Having an effective governance in place is always important, but it is even more so to help companies successfully implement mergers and acquisitions. Both companies need to quickly establish the structure and the decision making approach that will be used in making decisions. They also need to establish who has the right to make what decision and what criteria will be used to navigate the tough trade-offs ahead. The teams typically freeze after a change like this as they often do not know who to go for even simple decisions such as signing a license maintenance agreement.
A recent report from Forrester on mastering M&A recommends the following:
- Be brutally honest about jobs. CIOs need to quickly and clearly state how staffing decisions will be made. Identify which positions and staff members to keep and ways to retain them. Adopt a retention bonus program closely tied to the integration plan, with bonus kickers for meeting milestones and savings goals.
- Move quickly to get the low-hanging 'savings' fruit. That means consolidating data centres and renegotiating software licenses and vendor contracts to prepare for a larger user base.
- Drive business decisions away from feature-by-feature comparisons. Application rationalisation is critical because the cost of redundancy is so high and because business process integration requires a single applications set. This is the lengthiest and most complex part of integration. The big insight? CIOs must help executives see that "the shortest path to synergies may be to use as little as possible from the acquired firm."
- Pick one firm's set of processes. Roll those out to the other firm's staff. Process consistency is the hallmark of a mature IT organisation. It's also an important element in how business perceives IT. Processes such as procurement and security policies must be stabilised and standardised. Merging two firms' processes during an M&A integration adds to staff confusion; Forrester recommends you don't do it.