Neste Oil CIO Kari Keskiivari

Deconstructing Neste

Some Disassembly Required

In these times of ubiquitous mergers and acquisitions, IT units face enormous challenges: how to integrate the organizations being brought together; how to merge two undoubtedly different infrastructures; how to create cohesion from two corporate cultures; how to produce, from two sets of books, one comprehensive set of accounts.

And rightly so. Commerce is constantly evolving: Company A acquires Enterprise B and Institution C joins forces with Foundation D, all while Government Agency X is folded into Department Y, and so on.

Kari Keskiivari knows about such shifts. Like most of us, he's read about them in trade journals for years and has even been involved in a few of them firsthand.

But Keskiivari also knows something few others know: what it's like to extract an entire IT unit from one entity and transplant it overnight into another, newly created enterprise-and a 12.7 billion one at that-while the businesses are running full throttle.

Neither oil and water, nor oil and electricity mix

When Keskiivari learned in September 2003 that the Finnish energy giant, Fortum (for whom he managed corporate applications) was planning to spin off its oil unit as a separate company listed on the Helsinki Stock Exchange (OMXH), he knew he would be affected. Like most other employees, he didn't know how, or how much. But he certainly didn't anticipate what was to come soon after: his ascent to CIO at the new company and, along with it, the responsibility to carry out management's plan to surgically snip the oil division's IT infrastructure out of Fortum's corporate architecture and implant it into its new home at Neste Oil.

Fortum was itself the product of a 1998 privatization and merger between Finland's state-owned electric power and oil industries and a subsequent merger in 2002 with its Nordic neighbor, Sweden's Birka Energi.

Keskiivari was around for both of those consolidations. But the market synergies the company's pioneering executives envisioned seemed lost on investors and analysts, so a decision was made to change course and divest the oil business.

The decision proved not just prudent, but perhaps brilliant. From March 31, 2005 - the day the two companies separated-until January 2007, less than two years later, the combined market value of the two companies has increased 90 percent over their value as a single enterprise.

But getting there was anything but easy.