card spend, and Integrys would get the benefits of the rebates that would go along with this increased spend.
Integrys also ended up implementing an online training program for cardholders, which was something WPS already had. "We didn't have this, but we had been thinking about moving in this direction, so it was nice that they already had it in place," explains Seymour. The current training program is a tutorial with sound. Employees seeking p-cards take a test when they are done with the program, and are then issued their cards.
To provide Integrys employees with information about the new and evolving p-card program on an ongoing basis, the team sent regular e-mails to everyone. There is also now a Corporate Card page on the company's intranet, which has all of the information for users, says Seymour. Integrys also established a hotline number that cardholders can call for help.
To facilitate the transition, though, the team continued to allow cardholders to communicate personally with their p-card administrators—Seymour at People's Energy and his counterpart at WPS. "Before the merger, we really were the point people that everyone knew, and we could offer the personal touch," he explains.
According to Seymour, the bank did a tremendous job of smoothly cancelling everyone's old cards from the two companies and issuing new cards quickly under the Integrys name. "No one was every without a card, and it was a really seamless transition," he emphasizes.
Today, the program is working very well. Charges are verified automatically online, instead of the company having to rely on a manual program, which was in existence before. "We also have a stronger audit program," he adds.
Integrys now also enjoys the benefits of increased spend in the program and the accompanying rebates. "We now have over 2,000 cards, with $12 million in spend," he reports. Integrys is also using the card for new services that the two previous companies had not used it for in the past.
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