The high level of automation in today's business processes means that most organisations are totally reliant on the quality and efficiency of their IT systems to bring their products to market - be they tech solutions, TV programmes, airline flights, lifesaving medicines, motor vehicles, or whatever.
IT systems connect business processes and activities from the source - right through to delivery - and are clearly business-critical in any major organisational change. This applies whether the company is planning an acquisition, an expansion into new markets, a major restructure - or even a downsizing or divestiture.
Mergers and Acquisitions: IT’s Role
It seems pretty obvious that IT management should play an essential role from the very beginnings of any major change – to share in the 'ownership' of the project and become committed to its successful outcome. In the planning and execution stages, IT will need to ensure business continuity, while making the necessary short-term IT 'fixes' to ensure that new business also runs smoothly – especially during the critical first 100 days.
Ultimately, your IT staff will need to plan and implement long-term enhancements and changes to the technology infrastructure of the merged, expanded or reorganised business. Any newly acquired systems will need to become FULLY INTEGRATED so that they are capable of seamlessly taking your businesses forward for years to come.
Download our whitepaper - 5 IT Strategies For Business Success
Even in this technology driven age, it is quite amazing to see how few organisations regard IT as a major factor when they make plans for major organisational changes to their businesses.
Indeed, it is even more surprising to find that even consultants brought in to advise clients on major organisational changes often fail to include the IT director in their list of key players.
The perceived role of IT varies widely across different organisations – with many still seeing IT as just a support function, or a service provider. It is no surprise, therefore, to find that few IT issues are discussed at board level and that many board members and senior management have little knowledge or understanding of IT and the role that it plays.
The more enlightened organisations, particularly those with a good track record in expansions and acquisitions, regard IT management as an important part of their M&A team. Some companies even have a fully trained and dedicated M&A team within their IT departments. These IT specialists know what to look for and how to go about merging new businesses in the most efficient and cost effective ways.
Similarly, enlightened smaller companies often seek the advice of IT consultants when contemplating changes and /or expansion.
Why Is There Such A High Rate Of Failure In M&A And Restructures?
There are several reasons why so many major M&A and expansion projects fail to achieve their targets; but there is little doubt that the failure to understand and appreciate the role of IT in this process, and poor systems integration is one of the chief reasons for failure.
In extreme cases, failure to involve IT from the outset can be catastrophic. in a recent Deloitte survey it was estimated that more than 50% of deals either failed completely or did not achieve the expected benefits, due to lack of proper IT consultation and IT integration.
But even the involvement of IT management from the outset may not work if your IT staff are not experienced in handling a major restructure. Often, the IT department's reaction to a merger is to try to reduce the number of changes and 'fixes' to the systems. They will concentrate on finding ways to keep cumbersome legacy systems afloat, tick the boxes and make the deadlines.
Instead they should be doing is looking at ways to build a more flexible, integrated system, and to update cumbersome technologies. They should find workarounds that will reduce IT costs in the long run and provide a more efficient delivery of the product.
It is, therefore, essential that your IT staff possess the commensurate skills. Don’t make the common mistake of assuming that there will be substantial cost-savings within a merged IT department. Very few organisations are able to reduce IT costs. This is because of the on-going need to integrate and streamline two or more systems and to build a more flexible base for the merged and/or expanded operation.
Successful Deals Go Hand In Hand With Successful IT Work Streams
If your project is to reach a successful conclusion, it is absolutely essential that your IT Director is a key member of the planning team from day one – not after the decision has been made. It could even be the case that the IT challenges are simply too great or too expensive to render an acquisition cost effective.
At the other end of the scale, you may have a small or medium-sized business and are looking to expand or restructure your company to achieve more growth and business potential. The growth in your business means that you need to add more departments and more staff, but you also need to retain control.
If your IT function is outsourced it may be time to bring IT in-house so that you have a dedicated resource who understands your business and IT needs. The right person will be able to develop your systems and allow your business to expand while enabling you to remain fully in control.
A good external IT service provider will welcome this development. They can play a pivotal role in helping you to recruit the right people and, if necessary, work with them to develop and expand your IT systems.
Many IT managers wrestle with the challenges of integrating or streamlining their systems after major reorganisational changes. They need to make them fully functional and responsive to today's technology-oriented business environment. Often, some measure of digital processes and capabilities is the way forward.
Automated Business Process (APB) software is becoming more and more common as an effective tool in solving old, inflexible systems problems and helping to insulate users from the underlying systems inefficiencies.
Business model innovations allow IT departments to introduce a variety of business processes that will allow the users to benefit from digital business processes and allow customers to integrate with their smart technologies that are connected to the Internet.
Modern business demands - and the technologies to meet them - changes rapidly. Your company's systems need to be ready and adaptable to constant change and unpredictable demands, and still deliver both the user's and customer's expectations.
But dipping into Digital Business Processes (DBP) can be quite a quagmire. It is estimated that as many as 80% of companies have failed to achieve a good outcome when trying to introduce Digital processes – mainly due to the failure of IT managers to fully appreciate the scope of the issues involved.
The role of IT in any major re-organisational change is critical from day one – i.e. the planning stage. But make sure your IT managers have the support and resources needed to ensure your company one of the few to come out on top.
If you do need to bring in consultants to support your change programme, you can find out more about technical consultancy services here.