Let that sink in a little bit. In an IT integration project, the merger of the IT portfolio of two organizations, is not really an IT project. It is a business project. And the way you approach this determines if the integration turns into a raging success, or a crashing failure. It can determine whether the business can leverage the differentiators and synergies the business was seeking when acquiring the target company, or if the integration becomes an albatross that ultimately sinks the ’ship.’
Why is an IT Mergers & Acquisitions Integration Project Really a Business Project?
In this MEGA Byte, a 20-minute mini-webinar, I explained four best practices on how to approach an IT Merger & Acquisition integration project and make it a success. Included in my presentation is a chart created by McKinsey on why these projects are really business projects.
A measly 10-25% of an integration project is wholly the responsibility of the IT department. Between 75% and 90% of the project is either completely unrelated to IT, or deeply influenced by the business side of the house. Why? Because there is a business need or expectation behind all these technical efforts.
So what are the best practices to a successful IT M&A project?
Best Practice 1: Start Your Integration In-house
Think about a post-acquisition integration as a sporting event. Just as you might prepare to participate in the World Cup or the Olympics by going through intensive fitness training, skills coaching and game simulations up to six months before the event, your business and IT leaders must also prepare.
There are a number of questions you must answer before the big event:
Do you have enough internal capacity to execute the integration?
How will you handle the day-to-day operations of the business along with integration activities?
How is your product lifecycle, and will your product be available and ready to handle the integration of this augmented business organization?
What skillsets does your current team have?
What are your current initiatives?
If you’re in the middle of implementing an ERP system and you won’t be complete by the time the integration starts, how are you prepared to handle that?
Make sure you can answer all the questions to your satisfaction before the acquisition agreement is signed.
Best Practice 2: Implement an Integration Framework
An integration project is not a normal IT or software development project. You’re essentially integrating two organizations and deciding how to merge or integrate duplicate roles from the business side, the IT side, and duplicate IT solutions as well as technology processes. Wading through the complex consolidation and decision-making steps to bring value to the merged business can bog down any business.
That’s why it’s important to provide special tools to help your business and IT team make this process easier. An Integration Framework does the job here. These are the IT tools, business processes, IT processes and best practices that will help the integration team achieve better results than even you were expecting from them.
Best Practice 3: Develop an Integration Playbook
I covered this in detail in a previous blog post, but let me summarize the salient points here.
Every integration project provides unique “lessons learned.” You’ll discover new things, develop tools, create accelerators and identify best practices you need to document. It doesn’t matter if it’s your first integration or your fifth one, each integration project teaches you something new. Don’t waste the opportunity to capture these lessons.
The best way to capture these light bulb moments is with an integration playbook that lets you record the activities, tasks and accelerators you’re discovering.
You’ll make your next integration project faster, better and cheaper.
Best Practice 4: Identify the Low Hanging Fruit
Every integration project should be infused from the very beginning with an ‘agile’ mindset, meaning you should drive value early and often.
For an IT M&A integration project the best way to do this is to identify the low-hanging fruit. In practice, this means the intersection between two important characteristics from the business and IT side. From the business side, identifying what will bring value to the business soonest.
For the IT department, identify which of the top business priorities are easiest for the IT department to deliver as quickly as possible. It’s of utmost importance for both the IT team and business team to be of one mind on this, and develop a ‘low-hanging’ fruit roadmap to drive value from day one.
For a successful IT M&A integration project, it’s key to understand what the business wants out of the acquisition –those business differentiators that will drive shareholder value.
Then we recommend following these four best practices:
1. Start your integration project in-house,
2. Implement an integration framework,
3. Develop an integration playbook and
4. Identify the low-hanging fruit.
Finally, manage and document your IT assets and the data you’ll be integrating with an IT Portfolio Management solution, such as what Softtek and Mega offer. You need to inventory, evaluate and transform your merged IT infrastructure to easily link the business with your IT assets, and choose the best “to be” scenario that will become a ‘best fit’ for your integration.
This post was originally published on Nearshore Blog (Softtek)
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