This blog used to be called "Mergers and Integration" and occasionally, I like to kick it old school by writing about handling integration during mergers and acquisitions.
Of course, integration takes on a different meaning when you're talking about a merger or acquisition. More often than not, articles about this issue mean the integration of the businesses themselves - the staffs, the business partners, the business processes.
Recently, I was reading such a CFO World article about integration success after a merger and acquisition. It included this quote by Neal Roberts, CFO at IRIS Software:
Buying a business isn't difficult-integrating it successfully absolutely is. The more effort you put into planning the integration before you've bought the business and involving people on the other side, the bigger benefits you get.
He meant business integration, not integration of IT systems, but as I've shared before, IT and infrastructure integration can make or break issues with mergers and acquisitions. And as I'm sure anyone who's ever been through an M&A will tell you, even basic integration offers some unique challenges when you're trying to navigate not just different applications, but different cultures.
My colleague, Ann All, has written how IT can help companies navigate M&As, but reading this CFO World article, I think CIOs could also learn a lot about handling integration - both during M&As and the type of integration IT has to deal with everyday - from the M&A veterans quoted in the article.
Use an integration template. CFOs who have overseen multiple integrations often develop a template for handling mergers after the deal is signed. Most large companies, such as Oracle and IBM, have them. But they can also work in smaller IT departments.
IT often deals with the same types of integration over and over again. Integration expert John Schmidt calls these "standard integration points," an approach he writes about and teaches about as Informatica's vice president of Global Integration Services and Lean Integration Practice Leader. When he lead integration at Best Buy, he realized you could classify integration into three types - small, medium or large - just like a pizza. You should also have templates - aka, best practices - for the process of integration, including how to engage business users, establishing data governance and so on.
Consolidate. One of the key steps in any merger and acquisition is to consolidate by eliminating redundancies. Bank accounts, staff, the supply chain, professional services and even managers - all are on the list of consolidation targets, according to the article.
Just as there are redundancies within companies, there are often redundancies in how integration is handled within the same company. Many companies are using multiple ESBs and data integration platforms; some even have different staff for handling operational versus analytical data integration, which is fine - unless no one's talking. Add it up and it amounts to a lot of integration overhead, with a lot of individual learning curves. Try consolidating on one platform or standard. Or, at the very least, document what's being done across the organization so you can start to build a body of knowledge about integration best practices within your company.
Put someone in charge. "Allowing any aspect of the business or the merger plan to drift can be fatal," the CFO World article says. "That's why having dedicated resources to do the job - not just leaving it to the different department heads to sort out - is important."
I talked about consolidation and templates earlier, but the truth is, neither will happen without someone being in charge of deciding on one platform, determining the standard, collecting out and specifying best practices. In IT integration, this someone is a body called the Integration Competency Center or integration center of excellence.
Measure. Acquisition Solutions founder Chris Brown suggests CFOs use a dashboard to track key performance indicators during a merger and acquisition. These KPIs should be the ones used to justify the merger in the first place, he writes. Remember Schmidt's small, medium and large integration points? He used those three categories to measure the cost of integration. He managed to reduce the average costs per integration point from $10,000 to $1,000 within three years at Best Buy. By measuring, he showed the entire organization that his integration team wasn't just doing good work; it was measurably improving at that work.
As Rick Sherman of Athena IT Solutions recently pointed out, you don't have to wait for a big M&A to address IT integration issues.
"When you look at these silos in your own company ask yourself if they would be acceptable if you were involved in an M&A," Sherman writes, pointing out that a recent survey showed one in 10 executives don't feel they have the necessary information needed to make critical business decisions.
Which brings us to the last M&A tip that CIOs should apply to integration: Be proactive.