With good planning from the start, IT can help make the merger and acquisition process smoother for the entire organization.

Often IT is left out of the process and this creates significant issues later on, delaying the process and causing additional costs.

As an article from McKinsey & Company reports, “50 to 60 percent of the initiatives intended to capture synergies are strongly related to IT, but most IT issues are not fully addressed during due diligence or the early stages of post-merger planning.”

Examples of IT-related synergies include lower IT infrastructure costs, route optimization for lower logistics costs and increased volume discounts for IT procurement. However, to forecast savings, executives need a thorough understanding of the requirements for IT system consolidation.

The key is for IT to get involved as soon as the company begins to plan an acquisition. Don’t wait until the acquisition process is underway to start identifying potential obstacles or liabilities.

Use these four strategies for a successful M&A integration:

  1. Get involved in the due-diligence process: As noted earlier, IT is often absent from the due-diligence table. IT leaders must speak up and insist on having a voice during due diligence, because this is a vital part of any merger and acquisition. With large organizations that have a global presence, the process could take months.The due-diligence process allows for IT to carefully gauge the target company’s data, technology platforms and capabilities. Access to this information should increase as the deal progresses (nondisclosure agreements may need to be signed in some cases).IT’s primary role during due diligence is to uncover liabilities (like an underinvestment in technology) and identify opportunities for synergy with the target company’s technology (like integrating functional systems to lower operational costs).
  2. Learn the target company’s existing systems: The merged organization should be operational the day the deal closes. That means IT needs to understand the new company’s systems and develop an integration plan.In some cases, keeping the company’s legacy systems may make the most sense, because integration may be too costly or disruptive for end users. In other cases, the acquiring company moves data to its own platform, and a swift integration is necessary to avoid disrupting business operations.
  3. Identify gaps and redundancies: IT needs to know what’s in-house before consolidating, so do a comprehensive inventory of the services and systems that both companies use. A successful M&A should reduce redundancies and pinpoint synergies.An article from Booz & Company on IT’s role in merger integration recommends analyzing hardware, software and network systems; enterprise platforms (such as ERP and CRM systems); and corporate programs for specific lines of business.Also, look at the target company’s IT talent to identity gaps and determine how to keep the best employees, such as offering bonuses to stay through the integration. A mass exodus from IT will hurt the new merged organization’s ability to operate.
  4. Create a plan to merge the new systems: Build a strategy for transitioning to your new technology setup and getting everyone to use it. Since people often hold onto what they’re familiar with, consider using a change management model, such as ADKAR (build awareness, create desire, develop knowledge, foster ability and reinforce changes).Don’t forget to think about what you’ll do with systems and data that you decide not to migrate. Many companies seek a middle ground here, choosing to archive the data for the first six months as read-only (so people can access it but not change it), and then decommissioning the data once everyone is comfortable with the new system.As the new systems are merged, remember to be flexible. IT may have to implement temporary work-arounds to support business operations while a permanent solution is developed.

To learn more about how to use IT strategically for your next merger, download our new eBook, “Make Your Next M&A Painless With These IT Strategies.”

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