A Few Simple Steps Can Make Post-M&A IT Integration Smoother

Featured article by Ross Creasy, managing director of information management and technology at MorganFranklin

We’ve been hearing a lot lately about the current mergers and acquisitions boom, but very little about the role of information technology in making such deals successful. Yet the IT leadership of a company is central to the success of an M&A. If the post-deal integration is done right, the transaction will unfold much more smoothly, and that’s good for investors, employees and the overall health of the company.

The challenge for IT managers, however, is the uncertainty that surrounds the deal making process. Often the path to a takeover or merger is filled with twists and turns, fits and starts. The terms of the M&A and timeline may change abruptly, causing further difficulties for IT managers trying to prepare and plan for a smooth transition and integration.

Fortunately, there are a few steps that can bring structure to what is an often unpredictable process.

Begin with Business Goals

The first step is simple—understand the business goals of the deal, and build the IT integration strategy around those goals. For example, is the M&A designed to acquire the talented staff of the other company? If so, the IT goal may involve making sure these new employees have the tools and infrastructure needed to hit the ground running on Day One. From here, other key questions will arise, such as Will the network be able to support the additional load? Can the endpoints (that is, mobile phones and laptops) handle the extra volume and are they secure? Identifying the right business goals upfront will avoid time wasted on tasks that are not relevant.

Create a Playbook

The next step is to create a playbook, which is a plan and timeline of activities to carry out during the pre- and post-deal periods. This is crucial to manage the shifting phases and pieces of the deal, and to abide by what is often a tight timeline for technology integration. It is also useful for communicating the integration plans to people within both companies whose support is needed to make the integration successful. This will bring a measure of transparency to the process that is helpful in winning the support of key decision makers and collaborators, including business and IT leaders and staff of both companies.

The playbook also is helpful in modeling the costs and benefits of each aspect of the integration. Often decisions about which technology to keep and which to dispense with are made hastily, without full consideration of the longer-term consequences and needs of all users and divisions. The playbook can help make sure these are considered thoughtfully with the right people asking the right questions.

Divide the plan into three phases: pre-close activities and questions, post-close activities and longer-term activities. Share the playbook with the executive team, the business units and, of course, the core team that will execute the plan. Draft the plan in something as simple as an Excel spreadsheet. Key points of the plan can be presented in a PowerPoint deck to brief members of the executive team at pivotal stages.

Inventory Technology and Assess Requirements

Next, work with solution architects to take an inventory of all technology in both companies. Do this as soon as possible. In some cases, this will be in the pre-deal phase, before a negotiated letter of intent is drafted. In other cases, it may not be feasible until the letter of intent is in place. Keep a record of all the applications and how they are used and by which divisions of the company. Integrate this record into the playbook so everything is in one place. The time required to carry out this inventory will vary according to the size of the company, but typically will take between one to six weeks.

Collaborate with solution architects and business leaders to determine which systems are mission critical, which are obsolete, and which are just nice to have but not necessary. This is one of the most crucial steps. Key stakeholders should participate in this decision. At a minimum, this means solution architects and business unit leaders who are impacted by the system. Allow ample time for analysis and deliberation. Keep a simple log of the decisions and why they were made and make it available to the team. This will keep everyone organized, informed and aligned.

Prioritize the End User

Integrate the end user as early as possible. IT has an important role to play in making employees from both companies feel they are part of the merged company. Something as small as having access to email, calendaring and messaging can do a lot to support this. For the same reasons, integrate human resources and payroll functions as soon as possible. Any systems that provide employees information to their benefits, pay stubs and 401k plans, for instance, should be made available.

As early as possible, work with human resources to communicate to employees the timeline for pieces of the integration that will affect them. This will build confidence among employees, particularly the employees of the newly-acquired company, in the leadership team. Every detail doesn’t need to be communicated—just enough to demonstrate the company is on track and moving forward with the right technology in place.

No one knows for certain how much longer the current enthusiasm for M&A activity will last. But for IT professionals involved in one, it presents another great opportunity to demonstrate value and leadership within the board room and behind the scenes.

Ross Creasy is a managing director of information management and technology at MorganFranklin, a strategy and execution-focused business consulting firm in the Washington, D.C. metro area.