14 June, 2011

After a takeover, don’t kid yourself or the other team

CIO Magazine has an article with a familiar story. After acquiring several other companies, the group’s CIO tells an IT manager to integrate 3 core work-order IT processes onto one common platform. The manager’s dilemma is whether to be dictatorial or to build consensus on which system to use. Which system did the users seem to like best and why? He didn’t know. He’s on a hiding to nothing. Unless their system is awful, each system’s users will eulogize their system and hate the others. Someone will have to make the tough call, and the users forced to change will hate the decision anyway. The suggested solution: tell the users the problem and give them 2 weeks to make a decision or they’ll have it done for them. It’s a technique I’ve used often when factions emerge and it usually works.

But why was the company in this position? Some key questions seem not to have been answered during pre-acquisition analysis, due diligence and planning:
  • Is the acquirer’s system compellingly better, and expected to enable superior performance from the acquiree business?
  • Is the acquisition being done to acquire the other team’s smart IT applications, which will enable superior performance from the acquirer’s business?
  • Is integration of IT systems (with lower operating costs) a key value driver for the acquisition?
  • Is there a clearly compelling and obvious case for one system over another?
  • If the answer is yes to one or more of these questions, there should have been a plan in place before the deal was finalised, with rapid implementation begun immediately after acquisition. Otherwise, don’t bother, until normal life-cycle replacement kicks in, with the users involved.
Pre-acquisition planning applies not only to IT, but to every aspect of an acquisition (marketing, development, sales channels, fulfilment, management, culture, organisation, support, etc.). What are the big value drivers that prompted the acquisition? Plan to get them realised quickly after acquisition and then get on with growing the businesses again. Too much navel-gazing will destroy the acquiree and be a huge distraction from achieving the value benefits from the acquisition.

I suggest reading ‘Five frogs on a log’ for executives and managers involved in pre- and post-acquisition planning and execution. Its primary advice? Plan the integration before you finalise the deal, and don’t kid yourself or the other team. Unless making a strategic pre-acquisition decision to take on a particular aspect of an acquiree, it’s the acquirer’s way that wins. It’s simpler, quicker, less painful and more honest.

First published  July 29th, 2007

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