CIO Just Four Things: A framework for M&A IT integration

In the following “Just four things”, I want to provide some thoughts on how to approach an IT integration after a merger or an acquisition. The key driver of M&A is to return as much value back to investors as soon as possible, so the sequence in which transformation occurs will either accelerate or slow it down. Below is a framework to help thinking about where to start to optimize for the best outcome.??

So here is my 4-”C” s framework that has worked effectively for me.??

• Communicate: find all those projects that will improve communication between the acquired/merged entities. This will be even more important if the entities are in different locations or countries. A great first place to start is merging the collaboration suites (i.e. O365. Google Workplace, etc..). Best case scenario, both entities will be on the same one and the change is simple. Worst case scenario both entities have different ones and feel absolutely wedded to their chosen suite. In that latter case, bravely choose one and move forward. Most M&A business cases are based on “1+1 = 3” thinking where for example sales teams can be leveraged to cross sell products. Without that collaboration, sales cycles could be slowed down, or sales teams could become reluctant to sell the other entities product that they may not be familiar with.? Additionally, there are situations where the organisations are not using the same “chat” solution. Here to, consolidate early on. Communication between the entities is key to achieving the first benefits. It will take courage to select “the” tool, and some convincing will be required to standardise on one, but this is crucial for initial success, cooperation and relationship building. There needs to be as little friction in the initial interactions as possible.??

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• Collaborate: organisations are in the business of delivering products and/or services. To do so, they will be supported by a vast array of tools. The use of different tools by the entities may hinder them coming together because of incompatibility of deliverables, lack of interoperability, complexity of integration or in extreme cases, the difference in tooling can be a psychological “them-and-us" ersatz battle ground. So, focusing on the bringing all the key collaboration tools/platforms together as soon as possible will accelerate not only delivery of product and services but build bridges between the legacy units. Which of the tools is chosen will depend on factors like the complexity of consolidation, the preponderance of usage, contractual tie-ins, the breadth of functionality within tools, the existence of canned migration paths, intellectual property ownership implications, savings opportunity, and much more besides. Mapping this out in concert with the leadership of the various functions is critical versus the acquiring company just imposing its tooling. That latter approach can make sense in situations where the acquirer is disproportionately larger than the acquiree, but often when there are more than two companies involved or they are of comparable size, a more consultative and conciliatory approach is required to keep all parties engaged and onboard. To focus the minds, it is important to phrase the decisions in terms of what is best for the new go-forward entity which consists of everyone versus what is best for one or the other.?

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• Consolidate: Although some consolidation will have been done above, agreeing on similar platforms and tooling does not necessarily mean that the instances, contracts, payments cycles, payment locations etc have been consolidated. Additionally, even if you do all of the previous two suggestions, there will still remain a long tail of “lesser” business applications being used in the business. They will typically be financially less important, however the cost of maintaining an application in a corporate environment, even if the application is free, is never zero. Complexity is the enemy. Complexity drives cost, increases the likelihood of service misses, and creates a larger attack surface for bad actors.? This stage is therefore of equal importance to the previous two.???

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• Culture: despite the thorough due diligence and planning typically carried out pre-M&A, the “rubber hits the road” when the teams are tasked to execute the espoused changes. Assuming that the acquired company will just “do as it is told” or that it will see the wisdom in adopting the acquirer's culture without resistance is a recipe for failure. Similarly, assuming that the “official” values, as written down in various corporate communications documents, are in fact being lived by all employees equally, and especially within the acquiree, is over-simplistic and can lead to an exodus of key personal. It is important to address it head on by sharing what each groups culture is, being open to a non-recriminatory exchange on what, if anything, may need to be added/removed/changed to cater to the new bigger team. To help get this process started, there are a few values that typically work in all circumstance and if already in place should allow you to just get down to the business of doing business. These values are transparency, respect, encouraging productive differences, no blaming, solution focus, and decision bias mindset.? Ignore cultural changes/differences at your peril.??