What's the first step to taking your business to the next level? For many businesses, the answer is integrating with other companies. Mergers and acquisitions (M&A) can offer a number of benefits, including greater market share, economies of scale, and new markets.
However, integration management of two or more businesses can also be complex and challenging. If you're planning an IT M&A integration, it's important to have a clear IT strategy in place. This article will outline the steps necessary to build an effective integration strategy. Let's get started!
The role of integration strategy
The integration strategy is a key part of M&A deals, as it sets out the plans and objectives for combining two businesses. An integration strategy is important because it can help ensure that the merger and acquisition are successful and that the businesses can operate effectively.
A successful integration strategy will take into account the different cultures, processes, and systems of the companies involved. It will also address potential risks and challenges that may arise during the merger and acquisition process right from day one.
What is an M&A integration strategy?
An M&A integration strategy is a plan on how to combine the IT systems and processes of two companies during a merger and acquisition. The integration plan should be designed to enhance synergies, and ensure full optimization of the business, to achieve the desired results of the merger & acquisition.
How do you manage the integration challenges when implementing the acquisition strategies?
The first step is to identify the challenges you will face during the integration process. These challenges can be divided into three categories: technical, organizational, and cultural.
Technical challenges include compatibility issues between the two companies' IT systems, data migration, and security concerns. Organizational challenges include communication and coordination between the two companies, aligning the two companies' business processes, and deciding the new organizational structure. Cultural challenges include managing different work styles and values and dealing with change resistance.
Once you have identified the challenges you will face, you can begin to develop integration plans for how to address them. For each challenge, you will need to decide what needs to be done, the integration team responsible for doing it, and when it needs to be done.
Some challenges, such as data migration, may need to be addressed before the merger and acquisition occur. Others, such as change management, may need to be addressed post-merger integration by senior executives.
What is an IT integration strategy?
An IT integration strategy is a plan for how to connect and manage the IT systems of two companies during and after a merger and acquisition. The goal of an IT integration strategy is to minimize disruptions to businesses and allow them to continue operating as seamlessly as possible.
What are the types of integration strategies?
There are two types of integration strategies: parallel and phased.
1. Parallel Integration
Under a parallel integration strategy, both the target company and acquirer companies continue to operate as two separate entities until the IT systems are successfully integrated. This type of integration is usually the most complex and risky, as it requires the IT teams to manage two sets of systems at the same time.
2. Phased Integration
A phased integration strategy involves integrating the IT systems of the target company and acquirer companies in stages. This type of integration is less risky than parallel integration, as it allows the IT team to focus on one set of systems at a time.
What is an integration strategy with examples?
An integration strategy is a plan for ensuring that different IT systems work together smoothly. It is often used in the context of mergers and acquisitions when two companies need the consolidation of their IT infrastructure.
There are many different factors that need to be considered in an integration strategy. The most important thing is to ensure that the data from both systems can be combined easily and accurately. This may involve migrating data to a new system, or developing connectors between the two systems.
It is also important to consider the different ways that users will access the data. For example, if there are two separate customer databases, it will be important to have a way for customer service representatives to view both databases at the same time.
Steps to Building an IT Integration Strategy for Mergers and Acquisitions
There are a few key steps that you need to take in order to build an IT integration strategy for mergers and acquisitions once the deal closes. These steps are as follows:
1. Define the goals and objectives of the IT integration strategy
It is important first to define the goals and objectives of the IT integration strategy for mergers and acquisitions. What are you hoping to achieve with the acquisition integration strategies? What are your specific goals for the IT systems and processes?
Once you have answered these questions, you can begin to develop a plan to achieve these goals. The questions will also help you identify any potential risks and challenges you may encounter during the integration process.
2. Assess the IT systems of the companies involved in the merger and acquisition
The next step is to assess the systems of the companies involved in the merger and acquisition IT integration. What are the strengths and weaknesses of each company's IT systems? What are the differences between the two systems? This is a due diligence process that will help you determine how to best integrate the two systems. The assessment also helps determine the technical expertise needed to achieve integration success.
3. Identify the gaps and areas of overlap between the two companies' IT systems and processes.
Identifying the gaps and areas of overlap between the two companies' IT systems and processes is crucial to developing an effective IT integration strategy.
This analysis will help determine the necessary IT infrastructure changes, resource requirements, and implementation timeline. The diligence phase identifies which systems and processes can be merged or consolidated and which redundancies need to be made.
4. Build an execution plan and timelines.
After you've identified the gaps and areas of overlap between the two companies' IT systems and processes, it's time to build an execution plan or a roadmap. This will help ensure a smooth transition and minimize disruptions during the merger and acquisition.
Some factors to consider when creating your plan include:
- What needs to be done to integrate the systems?
- Who will be responsible for each task?
- What is the timeline for each task?
- What are the risks and potential problems that could arise during integration?
Once you've created your plan, it's important to communicate it to all stakeholders involved in the merger and acquisition. This will help ensure everyone is on the same page and working towards the same goal.
5. Implement the IT integration strategy.
The final step is to implement the IT integration strategy. This includes implementing the plan, making any necessary changes to the IT infrastructure, and training employees on the new systems and workstreams.
It's important to monitor the progress of the integration efforts and make adjustments as needed. The purpose is to make the transition as seamless as possible for employees and customers while building up shareholder value.
The IT integration strategy should be tailored to the business's specific needs. There are many factors to consider, such as the company's size, the type of industry, and the geographic location. The goal is to create initiatives that will work for the specific merger and acquisition.
One thing to keep in mind when implementing the IT integration strategy is to make sure that the IT infrastructure can support the new organization. This may require making changes to the network, servers, and applications.
6. Monitor and evaluate the results of the IT integration strategy.
Once the IT integration strategy is implemented, it's important to monitor and evaluate the results and metrics. This includes tracking employee productivity and customer satisfaction. The goal is to ensure that the new system is working as intended and that there are no major issues.
If the post-merger integration (PMI) is not successful, it's important to identify the problems and make changes. This may include making changes to the IT infrastructure, training employees on the new system, or changing the way the system is used. The goal is to find a playbook that will work for the specific merger and acquisition.
Let's get you started with an IT integration strategy for a merger and acquisition.
If you're looking to build an IT integration strategy for a merger and acquisition, our team can help. We have years of experience in designing and running secure, mission-critical workloads in the cloud. We specialize in Microsoft Azure Cloud and IBM Cloud and offer Managed Cybersecurity and Services for both platforms.
Contact us to learn more about our services and how we can help you get your infrastructure ready for a successful M&A IT integration. Want help building out your strategy? Learn more about our IT integration services for mergers and acquisitions here.