In M&A Deals, An Interim CIO Starts IT Systems Integration Planning Early

In M&A Deals, An Interim CIO Starts IT Systems Integration Planning Early

IT department leaders are usually left out of the early M&A meetings during the pre-merger or pre-acquisition phase. “IT systems integration” discussions do not include IT managers until it’s too late. This phenomenon is all too common when it comes to understanding the full scope of IT priorities and what each organization brings to the tech table to ensure successful M&A experience for employees and customers.

According to the 2018 Deal Value Curve Study, only 19% of M&A professionals surveyed believed there was sufficient due diligence on IT systems and assets before a merger or acquisition. This pitfall may stem from the fact that decision makers do not fully grasp the complexity of IT. Worse yet, they may fail to realize just how dependent the organization’s business goals are with IT systems.

Surprisingly, IT system integration is not top of mind during M&A discussions. That’s detrimental for two reasons:

  1.  Companies will inherit a variety of IT systems that don’t align after a merger or acquisition.
  2.  Nearly 70% of M&A transactions fail due to a lack of system integration planning.

These reasons alone are enough to reconsider leveraging the strategic expertise of CIO Leadership as a senior partner of executive management early on in M&A discussions.

An experienced Chief Information Officer has a pulse on day-to-day IT operations, processes, and systems. Involve them early in IT system integration planning, and they will jump start alignment of the partnering organizations IT departments, processes, procedures, and systems.

When IT department directors aren’t involved in M&A planning, they will find themselves scrambling to make their disparate IT systems work together after the sale or closing. The result? The speed of system integration becomes painstakingly slow or nearly impossible —  a major cause that turns a promising M&A sour fast.

As the timeline for IT system integration gets painfully stretched out due to poor planning, unnecessary expenses will rise, inefficiencies will run rampant, and governance and liability are at risk. This puts the newly-formed organization’s reputation on the line with stakeholders, their customers, and the public. Frustration inevitably will rise internally, and employee and customer retention becomes a new problem that must be addressed.  So then, how can a company assure success with IT systems during an M&A transformation?

CIO leadership on the management team is a proven factor that will make the difference.

Organizations can bring in an interim or fractional CIO from the get go that specializes in IT system integration. Fine tooth comb in hand, the outsourced CIO can analyze both organizations’ IT systems, as well as crucial ERP systems — which are often put on the back burner. They conduct a thorough IT audit of both IT systems to sheds light on the nuts and bolts of each companies’ IT assets, capabilities, licenses, contracts, policies, processes. IT auditing also identifies which systems run well, those that need an overhaul, and systems that should integrate.

By leveraging CIO leadership in planning, organizations can also ensure IT architecture is scalable and will adapt to the larger organization post-merger. Without scalability, organizations face a bottleneck that leads to delays, inefficiency, excessive expenses, or ceasing of vital operations. Worst of all, lack of expert attention can lead to liability.

In the era of digital transformation and innovation essentially all business goals are dependent on IT, led by experienced CIO leadership. Successful IT system integration planning takes time. With this in mind, merging organizations or companies acquiring businesses are more likely to celebrate success by including a seasoned interim or outsourced CIO, experienced in pre and post M&A IT systems integrations.