How CIOs Can Make Mergers, Acquisitions and Divestitures Work for Them

Tips for effectively managing IT in a MAD world, from staff support and business expectations to juggling priorities.

By Ali Bandukwalla, Pavel Krumkachev, Shalva Nolen and Rajat Sharma
Fri, June 06, 2008

CIO

The Problem: Managing Uncertainties and Expectations

The complexities of mergers, acquisitions and divestitures (MAD) can be chaotic for IT organizations. Knowing that IT's performance can impact the results of a deal, today's CIOs prioritize IT integrations or divestitures. Even the most seasoned IT executives worry about an integration's budgetary impact and recognize the advantages of quick completion. Common questions include:

MAD IT projects can sometimes adversely impact a deal because of the following:

  • Misalignment between IT and business strategy.
  • Lack of organization-readiness efforts prior to an M&A deal.
  • The complex nature of integrations and divestitures.

Beyond the obvious subject of synergies, it's important to identify how CIOs can use MAD activities as a platform to demonstrate IT's business value. Based on interviews with several IT executives, we examined critical decisions and common causes of failed MAD IT projects. The interviews helped us better understand the challenges of integrating or divesting various IT functions. The real-life lessons learned can benefit other CIOs preparing agile IT organizations and their companies for future deals.

Scenario: A Highly Customized Merger of Equals

To accelerate growth, establish greater market penetration and improve the customer experience, two companies merged. The IT team began planning for the integration, which included the activities necessary to support both "day one" integration—operations on the day the merger was legally completed—and the eventual goal of integrating all people, processes and technology, namely:

  • Readying infrastructure, such as e-mail, domain, and active directory, and integrating HR, payroll, and benefits policies and systems;
  • Upgrading the acquirer's existing ERP suite to enable a common ERP platform;
  • Merging all systems, processes, policies and procedures across organizations.

Challenges: Experience—and Time—Are at a Premium
In addition to the typical implementation challenges described above, this project faced the following issues:

  • Lack of integration experience. Most IT employees had production support experience; none had performed an integration of this size.
  • Lack of experience in infrastructure and application consolidation. One organization lost several key employees after the merger. Complicating matters, geographical separation of the two organizations meant that application and infrastructure knowledge resided in two locations, making collaboration and information exchange difficult.
  • Limited system access prior to day one. Legal and compliance issues prevented direct access to one of the company's IT systems, so information exchange prior to the deal closing had to be conducted in an isolated, "clean room" environment.
  • Poor data quality. Business-critical contract manufacturing required uninterrupted service and complex customized applications for procurement processes. One company's system data had quality issues due to back-end updates, poor governance processes and unpurged, obsolete data.
  • Aggressive implementation time line. If the team missed any deadlines, the integration go-live window would be delayed by at least three months to allow for the quarter- and year-end financial closing process. Consequently, even a small delay in system integration could jeopardize projected merger synergies.

Resolution: Keep It Quick and Simple
The team relied on experience, patience and rigor to overcome these challenges and consolidate and integrate the two organizations' IT systems within just eight months. The team used an ERP application to support the combined employee force with day-one, HR-related services. Integrated order management, finance and support functions soon followed to provide uninterrupted customer service and support. Although productivity and revenue metrics weren't possible, the team recorded the following achievements:

  • ERP instances were consolidated 90 days after the transaction closing.
  • Integration synergies met and exceeded estimates.
  • The team rationalized its IT applications portfolio.
  • The integration supported business synergies and end-state plans.
  • The restructured IT organization successfully supported the newly merged company.

Several critical factors led to the successful IT integration:

  • Limiting the integration's complexity by adhering to an "adopt and go" philosophy;
  • Involving the IT organization early;
  • Clearly communicating expectations for quick integration;
  • Proactively retaining and involving key IT leadership resources from each organization;
  • Using a loosely coupled, modular integration architecture to limit dependencies, expedite application and data consolidation, and provide flexibility and scalability for future M&A initiatives.

Continue Reading

Custom malware frequently goes undetected. According to Forrester Research, the best way to reduce risk of breach is to deploy file integrity monitoring (FIM) tools that provide immediate alerts. This white paper has been brought to you by NetIQ, the leader in solving complex IT challenges.
This white paper describes the business challenges and opportunities that are driving interest in Identity Governance while discussing considerations your organization should make to help achieve project success.
This paper explores the concept of content-aware IAM, describes the integrated architecture for this new approach, and highlights the benefits that this approach provides.
One of the key strategies that IT teams are pursuing to reduce capital costs while boosting asset utilization and employee productivity is the transition to highly virtualized data centers. However, IDC finds that expectations for further boosts in IT asset use and operational efficiency often surpass the actual results for a variety of reasons. These problems can quickly overwhelm any hoped-for benefits as the scope of virtual server deployment expands.
For your IT organization to keep pace with the business, you need a new, faster approach to infrastructure deployment-an approach that increases agility and accelerates time to application value. That's HP Converged Systems. Built on Converged Infrastructure, these systems deliver the industry's first portfolio of pre-integrated, tested, and optimized infrastructure solutions for applications running in virtual, cloud, dedicated, or hybrid environments.
The nature of the blade platform makes system management, monitoring and provisioning easy and efficient. Access this resource to learn how blade migration will save your data center time and money while increasing performance.
Download this webcast to learn about the design considerations for virtualizing SQL workloads, performance and scalability information and high-availability options, as well as support considerations
Many enterprises have discovered that the use of virtualization to support desktop workloads creates a range of significant benefits. These benefits include price efficiencies, improved IT management and greater agility and choice for end users.

This VMware sponsored webcast with IDC will provide both quantitative measurement of the business value -- defined as the expected ROI -- and qualitative analysis associated with the use of VMware View™. IDC will also provide an analysis of the View Composer and ThinApp™ features of VMware View, including the business value of these solutions and an overview of how they work.

Attend this webcast to learn about:
- Challenges and barriers that might impede the adoption of desktop virtualization
- Navigating roadblocks to facilitate a strategic implementation
- Optimizing qualitative and quantitative benefits to IT and your business
Applications are changing - they're increasingly web-oriented, global in nature and run from multiple device types. Additionally, the volume of data is growing exponentially every year. How do you ensure your applications have fast, accurate, up-to-date information in this new world? Modern applications are data-intensive; delivering data the old way using monolithic databases isn't working. What's needed is a modern approach to data. One that scales-out as needed and delivers predictable high performance, but without sacrificing data consistency or integrity.
VMware View™ 5 simplifies IT management while increasing end user freedom by delivering desktop services from your cloud. Building upon VMware's leadership in desktop virtualization, VMware View 5 delivers a high-performance user experience while giving IT greater policy control.

View this webcast and find out how VMware View 5 can help you:
- Deliver the highest fidelity experience of desktop services across any device and any network
- Simplify and automate IT management, security and control of desktop services
- Reduce the costs associated with your desktop environment
IT professionals are being asked to deliver faster "time-to-value" than ever before. An IDG Research survey found that CIOs are eager to invest in technologies that will enable them to get new applications and services up quickly, achieving faster time-to-value.
Learn how to reduce IT management overhead, ease revision control, guarantee data security, scale systems more quickly and reduce server and software costs.
Newsletter Sign-Up »

Receive the latest news test, reviews and trends on your favorite technology topics

Choose a newsletter
  1. View all Newsletters | Privacy Policy
Resource Center