Integration Planning Tool Series: Part V of VII

This is the fifth of our seven-post series discussing some of the many challenges associated with acquisition integration planning and sharing key considerations for CEO and Private Equity Sponsors looking to grow through Mergers & Acquisitions (“M&A”). As we shared in our first post in this series, Vector Advisory Services has created a complimentary M&A Integration Planning Tool to assist business owners and sponsors in evaluating and resource planning for key aspects of business combinations. We previewed this 25-point assessment tool, which includes five critical elements across five common functional pillars, to help leaders focus and assess resource needs to successfully integrate a business.  This post discusses the Technology & Systems functional pillar, and its associated five key elements:

1. IT & Data Governance
2. IT Operations
3. IT Infrastructure
4. Internally Developed Software, Software Integration, Portals
5. Enterprise Application Licenses & Support

IT & Data Governance: One key determination is whether the IT organization structure (leadership, make up, span of control) will be consolidated with clearly defined roles and responsibilities.  Data governance is critical and includes an understanding of the data dictionary and common data terminology.  Compliance requirements should also be identified, unified, and monitored (e.g., HIPAA, GDPR, ISO, PCI).  Tip – Establish a core team of individuals responsible for identifying critical data components, determining common terminology, and developing guardrails and controls to ensure ongoing data governance and quality.

IT Operations: Integration alignment within IT operations includes a wide spectrum of processes and actions, including consolidated data centers (on prem vs. cloud), help/support desk functions, overall IT security, server and network administration, and key technology supplier management (e.g., drive cost savings, stability, internal control).  Additionally, there should be a unified corporate domain.  Creation of a hardware and software inventory is helpful to determine unified standards for technology as well as identification of potential cost savings.  Policy alignment items include IT asset management and procurement processes.  Further, the combined organization should develop a consolidated IT budget, which is supported by a vendor spend analysis and combined view of IDSW capex, etc.  Tip – When reviewing and implementing the combined global device policies and practices, additional coordination may be needed with HR/Finance regarding phone policies (i.e., company purchased phone, vs. expense reimbursement for personally owned phone) and how to achieve the necessary security protocols.

IT Infrastructure: Similar to the IT operations integration considerations, IT infrastructure should be aligned.  IT Infrastructure such as networks, operating systems, telephony, messaging, video conferencing should be integrated.  Connectivity should be established between the companies (network).  Help desk and service desk support procedures should also be consolidated.  Tip – While overall O365 tenant migration may be a longer-term integration activity, calendar visibility should be prioritized to help facilitate collaboration and can be done quickly by establishing “trust” between the two tenants. 

Internally Developed Software, Software Integration, Portals: Standards should be established to budget for, manage, and report on internally developed software. Additionally, completing an inventory of hardware and software across the company/functional teams helps identify areas of consolidation and potential cost savings. Tip – When technology platforms are integrated, confirm any additional customer and supplier portal integration needs.  This should be a critical area of integration planning prior to closing as missteps here can be costly and very difficult to address later when momentum from the acquisition is lost.  Systems integration is time consuming and requires substantial resources to effectively plan, coordinate, develop, test, train, and implement these systems changes.

Enterprise Application Licenses & Support: Enterprise application licenses and support (e.g., O365, contract management, CRM, ERP, etc.) should be integrated/aligned.  Tip – Based on the complexity of the systems and solutions requiring integration, establish a near-term and long-term approach for integration.  Ensure all inputs and outputs are considered to avoid disruption of existing interfaces and system/data flows. Also consider the sustainability of existing enterprise applications.  For example, perhaps the existing ERP system can no longer support the combined organization without manual workarounds.  This analysis should take place during pre-close diligence to prevent the integration team from wasting time trying to merge or reconfigure existing systems if they don’t meet the needs of the combined organization (e.g., rather than quick decisions, ensure the right decisions are made prior to integration).

Defining the vision of the integrated state for each functional area is critical and it should be outcomes oriented.  The following is a set of example outcomes or priorities that your team may consider, revise, expand, and tailor as it relates to the Technology & Systems pillar.

1. Develop a system/data map/flow to assist with data migration, including defined data governance and ownership.
2. Evaluate existing hardware to determine if aligned with current standards and purchase new equipment if needed.
3. Review the most critical reports currently leveraged across companies and determine how/when these critical reports will be created and accessed by the combined organization.

We would love to hear your thoughts about any additional Technology & Systems critical integration activities.  Stay tuned for our post regarding the final functional pillar included in Vector Advisory’s M&A Integration Planning Tool. You can also download and use the tool for yourself on our website here.  A leader from our team would be happy to review your results with you, or even facilitate completion of the tool with you.