When the gritty work of joining two businesses doesn't go smoothly, talent is quick to flee, projects are delayed, and financial goals are missed. Independent research calculates that more than half of all acquisitions actually destroy shareholder value. Leaders of successful mergers follow three simple principles: They "follow the money" by targeting the merger opportunities that will generate the most new value, stress fast implementation over perfection and focus most of their resources on keeping the base business running smoothly—particularly early on in the transition.
Many of the same principles apply to merging two companies' IT operations. Unfortunately, they're not always put into practice. Many merging businesses go only as far as analyzing the potential savings of fusing their IT units—the head count savings, the economies of scale in purchasing and so on. As a result, many executives miss something much more important: the chance for the reborn IT department to drive significantly more value for the merged organization.
It's crucial to define early on what the IT merger is meant to achieve. It's just as important to quickly decide the "big picture" issues-such as which executive will run the new IT organization and what the governance structure will be. A transition team-the appointed CIO and selected executives-sets the big goals and guidelines, and monitors progress; the integration team, mostly comprising trusted IT lieutenants, manages the details of the integration. This blueprint shows how fast those decisions must be made. The colored vertical bars and timeline show the necessary activities, approximately how fast they should happen, and in roughly what sequence. The thickness of the bars indicates the relative allocation of the IT resources—particularly staff-for each integration activity. The allocations change as the two organizations come together.
The blueprint stresses three big themes. The newly forming unit must enable the merger to meet its business goals (the central blue bar), shifting from early focus on cost-cutting to emphasis on helping drive new business opportunities. IT must continue to support the running of the combined business during the transition (the tapering beige bar on the right), while merging the IT organizations, operations and platforms into one (the gray bar on the left). The chart shows how quickly the team must identify the projects that will yield the most value in the least time. The integration team has to spin off "quick wins" consistently, and wrap up fast to minimize disruption and maintain employee morale. One last note: The orange warning boxes show that things can and will go wrong. Savvy information technology professionals will be well prepared for those incidents.
David Shpilberg is the New York City-based director of the IT practice at Bain & Company, a management consulting firm headquartered in Boston. Steve Berez is a vice president, and Sam Israelit is a manager of the IT practice. Both are based in Boston.
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