Six Tips for Managing Mergers
Best IT practices described by CIOs and corporate strategists from India.
Tue, May 29, 2007
CIO India — For the IT team of an enterprise that is on an acquisition spree, each merger and acquisition brings a new set of users and calls for a holistic view. Here are six best practices for a merger identified by CIOs, analysts and corporate strategists:
1. Don’t delay integration. After an M&A is announced, it is important to work towards a process to integrate. “The first 100 days after the MoU is signed are crucial to define your plans, especially operational ones,” says Sivarama Krishnan, executive director at PwC. Then, focus on execution. “Till you integrate, the synergies are entirely hypothetical,” notes Krishnan.
2. Understand where the synergies lie. Acquirers are best advised to have an “investment thesis” ready, which spells out the rationale of an acquisition. The IT team can utilize it to identify areas of synergy as recognized by management.
3. Instill a process to quantify the synergies. This could range from efficiencies in the supply chain to usage of the target company’s resources. “These need to be captured in your systems,” says Rishikesha T. Krishnan, professor of corporate strategy at the Indian Institute of Management-Bangalore. “If you want to measure the progress of M&A, you need to have good data availability, which depends on whether you have the right systems in place. Decision-makers stand to benefit by this immensely, immediately.”
4. Communicate. A lot. T.K. Subramanian, a top IT executive at United Spirits, used a workshop-meeting of process owners of both entities concerned when he was leading efforts ot integrate merged companies' systems. There has to be an open environment for new users to better understand the integration process.
5. Identify users and their particular IT needs, strenghts and weaknesses. This helps determine the extent to which new users (and even existing ones) adapt to the integration environment.
6. Create a company wing for leveraging M&As. Enterprises that are very successful in M&As tend to have a separate business department that specializes in acquisitions and integration — complete with integration managers. This has immense benefits in tackling cultural issues and other matters relating to integration.
