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One of the byproducts of an economic downturn is an increase in M&A activity. From the CIO's point of view, the challenge is managing IT effectively during the M&A process—no easy task even in the best of circumstances. So here are five key pointers to help CIOs navigate the M&A process successfully.
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By Laton McCartney
One of the byproducts of an economic downturn is an increase in M&A activity, the deeper the downturn, the greater the increase.
From the CIO's point of view the challenge is managing IT effectively during the M&A process—no easy task even in the best of circumstances. To provide CIOs with pointers on addressing the IT component of M&A transactions, Deloitte, the global consulting firm, recently came out the a book, "Wired for Winning, Managing IT Effectively in M&A," which offers an in-depth look into M&A issues, ranging from the overall role of IT to effective construction and execution of a transitional services agreement.
"The role of IT in business has never been more significant than it is today," an excerpt reads. "The ability to keep one's company 'one the rails' while simultaneously executing a complex merger, acquisition or divestiture is a skill which needs to be part of every contemporary CIO's repertoire."
Here are five key pointers to help the CIO navigate the M&A process successfully.
—In terms of IT due diligence, establish key objectives. These should include developing an understanding of target company's IT strategy, IT operations and organization.
—Access potential IT cost synergies or cost reduction opportunities. This includes accessing server, hardware and network capabilities, data centers and IT help desks or call centers that may be in-house or outsourced. Also access key enterprise software applications including enterprise resource planning (ERP), customer relationship management (CRM) and supply chain management (SCM). Also look at the target company's existing IT sourcing and procurement arrangements and the feasibility to renegotiate, terminate, transfer extend or renew contracts with supplier.
—Create a strategic plan for IT integration and develop the acquirer IT strategy and vision for the combined IT organization.
—Establish IT performance metrics while creating business processes for the combined organization.
—Design the structure for the combined IT organization, then implement the combined IT organization and work processes.
Order a complete copy of Wired for Winning, Managing IT Effectively in M&A.
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