The odds of a successful post-merger IT integration used to be truly daunting. Whether it was a “merger of equals” or a pure acquisition, realizing target synergies was difficult, if not impossible to achieve.
This dynamic appears to be changing. Companies are learning how to face the IT integration challenge through several key changes in the overall effort. Through a combination of innovative technologies, highly-visible and inspiring strategy, a keen focus on stakeholder management and communication, and stronger internal and external resources, many companies have successfully managed this challenging endeavor.
As a result, these companies are able to meet the proposed synergy targets, and are even using the integration as an opportunity to develop technologies and processes that may improve the overall operating performance of the new entity.
How are companies breaking the paradigm to achieve M&A IT integration success?
There are several innovative approaches that companies are taking to improve their odds of success.
1. Leveraging new technologies
Massive advancements in technology are making the technical work easier and quicker to execute. This enables IT teams to simplify some of the most difficult aspects of the integration. For example, applications that many have traditionally been hosted in an on-premise data center may now be set up as software as a service (SaaS), and may only require a connectivity change. Examples in this area include tools like payroll platforms, time and expense applications and reporting systems.
Another example is that many companies have moved to external providers for much of their data center hosting even for their internally managed applications. The hosting providers have much more experience in migrating core data center components. While application connectivity will, of course, remain a key challenge, moving the data center components is often much easier because the company can rely on the expertise of its hosting provider to do much of the technical work.
2. Inspiring teams with clear, aspirational strategies
When key decisions need to be made, a clear, well-articulated and exciting strategy will help the organization get to the desired destination. Wouldn’t most team members want to go somewhere exciting? Wouldn’t most team members be more prone to go the extra mile if they knew it would help their career to be part of an inspired vision? Companies that share that vision across all levels of the organization inspire their teams to outperform. This can be a major boon at a critical time.
3. Increasing proactive communication
The best integration teams have learned (frequently the hard way) just how important communication is during the integration. Virtually every project will have conflict, especially when putting two different organizations together. However, much of that conflict relates to the information that is being communicated, or not communicated, to respective teams.
When project leaders and key stakeholders share what they can as early as possible, it tends reduce those conflicts, engender more enthusiasm for the effort, and ultimately increase the participation and effort put forth for a positive project result. In short, more communication leads to more cooperation, and that is a huge advantage when trying to meet extremely challenging integration deadlines.
4. More experienced internal teams
Many companies are hiring leaders who have solid experience in M&A IT integration, from project management and sponsorship through technical execution. As result, these internal resources can drive strong buy-in for integration projects, dramatically increasing the effort and dedication of the people assigned to deliver on these difficult engagements. They can also provide technical and process expertise, which accelerates decision-making and design, helping project teams get to results much more quickly. The list of advantages to having internal resources is quite extensive, and these advantages help to dramatically improve the results of the integration.
5. Innovative approaches from advisors and consulting teams
Consulting companies have continued to enhance their tools and resources, providing better overall services to clients in this arena. For example, there are now “playbooks” available that enable consulting resources to search past projects much more effectively, bringing past lessons learned to current project teams much more effectively. This helps avoid “re-inventing the wheel” every time a new project is initiated.
In addition to better tools, the M&A resource pool appears to be getting stronger, with more resources and options available to clients. What used to be the domain of pure strategy firms has now become a much broader market, offering clients a longer list of options for help. Many of these firms have deep experience throughout the entire integration project cycle.
Companies are innovating to deliver much more consistently on M&A integration projects. Through better people, processes, and certainly technologies, we are seeing improving synergy realization across many integration scenarios. As technology continues to develop, we can look forward to even more improvements. In fact, the challenges encountered may shift from technical execution to keeping up with the latest offerings available — a good problem to have for an IT team when it comes to integration.
Coming up: In Part 2 of this post, I will share some of the new technical innovations being brought to the market, including key tools like robotic process automation, test automation and training delivery.