Between 70%-90% of mergers and acquisitions (M&As) fail for one reason or another, but when it comes to IT integration, most complications boil down to the fact that companies often implement technologies in vastly different ways. Software licenses, service agreements, equipment, policies, and a wide range of other factors must all be accounted for to complete a successful merger or acquisition. For M&A to be successful, a good technology integration plan is vital.
But what makes a good technology integration plan?
To begin with, a good technology integration plan requires effective planning and execution, which requires close collaboration between IT and business leaders. IT leaders must be involved in M&A decisions from the start and also approach integration with the broader goals of the business in mind.
The bulk of the work lies in making a robust baseline assessment that involves both companies, identifying redundancies, gaps, and opportunities to add value. This process should be broken down into the examination of several distinct components for each company, including:
- People and organization: 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 cultural mismatches.
- Processes: Learn how to mesh the way both companies accomplish goals to achieve a successful union. Each company has processes in place of particular maturity levels and other characteristics.
- Infrastructure and applications: Make an inventory of each company’s applications, systems, and infrastructure to look for areas of overlap and to allocate resources most effectively. 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 and governance: Put mechanisms in place to ensure each company is aligned regarding its goals and accountability. This will help avoid conflicts of interest and problems in the power structure of the new organization.
- Financials: Carefully analyze IT costs by function and activity for each company. This allows you to identify items that do not provide value and a path to integrate most cost-effectively.
Following the assessment, a company can decide on the best integration model and create an execution plan that addresses risk mitigation and includes 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.
Planning, of course, is only half the battle. Companies must also put solid structures in place to ensure follow-through on any projects that have been delegated. This involves ongoing dedication to the integration process and requires a substantial commitment on the part of IT management to ensure that early work is not undone by later mistakes or lack of will.
Want to ensure your merger or acquisition is driving business goals? Contact Wavestone US to learn how we can help you cover all the bases when it comes to IT integration planning.
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