Defining an IT Integration Strategy for Mergers and Acquisitions

February 15, 2021 - by Synoptek

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Mergers and Acquisitions have long enabled different organizations to unify into a single entity to drive better efficiencies, enter new markets, and expand their customer base. But 2020 has brought them into the spotlight. Amidst the global pandemic, nation-wide lockdowns, and high economic uncertainty, Mergers and Acquisitions provide a ray of hope to businesses who have been badly affected by it all and mere existence has become a difficult.

For such organizations, Mergers and Acquisitions are a great way to cope with the difficult economic conditions. According to Nasdaq, Mergers and Acquisitions projects rose close to 20% between August and November 2020 – compared to the same period in 2019. But despite all the benefits Mergers and Acquisitions provide, not many live up to expectations, most trip on the integration of technology and operations. What they then need for success is a well-planned strategy for IT integration.

Creating an IT Integration Strategy for Mergers & Acquisitions

Given the current state of business, the number of M&As is expected to rise in the next few years. But despite how well the business strategies of those getting together are aligned, IT synergies are often elusive. For such organizations, integration of technology and operations is sure to prove difficult, usually because of inadequate consideration during the due diligence stage. A haphazard approach means executives have little or no idea about the costs and practical realities of IT integration – draining value from the unison.

When it comes to Mergers and Acquisitions, every IT department should have a strategy in place. A robust strategy can help in:

  • Streamlining IT infrastructure and rationalizing systems across both the enterprises.
  • Building a flexible, agile, and scalable IT architecture that can keep up with the pace of new trends and disruptions.
  • Making disciplined decisions about which systems to integrate, which to modernize, and which to remove.
  • Capturing a broader range of synergies across IT infrastructure, application portfolio, end-user support, and system administration, and at a faster pace than competitors
  • Having well-equipped systems in place to drive short-term savings and support the company’s long-term growth ambitions. 

Setting Clear IT M&A Ground Rules

A traditional integration model may not work in the case of an IT integration. Instead of providing differentiated capabilities, such an approach will end up making IT a cost center, and rarely a value enabler. Since a one-size-fits-all approach can never deliver the results different organizations seek, here are a few tips to set clear IT M&A ground rules:

1. Assessment is Key

When two businesses come together, the corresponding IT landscape that they generate is massive. No matter how complex or time-consuming it might seem, assessing every system, application, infrastructure and device is critical to the long-term success of the M&A. In-depth assessment of legacy systems is particularly important as they tend to produce several inconsistencies and inefficiencies in the long run; cloud applications, on the other hand, may require less integration and maintenance and can be more easily configured and scaled for evolving needs.

2. Chuck the Traditional Integration Approach

In M&As, it is common for the target company to blindly adopt and embrace the IT platforms and practices of the purchasing company. But to achieve the expected synergies, it makes sense to chuck the traditional approach to integration; rather than just migrating every system as-is, adopting modern service-oriented architectures or microservices can help in ensuring the resulting IT landscape is flexible and adaptive and accommodates a wider range of business applications.

3. If IT doesn’t Add Value, It doesn’t Need to Exist

When faced with an M&A, CIOs should carefully understand the value each system offers to the integrated business. Instead of going through the hassle of integrating every system, it makes more sense to scrap legacy back office systems and dump inefficient business processes to reduce capital costs and eliminate silos. Remember: any system that doesn’t add value should immediately be discarded – of course after careful consideration.

How does your Strategy Align with the Bigger Picture?

Having IT and business leaders work closely during the M&A planning stages is important to ensure they agree with the merger’s strategic goals and are on the same page when it comes to timelines, costs, and risks of integration. Since better communication increases the chances of a successful merger, it is critical that key leaders are always a part of broader strategic decisions.

Having detailed and extensive discussions about IT during the due diligence stage can help in identifying potential obstacles to integration as well as potential liabilities: right from incompatible platforms that do not align with business goals and lack of investments in modern technology systems that are in-line with the current business landscape.

Get the Best M&A Results

For businesses struggling to adjust to the new normal, Mergers and Acquisitions offer a great way to keep their head above water. Offering better cost and operational efficiencies, they can help in driving the required revenue and profit while ensuring customer service is not hampered.

However, when it comes to defining a robust IT integration strategy, partnering with an experienced and qualified technology provider can help in driving the best M&A results. Through proper planning and due diligence, a partner can not only help ensure the resulting IT ecosystem is modern and capable, they can also help in removing unnecessary uncertainty, allowing you to focus energy on how best to make the transition work – in relation with the overall business goals and vision – as well as in driving the required value.