Mergers and acquisitions (M&A) can be a stressful time for all those involved. Simple economics may be driving the restructuring, but human beings are involved and most of them don't like change or wondering if their jobs are in jeopardy. In today's high-tech joined-up world, IT will be crucial to the successful outcome of a merger or acquisition's, so how can the CIO ensure that it all goes as smoothly as possible?
In asking a variety of CIOs and M&A specialists, the overriding piece of advice is to get involved as early as possible. As Andy Wilton, CIO of Claranet, says: "It's absolutely critical to get IT involved during the due diligence stage, ahead of a merger or acquisition. Until you understand and appreciate the complexity in the target business's systems, it's difficult to know what the end result of the acquisition will be. The devil really is in the detail," he says.
"'It's easy to say, 'We've got two CRM systems, but we only need one'. You have to decide which one you want to keep, but you can't do this without in-depth analysis about the other functions that depend on that system – which can be very complex."
Having been involved in in large-scale M&A work in the gaming sector, Dr Peter Chadha, founder of business and technology consultancy DrPete, concurs. "Know your systems," he advises. "Make sure you fully understand both your own systems and the ones that you are acquiring. This is particularly important as a transactional situation may cause key stakeholders – like that technology guru who sits quietly in the corner – to jump ship leaving a vacuum of knowledge. And in your assessment get some quantitative system metrics; for example, it is crucial that you understand the scalability, robustness, security and to what extent the system can be developed in the future."
However, as we established at the outset, it's not just about systems; there is a human factor to all this. Don't underestimate the need to win the hearts and minds of the IT department within the acquired business, counsels Wilton. "If they're not on side, they could have a direct negative influence on all of the end users within the acquired business," he says. "If they start talking negatively about the new systems and processes, you are never going to get any goodwill from other staff within the acquired business. You need to give the acquired business confidence that you are comfortable with acquisitions, aren't going to break things, and that they will end up with a better, stronger organisation."
So talk to them is the message. Clear and regular communication from the very outset of an integration or separation should establish a sense of strong leadership and leave all staff in no doubt what is happening, when it will happen and how it will affect them, says John Turner, a board director with IT and business change company Xceed. "It's important to be consistent regardless of your audience, so that staff, managers, the market and the regulators are all hearing the same version of plans, progress, successes and even failures," he says. "It is worth remembering that people will fill in the gaps in whatever information you provide, so it is better to make sure there are none."
It's all about team building, says Dr Chadha. "Build a solid technology team around you – from both of the merging counterparties – and spend time building trust, because if people genuinely feel you care about them they will care about the outcomes," he says. "A strong team will see you through the ups and downs of the process and the politics that will inevitably arise. Draft in resources and experts as required, but remember that the existing staff have a day job to do for the business as usual, so you will need to ensure that you resource up to handle any migration with advisors of integrity."
In terms of retaining existing IT staff during what is obviously a stressful period, identify key staff and make them want to stay, says Wilton. "If possible spot them early – back at the due diligence stage," he urges.
"The top management of the acquired business should know the key staff and why they are important for its operations. This applies as much to senior staff as to junior staff, who may have niche technical skills, or the patents and copyrights in their name. As CIO, you should know who they are and have private words with them to make them feel wanted and to assure them that you want them to stay and that they will be looked after."
M&As naturally involve upheaval of some kind but, as can be seen, it doesn't all have to be about turmoil, upset and a sense of dislocation among staff. And M&As can even throw up genuine opportunities. Martin Prendergast, CEO and co-founder of Concorde Solutions, points out that proactive licence management and robust monitoring in the wake of an M&A can lead to significant cost savings through increased visibility of an entire combined software estate, for example. "Best practice Software Asset Management puts you in a great position to negotiate new deals based on realistic software requirements with software vendors, rather than estimates based on forecasts or headcount," he adds.
"Change always creates opportunities if you're open to them," says Tom Needs, chief commercial officer at IT services supplier Adapt. "From an IT perspective, business restructuring can provide much needed clarity around business strategy and this in turn can drive the opportunity to rationalise an IT estate and move away from legacy models. It can be a great leap forward to more cost-effective, simplified, scalable and forward-thinking models, which is better for the business, the customer and the end user."
So it's not a zero sum game; when an M&A is done right, everyone can be a winner.