IT merger and acquisition (M&A) activity has staged a strong recovery. Deals are reaching a peak and are increasingly...
complex and of a significant size. This poses a distinct set of challenges for CIOs.
Timeframes are compressed, huge sums of money are at stake, companies face scrutiny by shareholders and regulators and the deal team does not always want, or need, to understand the operational complexity.
On the positive side, with the exception of pure people costs, IT is increasingly enabling a large proportion of the deal synergies.
Our research has shown a clear correlation between day one effectiveness and IT involvement in due diligence and integration or divesture planning.
Assigning a senior IT executive to help with due diligence and identifying IT requirements prior to deal signing can mitigate unexpected integration or divesture costs, as well as expensive, risky and wasteful temporary solutions due to a lack of IT engagement in due diligence.
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Planning and delivering IT changes in the context of a merger or acquisition is just like any other IT project, apart from the fact that you absolutely cannot be late. The end date is typically the first thing that is set and everything needs to be reverse-engineered from this date.
Although many IT teams find it uncomfortable and difficult to progress in a fluid transaction environment, it is often down to IT and other back-office functions to help move the business forward. IT might not be able to tell the business what it wants, but by working backwards, it can certainly shape the programme and state precisely what decisions need to be made and by when – or risk not achieving completion.
A client responsible for the M&A integration of all back office functions once remarked; “I don’t know if I am driving or being driven”, referring to the fact that it is often down to him to use immovable milestone dates with robust reverse planning logic to help teams progress.
Planning and delivering IT changes in the context of a merger or acquisition is just like any other IT project, apart from the fact that you absolutely cannot be late
Reverse-planning often pushes IT teams outside their comfort zone. However, given the immovable deadlines, the next hurdle for CIOs is to find a balance between time, quality and cost.
Time is typically a constant factor. Faced with the trade-off between quality and cost, developing manual workaround solutions to meet deal timelines in the short timeframe is sometimes the only way forward. CIOs leading M&A transactions must equip their teams with the skills and mindset so that they no longer default to the traditional forward planning mechanism, which might not be successful.
The pressure cooker environment of an M&A project requires a step-change in the risk management and escalation process. In our experience, making optimum use of the senior sponsorship that is normally attached to projects of this nature can be the CIO’s best friend.
As long as it is not abused, risks are articulated succinctly and mitigation actions made clear, a daily escalation call with senior stakeholders ensures any blocking factors are dealt with swiftly. Risk management has to be ingrained into people’s DNA – and not forgotten, regardless of the situation.
At Deloitte, we have made the techniques required to deliver M&A IT projects applicable to any time-critical technology transformation project. Taking the 2012 Olympics as an example, the team used the principles of reverse planning and risk management to execute a project where there was no option of being even one minute late.
The expectations on technology were greater than ever and solutions never previously used at an Olympic Games were deployed. Gerry Pennell, CIO for Locog, often referred to these principles as the pillars of his "mission control".
More so than ever, the success or failure of an M&A deal can rest on the shoulders of the CIO, but these simple tools and techniques can make a significant difference.
Richard Baderman is a director at Deloitte's technology consulting practice. Parminder Sikka is a senior manager at Deloitte's technology consulting practice