Marriages made in Hell

We are gathered here today to join these two companies in holy joint venture… Till death – or the realisation that they should have planned the integration of their IT systems a wee bit better – do they part.

Call me a cynic but every time I read about another merger/joint venture/acquisition I take my phone off the hook. I can’t count the number of times I’ve taken calls from companies who suddenly realise that in all the excitement they completely forgot about the back end. Two CRM systems, two procurement systems, multiple databases, websites and sales systems. Not to mention two different corporate languages and, all too often, a cultural gap that is more of a chasm.

By the time someone decides to pick up the phone the integration process is usually in such a state that the chances of success are slim to none – hence my reluctance to get involved. That’s not to say that every merger is doomed to failure. Some companies have turned it into an art form – take Oracle and Cisco for example. But we’ll come to success later; first we must examine failure.

Due diligence is rarely a term applied to IT but in the same way careful research is conducted from a financial and legal perspective before any M&A activity commences, a company needs to know what it is getting into from an information viewpoint. Who has what in terms of data, where that sits and how it flows around and out of the company: basic stuff you might think, but you would be surprised how little attention is paid to it.

Take something fundamental but vital like sales. In all likelihood each company will have its own customer base and its own information on who that customer is and what products he or she has bought, as well as information on any complaints they have made or problems they have had. You may well imagine that top of the list in terms of importance during any merger would be bringing that data together and making it accessible through the same systems. After all, one good way to lose business is to annoy customers by trying to sell them the same stuff twice. Sadly, in many mergers the mantra of ‘customer first’ is quickly forgotten.

Integrating systems is much more than just connecting physical infrastructure. What many fail to realise is that the tools and systems within a company are an outward manifestation of its culture. A company governed by rigid procedures and rules with a culture of discipline and structure will use different IT tools than one more relaxed and less hierarchical, so forcing one side to adopt the processes of the other will create conflict and frustration. The history of M&A is littered with examples of companies that completely underestimated the impact of cultural differences: Quaker Oats and Snapple (Quaker Oats was eventually forced to sell the company for a loss of $1.4bn), HP and Compaq, Daimler-Benz and Chrysler… need I go on?

So what steps can you take to maximise the chance of success?

Firstly, mergers will never be easy but life can be much less stressful if you take time out to plan. It’s incredible how many intelligent business brains decide to skip this step when it is most needed. Take stock, understand the task in front of you and think about what success would look like. Set a realistic timeframe, think about the impact of culture and consider what is needed to be successful. In many cases you may have to spend to save.

Secondly, consider your team. For the integration to run smoothly it has to be led by a team drawn from both business and IT. And when I say team I don’t mean a ‘virtual’ team: they have to live and breathe each other from day one, even if it means (the horror!) sharing an office.

Thirdly and most importantly is communication and collaboration. Often the processes and tools that are put in place to connect people are very important in determining how successful communication is. The new forms of communication being developed in the consumer space through social networking lend themselves very well to project management. Not that I would suggest communicating with your team through Facebook, but setting up private networks that mirror the capabilities of public services like Facebook and Twitter is a great way of making use of the new communication pathways that are currently being developed.

Last but by no means least is learning from your mistakes. This is where we come back to the likes of Oracle and Cisco. Practice makes perfect and these companies (Oracle especially) have had plenty of that. But both these companies have ways to take the learnings from each acquisition and apply it to the next one.

So as regards the marriage of Kraft and Cadbury, I shall be watching with interest. The phone isn’t off the hook but I might be screening my calls.