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Five steps to playing a bigger part in your company's M&A

I spoke with Gartner analyst Dave Aron for my story today about the CIO role in a merger and acquisition. The topic seemed timely: A variety of reports suggest that corporate M&A activity is heating up, with the cash-rich players eager to buy the talent and products they need to compete effectively as the economy rebounds.

Aron is in the midst of updating a two-year-old study on the CIO’s role in a merger and acquistion, in particular, what distinguishes the successful  from the unsuccessful CIOs in these high-stress situations. Of course, every deal is different, but Aron has discovered that many successful IT integrations follow  predictable patterns. Here is the Gartner breakdown:

  • 1. Hypothesis-driven planning phase:  CIOs who play a meaningful role in M&As tend to form an early hypothesis about how the integration of the companies should go. Why? People are hungering for certainty in these situations. A CIO who can size up the acquisition and put forth a vision of what kind of integration would work best is a valuable resource.
  • 2. Welcoming and signaling phase: This happens just after the deal is done “to wake everybody up to the new reality.” It might be that everybody gets their integrated phone numbers or badges or email accounts, Aron said. In this phase, IT moves quickly to let the acquired and the acquirers know that a new day has dawned.
  • 3. Identifying early benefits from M&A: Just as it implies, this is when the IT department goes after the quick wins — be it presenting a single face to the customer, finding the cost savings in sourcing contracts or rationalizing regulatory compliance controls.
  •  4. Main integration: One of the persistent myths of M&As is that IT integration has to be done quickly. Not necessarily so. It may be that it makes more financial sense to leave systems be (for a while). Rick Roy, CIO of CUNA Mutual, backed this advice up: “The first question if you are buying is always, are you going to integrate? Maybe not. In our world, we will eventually, but I will not touch infrastructure until well down the path of earn-out on the deal.”
  •  5. Longer-term benefits: There are continuing benefits CIOs can help their companies wring from the deal, and it is the IT department’s job to find them.

An interesting coda: Positive uncertainty

The mantra that an M&A integration has to be done quickly may be outdated, but according to Gartner, that other mantra — make the tough decisions early — still holds true. Gartner found a lot of evidence that any kind of uncertainty, even “positive uncertainty ”  (a situation where nothing bad is happening and there is a promise of good news) can really destabilize IT people.

I need to run that observation by an IT shrink.

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