Day-to-day corporate operations typically lead to a large accumulation of technologies and applications. Adding a merger or acquisition to this already intricate environment significantly increases the complexity of the IT landscape. It creates unique complications, even if a company had a healthy IT system … streamlined, efficient, cost-effective and low-risk … before M&A activity.
Evolving IT systems during or after mergers or acquisitions to improve business performance and ensure business continuity often creates headaches for CIOs.
- The combined IT portfolios are overflowing with duplicate, redundant, obsolete and irrelevant applications.
- These unnecessary technologies are quite costly and consume a large portion of an IT budget.
- Data quality and integrity is on the line and often there’s been a lack of proper data governance on one side or the other.
- Technology and application lifecycle management is frequently an afterthought during the flurry of M&A, but it is essential if the new IT roadmap is to support the new business objectives.
What can CIOs do to eliminate the pain and properly manage IT resources during and after M&A?
- Insist that IT is part of the mainstream merger or acquisition conversation and plans from Day 1. After all, IT is the business engine for most companies. What good will it do to integrate business units, manufacturing, finance or marketing if you still have two separate, disparate IT systems?
- Determine how you’ll create a single IT culture to fulfill the consolidated company’s goals. Will you merge the two IT systems, discard one completely or evolve both into an entirely new IT architecture?
- Get your house in good order before merger day. If you haven’t undertaken strategic IT portfolio management before now, how will you reconcile two IT systems when you don’t know what resources serve which business units or support what processes?
- If the other company hasn’t done their own IT portfolio management, insist that they also engage in it before the deal is done. And, remember that there’s a strong business case for both companies to use the same IT portfolio management software tools. Do you want to forgo business continuity, cost savings or proper business team support AND create another technology challenge of integrating your IT portfolio management information and methodology with another before you tackle any actual IT system changes?
IT portfolio management is the best remedy for IT sprawl. It streamlines IT investments and aligns them with your business priorities, which may be significantly altered due to a merger or acquisition. It also helps you stay focused on business-critical applications during the M&A. Essentially, it creates a single source of truth about your IT assets that you can rely on for effective business planning for the new entity.
To reduce your M&A pain, use the fundamental three-step approach to IT portfolio management. It will help you increase the agility of your IT systems to cope with another company becoming part of yours.
- Inventory: collect information about all of your IT assets and establish a single repository of information. Break down IT assets by business line, processes, capabilities, organizational unit, technology vendor and more.
- Evaluate: assess each IT resource by business value, functional support, technical efficiency, cost, vendor support, risk and performance.
- Transform: develop several plans for the IT system you expect to need after a merger or acquisition. Identify the best one to eliminate obsolete technology, costly redundancies and high risks. Create a roadmap that shows how to add and retire technologies at the right time to support business goals.
Merger and acquisition activity doesn’t have to create headaches for CIOs. With proper planning and the right tools, CIOs can enjoy playing a major role in an exciting new venture.