There are several elements that should be considered when planning for a technology integration following a merger or acquisition. This framework will help form the foundations of an integration effort that builds on the strengths of both companies to drive the business goals of the unified whole.
Synergy – The integration should combine pieces of each company to form a more complete, more effective whole. This involves the maximization of revenue streams through embedding key products from the target company into the parent company, or vice versa. It also involves recognizing that some elements should be left segregated in order to achieve maximum cost effectiveness or efficiency. Elements that should be considered include people, operational elements, applications and services, and enabling technology.
Time to Market – As a combined entity, a variety of factors will change the time to market for products and services. Leveraging skills and resources from both companies can help expedite development, testing, and production, allowing products to be created faster and less expensively. In some cases, this can also work in the opposite direction, as integration problems can cause inefficiency and other problems.
Cost – The costs of any integration efforts will be a major component of developing effective strategies. Companies must examine the expenses of a chosen integration roadmap, as well as the savings it will allow for, in order to make better decisions about what to keep segregated and what to combine.
Innovation – Bringing together the varied talent and resources of two companies can lead to a dramatic increase in innovation. Companies may have the ability to develop new products faster, combine technologies to create more effective solutions, and benefit from an influx of ideas. However, it is also important to take steps to make sure that innovation is not stifled by incompatible culture changes or processes that aren’t effective in a new environment.
Creating an integration plan
In order to agree upon an integration model and ensure that the IT organization is ready to carry out the necessary changes demanded by that model, careful evaluation and planning is necessary.
Start with a baseline assessment
Designing an effective plan for technology integration that meets broader business goals should involve careful assessment of both companies. This assessment should identify any redundancies in people, systems, infrastructure, applications, vendors, capabilities, and costs. It should also identify opportunities to add value through integration or collaboration and look for areas in which there are gaps that need to be addressed. This process should be broken down into the examination of several distinct components for each company:
- People and organization – Assessments must evaluate the skills, capabilities, and overall organizational structure of both companies. Look for overlaps in employee capabilities, potential power structure problems, and any issues that could arise from mismatched culture.
- Processes – Each company has processes in place of particular maturity levels and other characteristics. Learning how to mesh the way both companies accomplish goals is a critical step in achieving a successful union.
- Infrastructure & Applications – A careful inventory of each company’s applications, systems, and infrastructure must be made to look for areas of overlap and to allocate resources in the most effective way. Other issues to address include relative scalability of infrastructure, the suitability of adopting resources to new tasks, and adherence to industry best practices.
- Strategic alignment & governance – During a merger or acquisition, there should be mechanisms in place to ensure each company is aligned in terms of its goals and accountability. This will help avoid conflicts of interest and problems in the power structure of the new organization.
- Financials – There should be a careful analysis of IT costs by function and activity for each company. This allows the company to identify items that do not provide a positive value and to integrate in the most cost effective way.
Create timeline & project portfolio – After making an assessment of the current state and deciding on an integration model, companies must begin creating a plan for the projects necessary to accomplish those goals. This should involve a structured timeline with milestones and metrics to judge progress. This allows IT to prioritize projects according to the needs of the business and allows for a more organized approach to integration.
Address risk mitigation – Technology integration inherently involves risk. IT leaders should look at every decision in terms of the potential costs and pitfalls compared to its benefits. This allows for planning that is based on logical analysis of the facts and reduces the chances that the integration will fail due to unforeseen outcomes.
Develop a structure for execution – Planning is only half the battle. Companies must also put solid structures in place to ensure any projects that have been delegated are followed through on. This involves ongoing dedication to the integration process and requires substantial commitment on the part of IT management to ensure that early work is not undone by later mistakes or lack of will.
Looking for more detailed information on integrating technology during mergers or acquisitions? Download a copy of our comprehensive white paper, “The M&A Playbook for IT.”
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