Gartner Advises CIOs to Develop a Positive Approach to Mergers, Acquisitions and Divestments

Chief Information Officers (CIOs) who approach organizational mergers, acquisitions and divestments (MA&Ds) as an opportunity to grow staff and strengthen IT assets put their companies at significant advantage over those who view MA&Ds with trepidation, according to new research from Gartner. In a report entitled 'Timing Is Everything in Mergers, Acquisitions and Divestments', results from a survey by Gartner Executive Programs (EXP) reveal that CIOs who take on the role of integrator from an early stage in the process can improve the success of the overall deal. It also highlights 10 distinguishing practices of MA&D experienced CIOs.

"Integrating the IT systems of two or more enterprises is a vast, complex and potentially costly process and it is a major challenge for the IS organization," said Dave Aron, vice president and research director at Gartner EXP. "However, if the process is handled in the right way, it can provide the opportunity to upgrade and update existing systems for overall business benefit. Proactive CIO involvement in the MA&D process can also play a significant role in identifying and reducing information and process-based risks that span multiple business areas, as well as spotting opportunities related to that information."

A positive approach and attitude towards mergers and acquisitions is one of 10 powerful practices identified by Gartner in MA&D-savvy CIOs. "IS organizations which are MA&D-ready tend to have a CIO who has been engaged in the process from an early stage," said Aron. "In such cases, the CIO is ideally placed to both maximize the value of future integrated systems and retain employees who will be of long-term value to the organization. With MA&D deals on the rise again, CIOs need to understand and influence their enterprise's MA&D agenda."

Aron went on to stress that when it comes to mergers, acquisitions and divestments, timing is everything, "Practiced CIOs are more likely to engage, prepare and execute on the process earlier than a classic MA&D timetable would suggest, with a strong bias towards fast, clear decision making and people issues." Elaborating on this Aron outlined 10 distinguishing practices of CIOs who will thrive in a MA&D environment:

1. Viewing MA & Ds as an opportunity to provide challenging roles for their staff, improve IT systems and demonstrate the value of the IS organization
2. Envisaging and positioning the role of the CIO and IS department as an integrator in the business -- not just a functional expert - and therefore a key stakeholder in the deal
3. Ensuring that the department is MA&D-ready long before a deal is on the table. It should be a key consideration when building a scalable enterprise architecture
4. Creating and constantly reviewing a set of core strategies that help to build and improve MA&D capability
5. Ensuring the counterpart CIO is involved early and often, as opposed to keeping them at arms length
6. Engaging the most able and experienced staff in the process, supporting their day-to-day responsibilities with contract staff. Heavy reliance on external consultants in the MA&D process makes integration much more risky and expensive, as they lack the deep contextual knowledge.
7. Thinking ahead and evolving an ever more detailed integration plan while the deal is being done.
8. Prioritizing decisiveness above accuracy. The CIO needs to move quickly to reduce complexity and minimize uncertainty.
9. Making people and relationships the top priority. Staff retention and morale should be addressed from the outset. Left-brained technologists tend to be less comfortable with ambiguity and have extremely portable skills!
10. Embedding integration projects in the every day workings of the business. Treating them as separate and special will damage 'business-as-usual.'

According to Aron, although the CIO of the acquiring company may have been on the inside of the deal much earlier than the CIO of the target organization, the target CIO can take precautions to ensure that he or she is similarly well prepared, should an acquisition be on the cards. "We advise CIOs in this situation to have their processes, human resources and assets well documented, and to take an honest view of their position. In the early days we would recommend trying to learn as much as possible about your suitor and developing a plan accordingly that will keep staff motivated and onside."