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Winning With An IT MandA Playbook
Winning With An IT MandA Playbook
IT M&A Playbook
What brings repeated success in mergers and
acquisitions? What ensures that IT does not cause
a deal to falter? A playbook that makes IT integration
faster, better, and future-proof.
IT has three important objectives in an M&A: (1) ensure from day one that the merger causes
minimal disruption to its stakeholders (including customers, suppliers, and employees);
(2) play a major role in delivering and enabling synergies; and (3) contribute to developing
the company’s long-term IT operating model.
IT Implications in M&A
IT is never the sole reason for an large an investment to make Paying inadequate attention
M&A, but it can easily be a deal the deal worthwhile. to sustainable IT integration
breaker, or at least a delayer. One can result in an IT environment
European services company IT lead times are usually longer that reflects the company’s
postponed an acquisition by than the time needed to com- acquisition trail. This forces
more than six months because plete a deal, and IT resources chief information officers (CIOs)
of the substantial investment are already stretched to support to embark on a never-ending
needed to integrate the target’s business as usual. So the risks journey of simplification and
IT into its own centralized IT of failed integration can be very optimization.
organization. In another case, real. For example, on the first day
the merger of two banks failed after the merger of two European
when they discovered that banks, bank tellers did not have
combining their respective access to a common set of
IT systems would require too banking services.
However, we have seen some forward-looking examples where M&A had served as an umbrella
project for a broader IT transformation. One European engineering services company used
an acquisition as the catalyst for fundamentally improving its IT and taking advantage of the
acquired company’s systems, infrastructure, and people where these were superior. In another
case, a U.S. consumer goods company chose to replace its own IT staff with the top talent from
an acquired organization. Both companies understood, before acquiring their targets, that
IT was a vital component of their businesses and made it core to their acquisition strategies.
The IT M&A playbook an organization develops must take into account each of these objectives,
and it should be tailored to the organization’s specific context. All playbooks must ascribe
to five main principles:
Involve IT early. IT’s role in any M&A should begin at the deal’s outset, not just—as is sometimes
practiced—during post-merger integration. For example, giving IT a seat at the due diligence
table will bring a more realistic understanding of the risks and what it would take to execute
the deal. A holistic playbook recognizes this, covering the entire M&A life cycle from target
selection and due diligence to merger planning, post-merger integration, and synergy
realization (see figure 1).
Address various acquisition scenarios. Because no two acquisitions are alike, they should
not be integrated in the same way with the same approach, nor should they follow the same
set of priorities. The playbook should not be merely a prescriptive set of processes and activities.
It should be flexible enough to handle different scenarios.
Figure 1
A holistic playbook covers M&A from planning to completion
en
ce
programs
Syn
operating model
nin
me
• Finalize IT synergies
• Manage transition service agreements • Develop high-level target IT operating model
an
rg
er
pl
An IT integration team must be able to apply the playbook, whatever the M&A scenario. Different
acquisition scenarios can be factored through route maps, which provide a navigation path
through the playbook, making it easier for team members to comprehend the scope of their
work. Based on the acquisition type, a route map guides the team through configurable
processes, tools, and accelerators that can be adapted to specific needs of the M&A.
Figure 2
Four scenarios for merging IT organizations
Mainly
data
A T A A A+T
Accelerate the process. Aimed at shortening the M&A timeline, accelerators are checklists,
tools, and templates needed to manage the M&A effectively. Ranging from IT due diligence
questionnaires to IT synergy-realization templates and benchmarks, the accelerators span all
four phases of the M&A life cycle. The playbook should include examples of these accelerators
from previous acquisitions to help integration teams jump-start their activities and to accelerate
the learning curve for new team members.
Live by lessons learned. Every integration is unique, so it is essential that integration teams
learn from past lessons—both positive and negative—and update their approach for future
deals. The lessons range from important missed activities to poorly timed interactions with
other functions, communication methods, benchmarks, and contractual arrangements. Keep
in mind that it isn’t just your own M&A that offers valuable lessons. There is much to be learned
from watching other mergers or acquisitions—even those in other industries.
Figure 3
IT connects functions and work streams during integration
Illustrative
Human resources and organization • Retention and • IT people movement • HR policy changes
severance
Figure 4
Turning integration from art to science
Do it quick. An engineering services company credits its IT playbook for its ability to complete
due diligence within two weeks, integrate all financial data within four weeks, and decommission
systems within four months. The company’s senior leaders say the IT M&A playbook approach
has become the most significant component of their acquisition strategy.
Do it right. A global telecom company integrated its M&A targets within six weeks on average
by employing a highly structured process. The company also achieved an unusually high
employee retention rate of 80 percent in its acquired companies, thanks mainly to its seamless
integration processes. In another example, a major conglomerate used an “integration complexity
grid” within the playbook to identify unconventional aspects of any deal that might require
a customized integration approach.
In short, the IT M&A playbook not only increases the speed and reliability of integration, but
also helps reduce costs while ensuring a seamless acquisition and long-term success. This can
also generate important intangible benefits: better employee retention, a consistent process
driven by internal discipline, better development of core competencies, and an IT capability
that is reliable throughout the acquisition process.
Provide easy access. The best playbooks are modular and hosted on an internal wiki or collabo-
ration portal that provides global access, where navigation is driven by the M&A phase, the
acquisition type, the function, or the work stream. The playbook deserves a prime position
on the organization’s internal IT home page, where people access other important applications.
Train people. A dedicated pool of IT integration experts, although costly to maintain, makes
sense for companies doing frequent deals. More often than not, these expert practitioners
already have a process in mind. However, a documented playbook—complete with accelerators,
examples, best practices, and pitfalls—ensures consistency and the application of best practices.
Figure 5
Putting the playbook into effect
Train people
Source: A.T. Kearney analysis
Integrate across functions. An M&A playbook is a structured set of processes that brings all
functions together to help things run smoothly and quickly. An IT M&A playbook must be a subset
of the larger holistic M&A playbook. Some succeed in having M&A playbooks in place for various
functions, and their experience points to similar structures and implementation attributes
as key success factors. Similar structures refer to the breakdown by phases in the M&A life cycle,
relevant processes and activities, and supporting accelerators and examples in all playbooks.
Implementation attributes are the playbook’s access mechanism, design, layout, and delivery
format—all of which should be consistent across function areas.
Sustain and improve. Continual monitoring and improvement will keep the playbook relevant.
Incorporating lessons learned and best practices from previous deals and using examples
to illustrate success stories are just as important as outlining processes and activities. For
example, pulling data from previous integrations into your cost and time estimations can
improve the accuracy of future estimates, and including retained staff’s feedback will help
assuage anxieties and expedite integration and a return to business as usual.
Authors
The authors wish to thank Amit Jhinzuvadia for his valuable contributions to this paper.
For more information, permission to reprint or translate this work, and all other correspondence,
please email: insight@atkearney.com.
The signature of our namesake and founder, Andrew Thomas Kearney, on the cover of this
document represents our pledge to live the values he instilled in our firm and uphold his
commitment to ensuring “essential rightness” in all that we do.