By Naked CIO, 27 April 2009 08:00
COMMENT
Integrating IT can make or break a merger or acquisition, says the Naked CIO. Here's how to get it right.
Inspired by Oracle's recent bid to purchase Sun and mumblings about the difficulty to integrate their product sets, I recalled the challenges IT had in several companies I worked for when trying to integrate systems as a result of mergers and acquisitions.
Firstly, I recall the frustration I had as an executive running IT that I was not included in the 'need to know' circle when the consideration of the merger or acquisition was being discussed. Inevitably, once the deal was pretty much final, IT would be brought into the loop and then be perceived as party poopers when rightly we would identify considerable challenges and costs to integrating services, applications and data into one seamless environment.
In my experience streamlining and creating synergies between platforms and applications of two companies can take a considerable amount of time, often years, to do right.
When the board looks at the upside of a merger or acquisition, they almost always leap to the conclusion that services, products, applications and information will be seamlessly integrated from day one. Even those that have been through the exercise before are often still believers that Santa Claus will come down and make everything work perfectly.
Secondly, the challenge when integrating two companies' IT platforms and indeed strategies is attaining business alignment. It is almost always the case of a square peg in a round whole - and trying to understand what to compromise is very difficult.
Additionally, it's hard to decide, with two often-divergent strategies coming together, which one or which hybrid is the right one. Don't ask the board, as in my experience they rarely have thought that far ahead.
So in most cases integrating IT platforms in these circumstances is a wait-and-see exercise propagated by naïve executives and pawned off on unsuspecting IT professionals to make right - and to be accountable for if it goes wrong.
There are many ways in which companies can mitigate some of these unfortunate events. Having a CIO or IT executive on the board in the first place is an excellent start. Evaluating the IT integration opportunities even before due diligence would be beneficial. Understanding these costs and challenges prior to any agreement is a must especially if IT integration is a key aspect of the success of the whole initiative, which is predominantly the case.
When acquiring another organisation, it is critical to have a plan that encompasses all aspects of the integration process right from the beginning. This will allow you to ensure that benchmarks and expectations are managed properly. Quite often you can achieve some form of synergy quickly through establishing a data warehouse that can take multiple source system data and allow for analysis and manipulation while you wait for application synergies and development in order for operation platforms to work in unison.
Even though you, the IT executive, may be the bad-news bearer, never over promise in terms of mergers and acquisitions. Instead always err on the side caution. Why? Because the unknowns in these circumstances always have a negative impact on the plan.
Most of all, convince your company that if it is planning to acquire another company, IT needs to be a key player from the start. This will help with the integration efforts and provide valuable information on the true cost of a merger.
Comments
There are 3 comments. Join the discussion
1. Steve Clarke
You're spot on, the future of the separate IT systems is never properly evaluated prior to a merger, there's an obsession with the asset list and the people, but not how the systems are to be integrated. Often the easiest thing to do in the short term is to keep everything separate. This gives the impression that the merger is a success from a board perspective, but doesn't address the long-term need to integrate systems and people. Mergers have to be completed quickly and the board is expecting to save money from the bottom line so Quality is compromised in the Time / Money / Quality triangle that ultimately stores up future problems for IT leadership.
2. Charles Smith
Ah Grasshopper has learned in business that Politics is more powerful than Logic.
I too have been through large mergers and seen the worthy punished and the good buried.
Sadly in this case I suspect MySQL will be neutralised.
3. Simon Allen
Ah yes, this is familiar territory. Why do so many Mergers & Acquisitions fail? The IT dept can tell you!!
One of the aspects of our work that the main board fail to understand is that we understand the WHOLE business - top to bottom. Since we have to deal with everyone and all the process' we understand 'where the business is coming from' and, critically, where it might be heading!
Even the first visit to the target company can start to tell you that it will or will not work.
Unfortunately, the board still think of us as mere drones. They do not understand IT and have made it quite clear that they have no desire to find out. I won't bore you with examples, as you will all have many of your own to tell.