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Monday, 31 January 2011
Indigo Technologies Explain Why IT Integration is Crucial for Merger Success
When a company decides to merge with or to acquire another company, IT is often low down on the list of priorities during the transition process. Many organisations consider cultural integration, management and leadership to be more important in facilitating merger success – despite IT integration being ranked as the most crucial factor in the success of a merger by IT executives.
Aligning merger objectives with IT integration strategies is a complex and time-consuming process, due to a lack of understanding of the problems involved. Sean Thomson, Director at Indigo explains that business managers, who overlook the importance of the IT system during a merger, do so at the cost of the efficient and effective running of their business. “Mergers or acquisitions involve not just the transfer of physical assets but all of an organisation’s intellectual property, systems and people. A successful merger is about more than just sticking two companies together – and post-merger integrations can fail to meet synergy targets and timelines. As a result, the process of aligning the systems can become time consuming and expensive.
“Modern business is defined by change and depends on IT, as it is the means for communicating with clients, customers, colleagues, storing company information and supporting the actual day to day running of the business. The transfer of the IT system should be at the top of the list of priorities during this period of change, but more often than not it is given the least attention.”
Many organisations invest significant time, support and management into their IT systems, building a resilient infrastructure, internal and external communication procedures and business critical systems. Sean continues, “To ensure that these remain intact during a merger or acquisition, there are just five simple steps that business managers must consider to successfully transfer their IT”.
Plan
A clear three month plan needs to be developed in the first 10 days of the merge. The plan should cover IT and business systems/application strategy and rollout, IT infrastructure and budgeting. The two IT departments should be organised to push through the transition, but also restructured for post-integration normality. The plan is the cornerstone to a successful merger as this gives the framework for the whole IT transfer.
Identify key requirements & training
It is vital to ensure the business requirements and processes of the combined enterprise are understood and communicated well. Very often, businesses ignore or rush this step, assuming the future company processes are similar to the old ones. The implementation of new systems and software can be daunting for many existing and new employees, as they are faced with the challenge of learning new procedures and developing new skills to effectively use new software and carry out tasks. A suitable IT training programme will ensure all employees develop a good understanding of how they operate new systems.
Methodology
Ensure there is a practical methodology for systems evaluation. A good operational framework usually consists of the following elements during migration, which needs to be completed within two months of the merger. In the first month, the business processes of each company function must be mapped to the future system with no potential or large operational risks during transition.
Set a timeline & stick to it
The migration’s timeline should be as tight as achievable, using as much of the existing infrastructure as possible. The future system must match the business strategy and, crucially, be useable for several years. It also needs to be scalable to ensure it can be rolled out to subsidiaries and even legal entities.
IT functions should not be given a back seat during mergers as they have a vital role. These steps will help maximise the effectiveness of the integration process as fast as possible.
