"The integration programme is on track. It is only IT
that is behind." A comment along these lines usually occurs within
a month of a business undergoing a merger, if not sooner. In the
worst cases, IT delays can bring the whole integration programme
between two companies to a halt. In all cases, a black mark goes
down against the IT team.
So what should organisations contemplating a merger or acquisition
be thinking about when it comes to IT?
Once a target has been selected and the transaction moves into top
gear, teams of lawyers, accountants and industry specialists
support the "due diligence" process. With a focus on the statutory
and regulatory aspects of the deal, the financial and tax
structuring and the synergy benefits, integration concerns are
often way down the list of priorities.
The IT component still remains someway down the list of priorities.
Greater emphasis is always placed on people, customers, products
and financials.
IT due diligence is all too often just a listing of systems and
software with little thought given to how they will be assessed and
integrated. Only an enlightened few bring their IT director into
the inner sanctum of the transaction team.
Usually, in the run up to day one, the acquirer's focus is on the
establishment of operational and financial controls, as well as the
communications that are needed for different stakeholders. In
hostile deals, contact between both sides may be restricted; in
friendlier takeovers, greater collaboration may take place.
Day one generally arrives with the IT teams of the two merging
businesses having had limited contact with each other. However, IT
is expected to carry the burden of seamless integration between the
two companies.
Immediately, requests will start to flood in from the rest of the
business, such as getting access to the IT systems and network of
the other company. Common demands will include:
- "Can we get access to their systems this week?"
- "Can I access my e-mail on their network?"
- "How long before we can get this onto our server?"
To complicate things further, these requests come before all the
major questions of the IT team's structure, location, capacity and
platforms have been resolved. In the meantime, other parts of the
business are busy building their integration plans in blissful
ignorance of their dependencies on IT. Whether they are realistic
and agreed by all sides is subservient to the need to have plans
quickly.
In a matter of weeks, the IT workload has mushroomed, increasing
the probability of disappointment on all fronts. Everyone will
realise that IT has not been involved and will need further time to
get its plans together, slowing the pace and causing frustration
all round.
Fortunately, IT managers can take steps to minimise the risk of
ending up in such a situation. The trick is to plan ahead and
ensure that IT is at the heart of any merger, not left on the
sidelines.
How to relieve the burden on IT
- Involve the IT director in the merger process
- Open a dialogue with the IT department of the company being
acquired as soon as possible
- Anticipate initial connectivity and integration problems
- Ensure security measures can cope with the increased size and
risk-profile of the new organisation
- Identity and retain staff vital to maintain business-critical
systems
- Ensure other departments have realistic assumptions of IT's
ability to deliver on time and on budget
- Ensure IT has a strong presence at steering group
meetings
- Balance "quick win" projects with larger strategic
benefits
- Capitalise on synergies created by the merger, ie reduced
expenditure on licences, support and consulting.
Neil Boss and Glen Witney are directors in the merger
integration team at Deloitte