Deals are full of optimism: Promises of value rain down on the business as a result of successful mergers, acquisitions and divestitures, so companies continue to wheel and deal to optimize portfolios and reach their growth goals.
But both integrating and separating businesses after the ink on a deal dries is no easy task, particularly in the world of IT, as many business functions – from HR and Finance to Sales and Marketing – depend heavily on IT-run systems, data and automation.
According to KPMG Director Corey Jacobson, “it can be one of the most complex and challenging areas to handle.” With integration, he explains, the organization has to quickly overcome technology barriers in order to consolidate and streamline the IT landscapes and the business processes. On the other hand, separations are all about speed to execution as an entirely new company may get stood up. There is even a third scenario, where both integration and separation is done together. “It can get fairly chaotic at times,” he says.
Cloud Can Help IT Add Value to Deals
The integration and separation steps required to deliver on a merger or acquisition is just another business event — albeit one that is larger and more extreme than usual. Yet, the business is always asking and challenging IT to do more with what they have, so IT, as always, must develop a playbook to make their integration and separation efforts faster and cheaper. That’s where the cloud comes in, says Jacobson.
“IT is typically a key risk because of legacy systems and outdated ways of working, which can quickly become barriers to achieving the deal’s real value,” he says. “IT’s traditional approach may have the illusion of speed and control, but it doesn’t move the needle that much.” Cloud flips that around, with matured, standardized As-a-Service models that offer continuous integration and delivery that offers the necessary speed to value, while also transforming the company, he explains. “This is a critical shift that companies need to understand in order to gain a value advantage.”
That value advantage goes beyond the cloud technology itself, he emphasizes. Yes, integrations and separations will become more efficient and cost-effective with cloud. But the next step is for cloud to become part of the overall business strategy.
“If part of the business strategy is acquisitions and divestitures, then you have to bring cloud to the table as part of the deal valuation,” says Jacobson. That means bringing IT leaders to the table early on in the deal planning process to assess IT’s use of the cloud in terms of degree of dependence and maturity levels — how is the business using the cloud? Are there As-A-Service solutions that have been architected and documented properly? Does business unit deploy cloud piecemeal, or is it standardized across the enterprise?
In addition, companies should look at how to identify additional cloud-driven opportunities to achieve extra value. “So, if you’re looking for opportunities on the business side, such as a tax issue, you should also look at the IT side — how cloud can help,” says Jacobson. “Does it mean if I go to an SaaS model instead of having some on-premises, does that help me get there faster? Is that where my long-term goals lie?”
There is also the issue of updating the deal strategy to incorporate the use of the cloud to hit synergy targets, as well as identifying resources within IT that understand both the technology and deal pieces to figure out how to optimize cloud.
Cloud Helps CIOs Get Creative, Thoughtful and Innovative
According to the 2016 Harvey Nash/KPMG CIO Survey, The Creative CIO, the strategic influence of the CIO is becoming more important than ever. That is particularly true when it comes to integration and separation, as the IT organization provides significant core services to the business in order to make integration/separation efforts a success. The infrastructure — servers, storage, and network — has to be provisioned quickly and effectively, because without these basic components, everything else comes to a standstill. Then, applications and processes sit on top of that and then “the rubber needs to meet the road,” says Jacobson. “You have to start implementing and developing.”
Cloud can help with all of that: “You can cut down provisioning for core services or infrastructure services from months to days and weeks,” he says. Then, there are some innovative ways emerging data providers are thinking about cross-connects between multiple cloud providers. “By quickly cross-connecting those cloud providers and your data centers with high-speed, reliable connectivity, this cuts down on a lot of capital outlay as well as time and effort,” he explains.
As more creative-minded CIOs report directly to CEOs (a third do) or sit on the executive leadership committee (more than half do), it is often up to the Creative CIO to take these ideas and efforts to the business — developing a set of cloud scenarios and use cases to the executive management team to bring opportunities to life, including accelerating integrations and separations.
Conclusion: IT as Critical Cloud Driver
As the number of these deals continues to accelerate with companies seeking to gain advantage, IT can no longer come along for the ride, or be seen as the barrier or the key risk, says Jacobson. Instead, they need to be the critical driver and an enabler to realizing the value of the deal. So with the maturing of cloud platforms – infrastructure-as-a-service, platform-as-a-service and software-as-a-service and even data-center-as-a-service – deals can look not only at accelerating the deal value, but also how they can increase their competitiveness.
Says Jacobson: “In order for this to work, IT leaders need to be engaged throughout the deal lifecycle and be seen as that technology broker, integrator and orchestrator.”
For additional insight related to our research, visit our website to access a playback of the 2016 Harvey Nash/KPMG CIO Survey results.