Mergers and acquisitions: Implications and repercussions for IT

Mergers and acquisitions, spinoffs and takeovers — these are massive events in the lifetime of an organization, and the tech industry has already seen a numerous amount of these deals in 2017. If you are an IT decision maker stuck in times when these words are spoken every day in your corporate boardrooms — times are tough.

Merging or demerging of systems, processes, teams, and technologies is a Herculean task. However, with all corporate mergers and acquisitions, these gigantic tasks have to be done with diligence and with little margin for error. You may have seen this in “The Good Wife,” which is one of the best shows of all time. Now that was law firm stuff but nonetheless you saw more than once if you have seen this show all the stress and variables involved in merging entities with so many moving parts.

Mergers and acquisitions

In this guide, we will take you through the biggest implications of corporate mergers and acquisitions on IT, and watch-points to take care of. From the problems related with workforce management to the issues around systems migration — there’s a lot to chew on for the IT leadership of both the companies. Read on.

The problem of IT inertia

Most star IT leaders in an organization get to their stardom because of their expertise in specific technologies from specific vendors. Now, things can change when a company is acquired by another, if the preferred technologies of the acquirer are different. System choices made by the parent company are usually sticky and not negotiable, and it’s the acquired company that has to move to the new systems.

Regardless of their personal expertise, and regardless of their personal preferences, experienced IT professionals have to undergo cross-skilling and up-skilling exercises to be relevant for the new and larger challenges. For CIO and IT leadership, mergers and acquisitions invite a plenitude of challenges around trying to match skills to requirements caused by the void created by technological mismatches between the two companies.

Some people will be happy, some let go, others will have to wait to see how it all works out while being evaluated how they handle their new environment.

Staffing challenges after mergers and acquisitions

Mergers and acquisitions

Employees can find themselves absolutely out of motivation and drive to deliver quality work when they don’t have clarity on what the enterprise will do to sustain them after the merger is completed. CIOs need to intervene well in time to create an atmosphere where employees feel a part of the enterprise and willing to assist in the arduous tasks of the technological merger.

They need to be able to deal with change. If they do not embrace this change, they may not be viable employees in the new company because they do not accept this new direction. Dealing with change is part of life; some people are not good with change and you do not want these types of people slowing down this transition.

In worse cases, employees could sabotage systems and cause data leaks, which should never be tolerated — we have seen this with the ultra-villain Nina Myers in “24” and other TV show and movies. CIOs need to adopt counter strategies to spread positivity. Training plans, reshuffling skills, and extended notice periods before separation, for instance, work well in keeping the IT workforce on track for dispensing their regular duties.

The implications of discontinued systems

Mergers and acquisitions

Mergers and acquisitions invariably come with several implications in terms of the software, systems, and tools that the companies use. Here are some of them:

  • Unless the contract states otherwise, you will need to pay license fees and subscription fees till the end of the agreed term of usage.
  • There are several challenges around extraction of data from systems that will be discontinued, followed by conversions to more reusable formats.
  • Vendors supporting the systems to be discontinued can be problematic to work with, because they have to move from the “support” rule to the “transition” role — something they’re not prepared for.

To meet these challenges, top management has to engage vendors in meaningful dialogs well in advance so that appropriate arrangements can be made for systems migrations. If you’re stuck with noncooperative vendors, you will need to work with consultants knowledgeable of both systems (the ones to be discontinued, and ones to be adopted).

Loss of CIO

When two companies become one, two CIO positions also coalesce into one. This means one of them has to be separated from or reassigned in the merged company. When the outgoing CIO has a great prospect in hand, it’s not a problem because the separation is on a good note, and his or her loyalists don’t feel bad about the severance.

In most cases, however, enterprises consider the option of keeping the services of one CIO for any role other than the combined CIO role, so that the organization-specific expertise can be retained within the new company. Upper management has to make hard decisions about who stays and who leaves from the top brass of the technology stables. Also, the new CIO has to make quick decisions and start expansive networking and socializing campaigns to strike the right notes with the new teams they have to work with.

The biggest mistakes that IT leaders and business leaders from the two companies involved in mergers and acquisitions can make is to focus purely on the IT part of the merger without realizing the implications on the customers that are served by the technologies. The customer experience changes because of the changes in the IT ecosystems of the merging companies. To address these concerns:

  • Communication has to be done well in advance to help customers prepare for the change.
  • The change, in terms of user experience, should be minimal.
  • Customer service teams needs to be ramped up and made aware of the changes, apart from being trained and socialized with the most conspicuous system changes.

Disaster recovery and business continuity

When two companies merge, the IT system migrations are managed in phased manner. These mini-migrations are spread across several weeks, if not longer. Such migrations are often complicated and challenging to the extent that companies need to keep the original systems ready for a switch-over if the new systems can’t be made live on the promised date and time.

This continues until the time a successful migration of the acquired company’s systems is achieved. End users should be informed well in advance of the potential downtime. The criticality of keeping an immediate failover safety net mechanism in place can’t be underscored enough during a systems migration.

Risk management

The success of mergers and acquisitions depends, to a large extent, on how cohesively the IT ecosystems of the two companies can work together. A lot about acquisitions is about risk management for IT, whether it’s the risk of managing a disgruntled workforce or the risk of migrations going off schedule. In most cases, timely communication and planning can make all the difference.

Photo credit: Shutterstock

About The Author

Leave a Comment

Your email address will not be published. Required fields are marked *

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Scroll to Top