IT and acquisitions - the sudden change of direction

Imagine the scene. You are settling down at your desk one morning, drinking your first coffee of the day and quietly congratulating yourself on how well the presentation you made to the board yesterday went on the progress you have made in rolling out the IT strategic plan, when you are suddenly summoned to your boss’s office.

The conversation goes something like this:

You: morning boss, you wanted something? 

The Boss: Ah, yes, good morning. I need to let you know that we have put a successful bid in for XCo. Due diligence has been completed and we expect the deal to go through the day after tomorrow. I therefore need you to mobilise a team to sort out the IT integration. Here’s some background reading (hands over document). Can you come back to me with a costed plan before the end of today? Oh, and by the way, it’s still secret at this stage so please don’t share this with any of your team.

It’s that horrible moment that happens from time to time in life, when your legs have just been pulled from under you. It’s unbelievable; the board sat through your presentation yesterday, all nodding and smiling and they knew… they knew! And now all your beautifully crafted plans are in tatters and are going to have to be put in hold (at best) while you scrape together the resources (from where?) to deal with this broadside that has just hit you from nowhere.

So, what’s to be done? Well here are my top tips for dealing with acquisitions:

1.Be proactive not reactive

There is an old joke where a traveller stops in the depths of the countryside to ask for directions to the nearest town and is told ‘if I were you, I wouldn’t start from here’.

This is absolutely true in the scenario above. The moment you get a hint of an acquisition, whether from the corporate strategy or even the rumour mill, you need to be lobbying. IT can bring significant costs and significant risks to any acquisition. It can also deliver significant benefits that might just be the making of the business case. You therefore need to be in there at an early stage. Maybe not when a particular company is identified as a target, but definitely through due diligence so that assumptions can be validated and risks managed. Of course, there is no guarantee that this will happen, but just sitting back and hoping for the best is just not enough.

2. Start with the nuts and bolts

Every acquisition is of course different, but in the vast majority of cases, the early days will be about securing and maintaining continuity within the acquired business as well as finding out what it is you have actually bought, rather than embarking immediately on a complicated integration project.

You need to clarify reporting lines (does the CIO of the acquired business, if still around, now report to you? If not, what is your relationship?). Check critical issues such as information security are adequately covered. Understand what the IT estate of the acquired business looks like. Are there any risk areas that need to be addressed? What does the IT strategy, budget and plans of the acquisition look like? Are there any black holes? Are there any critical supplier relationships that need to be maintained? Are there any urgent business needs to be addressed? These might be as simple as putting a private link in between the organisations to enable secure communications and information sharing and giving relevant individuals appropriate telephone directory information, but what if your finance team want immediate access to their financial systems?

Governance is going to be another important area to think about. Do you want to put a freeze on new projects in the acquired business until you have a thorough understanding of what is going on there? What about ongoing projects which might be taking them in a different direction to your organisation? What about urgent changes which cannot be avoided? Who approves these and how?

Above all, you need to re-assure the IT staff in the acquired organisation. You are, of course, unlikely to be able to give long term guarantees, but the last thing you need in the short term is an exodus of critical individuals. Get people you know you can trust in on the ground if you can and make sure you show your own face regularly. However, also ensure that you discourage tourists. This is the new big thing and everyone will want to be involved whether they have been invited or not. This can add to the uncertainty in the acquired organisation and can also be disruptive of continuity of operations in the acquiring organisation, so make sure that people who need to be focussing on the day job do just that.

3. Start planning and re-shaping plans

 I’m afraid you are almost certainly going to have to tear up your lovely strategic plan and start again. However, before you start re-planning you need to know what the business wants to do with its new asset. If the answer is run the new business relatively independently with just a common head office layer, then the job might be relatively simple, although there will probably still be common standards to roll out and savings to be realised through. For example, consolidating licensing.

If, on the other hand, the plan is to integrate the business, there will probably be a lot of work to do. How is that integration going to work? Will you just migrate the acquisition to your systems (and are your systems actually sufficiently scalable to handle this) or is a mix and match approach preferred? What timescale are we talking about? What IT costs and resources are involved? This will almost certainly mean that you will need to re-evaluate your current programme or work and postpone some of your other planned projects so you will need to know which ones your organisation can most afford to lose.

4. Enjoy the experience

Acquisitions don’t come along every day. Your stress levels will shoot up and you will probably be working silly hours, for a while at least. But they are exciting and a compared with the often humdrum work life, incredibly interesting. Enjoy the experience and when the job is done don’t forget to give your team and yourself credit for what you have achieved.

Adam Davison 

Comments (3)

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  • 1
    Dave Dowson wrote on 1st Mar 2013

    Nice article Adam, I work as an architect in this area involved in the Due Dil and also early integration phase and your article makes a pleasant read

    You mention "You are, of course, unlikely to be able to give long term guarantees" One thing that can help mitigate risk here is golden handshakes to the key staff that you cannot afford to lose - make them feel wanted with a reward

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  • 2
    Adam Davison wrote on 4th Mar 2013

    Good point Dave. Retention bonuses or golden handshakes can be very useful in this scenario as long as they are appropriately targetted of course.

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  • 3
    Stuart Anderson wrote on 4th Mar 2013

    Adam, great points. Some ideas to deal with the one day milestone your boss gave you, it happens.
    It's about managing expectations. Define some TORs with your boss. And discuss your/his constraints. Document these for the 'end of day' deliverable context. I'd ask to see the Due Diligence docs. Size, complexity and Bus. Risks. Sit down for a couple of hours, read and plan your problem solving approach, and deliverable plan, you only have one day. Then refine with Boss. Some outcomes: max. 3 high-level integration options, each with risks; IT and Business, pros, cons, 'finger in air' costs, use a range for each option. Due Dil. Will have some numbers and assumptions, hopefully. Present recommended option based on context, (Due Dil. Reports, Boss TOR), Action plan to support. Incl. all of your ( Alan's) points e.g Change Management Plan, Enterprise Arch. Review etc.
    Need to give your boss something to keep his and your job, assuming you still have one. Read Due Dil. Carefully for that answer and bend recommendation to make you the new Chief!

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About the author

Adam Davison MBCS CITP has an MSc in IT from the University of Aston and has filled a variety of senior IT strategy roles for organisations such as E.ON and Esso.

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