Many companies hope to expand their digital capabilities after mergers and acquisitions (M&A), but the overall IT integration strategy is often overlooked, taking a backseat to financial and operational due diligence. As a result, most M&A transactions fail to achieve revenue synergies and long-term business value.
Integrating IT operations is a crucial aspect of any merger or acquisition, but there are many challenges with post-merger IT integration. An integrated technology strategy is so much more than just consolidating IT systems. It involves aligning tools, processes, and people across the enterprise.
Whether you have recently completed or are planning an M&A process, we have compiled a list to help prepare your IT teams and ensure a successful post-merger integration.
| Navigate the complexities of mergers and acquisitions with confidence, mitigate risks, and steer your IT team to success with our Mergers & Acquisitions checklist. In this user-friendly template, we've pulled together everything you need to integrate teams and tools in a comprehensive Jira project. |
Inviting IT leaders to have a seat at the due diligence table after a merger or acquisition is crucial. They know the ins and outs of the current and future tech landscape and have the technical know-how to merge different systems smoothly. This is especially important when 72% of organizations hope to access new technologies as part of their M&A transaction.
Involving IT leaders from the start fosters collaboration and transparency, easing the transition for employees and maintaining business continuity. This proactive approach not only streamlines the integration process but also sets a solid foundation for the long-term success of your merged company.
When companies come together, integrating their technology stacks into a cohesive, scalable ecosystem is one of their most important tasks. What’s more, they must accomplish this within the tight deadlines of an M&A deal, which means speed is everything. Research shows that the most successful mergers and acquisitions typically complete about half of the systems integration within the first year after closing, and the remaining half within two to three years.
Some organizations take a merger or acquisition as an opportunity to modernize systems by moving to the cloud. While this is a great way to deprecate legacy systems, it can result in a disorganized instance if not done correctly. Developing a strategy for migration is essential to achieving enterprise intelligence in the cloud. The first step to quickly connecting your new systems is to perform a comprehensive audit of your technology infrastructure. Understanding the current state of each company's IT systems helps identify overlaps, gaps, and areas for improvement to cut down on costs and administrative overhead.
When the average company spends $135,000 a year on unnecessary software licenses, quickly eliminating redundancies will enable you to align IT assets with the new organization's strategic objectives and realize revenue synergies faster.
When the average company spends $135,000 a year on unnecessary software licenses, quickly eliminating redundancies will enable you to align IT assets with the new organization's strategic objectives and realize revenue synergies faster.
Research shows the most common reason tech companies failed to achieve revenue synergies after an M&A deal is because of the ineffective integration of their product portfolio. This is why prioritizing Enterprise Portfolio Management (EPM) during a post-merger integration is essential, as it ensures that technical teams are equipped to deliver the right value to customers at the right time.
While tools and configurations can assist with optimizing technology infrastructure, they are not a cure-all. You must figure out prioritization at every level of the organization to provide clear visibility into how your portfolio contributes to strategic goals and initiatives.
Integrating your data and analytics post-merger is a complicated, messy process that impacts everyone–from executives to employees. Not only do you have data scattered across disconnected systems, but trying to integrate modern architecture with legacy technology systems complicates things even further.
It’s also crucial to aggregate data in a way that speaks to your company culture and how your leadership teams consume analytics. After all, your data only matters if you know how to use it. Aligning data across the enterprise enables your newly combined organization to fully utilize its data assets and provides leaders with timely insights to make fast decisions.
How are you supposed to capacity plan for what’s coming down the pipeline when you bring together two entirely different organizations? Making the right decisions about how to manage your workforce and workloads is already challenging enough. Adding a merger or acquisition into the mix complicates things even more.
Before allocating resources, interview key stakeholders to understand current workloads and how to optimize both human and technical resources. Once you have a clear understanding of people's responsibilities and capabilities, you can implement processes and configure your apps to support resource allocation. This will enable integration teams to see if workloads are balanced and realistic.
We can’t discuss M&A deals without touching on divestitures, which are also important tools for driving long-term business growth. Consequently, IT is as crucial in divestments as it is in mergers and acquisitions, helping newly divested organizations ensure business continuity and organizational alignment.
While the above list focuses on the integration process, the same principles apply to divestitures. Companies separating from their parent organizations must quickly realign IT infrastructure to keep operations on track, all while navigating organizational change. They must also streamline workflows and untangle vast amounts of data without losing visibility into the cost and flow of work. Just as a merged company needs to present a unified front to customers, so does one that has undergone a divestiture.
Your IT integration strategy can make or break the success of your M&A deal. Successfully integrating IT operations is challenging and requires careful planning, collaboration, and honest strategic and technical conversations.
To get you started with the integration process, we’ve put together a merger and acquisition due diligence checklist. After guiding several enterprise organizations like Appfire and 3E through the complexities of consolidating and separating IT environments, we share what it takes to build a scalable technology foundation.
From ensuring visibility into all levels of your portfolio to simplifying software licenses, this IT integration checklist outlines how to align your people, processes, and technology with business objectives after a merger, acquisition, or divestiture.
To learn more about how Praecipio can help you achieve post-merger integration success and build a connected enterprise, reach out to our team.