It’s natural for business leaders to focus on the benefits of an M&A deal and how it will lead to new efficiencies and synergies. And, of course, there are real benefits when two organizations combine forces to increase market share and complement each other’s strengths. But there are also many challenges often overlooked when bringing together the culture, systems and assets of two (sometimes very different) companies, especially regarding IT infrastructure and environments. Too often, the IT integration component of an M&A deal is rushed and underfunded.
Follow these tips to navigate three of the most common roadblocks to making your fantasy version of M&A a reality.
1. Data Management
Sometimes organizations in an M&A deal get lucky and database integration is a breeze: Either the two companies are already using similar tools, or else they’re able to use a solution such as IBM InfoSphere to integrate disparate systems.
However, data management is often trickier than this. In such instances, I typically advise companies to designate one of their databases as the primary solution and treat another as a repository for historical data. Under this model, some records will never be fully integrated, but that usually doesn’t present much difficulty. If a customer or employee has a question about a deal or a sale from five years back, the company can simply query the repository database. Otherwise, the primary database is used for all new records.
When standardizing data management practices, it’s usually best to go with whichever organization already had the stricter standards in place. Over time, external data safety regulations are likely to tighten rather than loosen, and it’s better to be prepared.
2. Data Center Consolidation
Multiple platforms, authentication issues, various languages and protocols, architecture, infrastructure, security, and migration: These are just some of the issues that organizations run into when trying to merge multiple data centers.
While there’s sometimes a case to be made for keeping one organization’s data center as a primary site and the other as a secondary or backup location, business leaders are usually looking for every possible opportunity to consolidate during an M&A deal. To effectively consolidate data centers, IT departments should conduct detailed assessments of both companies’ current environments and also create a business impact analysis of existing IT operations. This will help business and IT leaders to understand what they have, which of those assets are necessary going forward and which tasks must be undertaken first.
Typically, I advise organizations to divide data center consolidation tasks into three tiers of priorities. Tasks such as merging email and sorting out authentication procedures will usually need to be completed right away.
3. Application and Software Integration
When IT leaders start thinking about all the various ways that employees use applications for their jobs — and how these tools integrate with other software tools across the enterprise — the idea of integrating applications across two companies can become very daunting, very quickly. Even the idea of simply training hundreds of new employees on an unfamiliar tool can be overwhelming.
To get a handle on the integration process, I recommend that IT leaders conduct an application rationalization, looking at all of the applications across both companies and considering the costs and benefits of each. Sometimes, the decision about which applications to keep and which to ditch will nearly come down to a coin toss (when, for instance, similar numbers of users are trained on both, and neither solution is mission-critical). Other times, IT leaders will see that one application is deeply integrated with seven other systems, while a competing application mostly serves as a stand-alone tool. In these instances, the choice is easy.
I hope you find this information helpful. Getting around these roadblocks can be done; it just requires getting IT involved in the M&A process from the beginning and thinking through the real IT consequences of the integration.