Insight

Achieving IT integration success in M&A: Best practices and pitfalls to avoid

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Jennifer is an accomplished IT specialist with nearly 30 years of experience in managing highly technical projects. Recently, she has successfully led complex IT integrations during major M&A deals. We sat down with her to discuss best practices and common pitfalls to avoid.

By Jennifer Mohundro, Prosource.it specialist

In today's fast-paced, technology-driven business environment, mergers and acquisitions (M&A) are common strategies for growth and building a competitive advantage. The success of these endeavours hinge on a number of factors, with IT integration playing a pivotal role.

At prosource.it, we specialise in the technology of change and successful transitions. As experts in the field, we have the knowledge and experience to navigate the complexities of even the most intricate landscapes, implementing IT integrations to suit your business strategy.

By understanding these complexities, organisations can more effectively navigate a successful IT integration, ensuring a seamless transition, maximising the benefits of their M&A activities, and significantly reducing costs and waste.

"With nearly 30 years in IT, I've faced many high-pressure projects and incidents. Yet, no question has ever stopped me as quickly as, 'So, what's in IT?' A VP summoned me after the company announced it would divest our business from the global portfolio. His usual cheerful demeanor turned stern: 'IT cannot mess this up. We all believe IT is the greatest risk right now.'"

So how do you mitigate against this risk?

In IT integration, there are several common pitfalls that often come up, usually because of interconnected issues. One major challenge is not planning effectively, which can lead to unexpected problems and delays. Without a clear roadmap, it's hard to foresee and tackle potential issues, making the approach more reactive than proactive. This problem is often made worse when IT specialists aren't involved early on. Without their guidance, the integration efforts can lack strategic direction and oversight, which will cause them to stray from the broader business goals.

Integrating different systems can be a long and complex journey, often more challenging than initially expected. Each system usually has its own unique architecture, data formats, and processes, which can lead to tricky compatibility issues. These technical hurdles can become even more problematic if there isn't enough testing and validation, causing further complications as the integration moves forward.

In addition to the technicalities of integration, the human element is vital to success, especially during mergers and acquisitions. When training is insufficient and communication is lacking, employees can resist the changes and productivity may drop. This resistance often stems from not fully understanding the benefits and functionalities of the new systems, which will lead to frustration and reluctance to embrace the change.

"People are central to successful integration. Clear communication and thorough training are key to gaining employee buy-in and maintaining productivity."

So, what should you do to avoid these pitfalls and ensure success?

Plan, plan, plan

The initial phases of any M&A activity will often be highly confidential, with restrictions on what information can be shared by each side. Although this can make planning more challenging it is crucial that it is done properly to avoid any surprises down the road.

To kick off the planning phase, it's crucial to start with a thorough assessment of the current IT systems of both companies. This involves evaluating the existing infrastructure, applications, and services to pinpoint overlaps, gaps, and areas ripe for consolidation. IT M&A activities by the buyer and seller include ITK sessions, pre-close preparations, CiC cutover planning, and possibly a TSA. Developing a clear integration strategy is paramount. This strategy should outline goals, timelines, and key milestones, and crucially, decide on the approach—whether to fully integrate, partially integrate, or maintain separate systems. Post-close, they have separate tasks to ensure a smooth transition.

"IT M&A activities by the buyer and seller include ITK sessions, pre-close preparations, CiC cutover planning, and possibly a TSA. Post-close, they have separate tasks. Most IT activities, supporting the CiC cutover, occur pre-close. The CiC process can take minutes to days. The goal is to bring critical systems online quickly and safely, requiring extensive planning and assessments. 95% of IT activities happen pre-close."

During this phase, conducting a comprehensive risk assessment is essential. Identifying potential risks such as data loss, security vulnerabilities, and system incompatibilities early on allows ample time to develop effective mitigation plans. This proactive approach ensures that any issues can be addressed before they become significant problems, paving the way for a smoother integration process.

If you've planned effectively, the execution should proceed smoothly with minimal surprises. However, throughout the execution phase, it's crucial to stay vigilant and continuously plan for the unforeseen. A successful integration not only meets strategic goals but also adapts to a landscape that will likely evolve as the process progresses. Remember, recognising when a plan needs to change is just as important as developing one in the first place.

Data, Data, Data

Data is the lifeblood of any business, fuelling every decision, strategy and innovation, and ensuring that companies can adapt, grow, and thrive in an ever-changing market.

During IT integration, ensuring data is accurately collected, seamlessly migrated, assessed and tested is absolutely crucial. Quality data collection and migration are vital for maintaining data integrity and consistency across systems. If data quality is compromised during this process, it can lead to significant disruptions, data loss, and operational inefficiencies.

At any time, employees expect their data to be accessible and consistent to perform their roles and tasks effectively. This remains true during times of change and integration. Even if the system or infrastructure that they work on has changed, it is vital to ensure their data has not. Getting this right ensures that employees can continue their work without interruptions, allowing them to maintain productivity and adapt more quickly to the new business around them.

"Data drives business intelligence, making it crucial for companies. Early pre-close decisions by the buyer and seller include data sharing, format, sample or full sets, transport methods, and release dates. These require careful planning. Until CiC occurs, data sharing may be limited, creating a dynamic where IT groups work towards the same goal but follow different guidelines. IT must adhere to their company's rules until CiC."

Manage the change

Change management is all about keeping stakeholders informed with clear, honest, and engaging communication. Regular meetings, newsletters, and email updates can help keep everyone in the loop. It is important to be transparent about what's happening, including any challenges and next steps to build trust and manage expectations. Getting everyone bought into a change is a journey, with some people requiring more time or information than others. Keeping communication consistent whilst ensuring there is always a way for stakeholders to ask questions and provide feedback will allow everyone to navigate the changes in a way that works for them. By managing the change, you will build overall confidence in the transition and improve the chances of success.

"Beyond their traditional IT roles, the team must handle M&A-specific tasks, partner with the business, guide end users, and collaborate with IT from both buyer and seller to execute a detailed plan. M&A demands extraordinary effort from IT, requiring both BAU expertise and a scalable team. At prosource.it, we rapidly expand teams with qualified professionals, staying agile to meet needs."

In conclusion, navigating the complexities of an IT integration during mergers and acquisitions is a multifaceted challenge that requires meticulous planning, robust data management, and effective change management. At prosource.it, we understand that the success of M&A activities hinges on these critical elements. By prioritising thorough planning, businesses can anticipate and mitigate potential issues, ensuring a streamlined transition. Quality data management is essential to maintain operational efficiency and support informed decision-making. Equally important is managing the human aspect of change, keeping stakeholders informed and engaged through transparent communication and support. By embracing these best practices, organisations can maximise the benefits of their M&A activity, significantly reducing costs and wastage, achieving seamless integration and driving strategic growth.