Jul 102008
 

Do you believe IT can affect the financial outcome of a corporate merger and acquisition? Is IT’s role in this scenario tactical or strategic? We will address these varying perspectives in an upcoming issue of Cutter IT Journal. If you would like to weigh in on this contentious issue, please review our complete Call for Papers.

Cutter IT Journal Call for Papers

Can IT Make or Break a Corporate Acquisition?

There are two key work areas for managing acquisitions — performing due diligence on the target company and integrating two separate and distinct functions. This applies to all functions including Information Technology. Frequently, however, the IT organization is not even involved in the former, primarily because of the need for secrecy before a public announcement can be made. And once an acquisition has been announced, the IT organization can find itself in the pressure-cooker, tasked with integrating the two IT departments quickly, often with little notice or planning. Moreover, the IT group for the acquirer must often undertake a new, major integration program initiative with the same people who are expected to continue managing normal IT operations at the same time. And should the acquiring IT group uncover a major problem with the target company’s IT operation that was not identified during due diligence (e.g., a major project that is late and over budget), corporate management may not view such a surprise favorably.

Does this scenario sound familiar? Or has your experience with managing acquisitions been different? Have you been able to participate in due diligence in order to evaluate the strengths and weaknesses of the target company’s IT function? Have you been able to plan the appropriate resources for a successful integration project? Have you had a seat at the executive table and been able to offer strategic insight into the potential IT value of a combined business?

In my Cutter Executive ReportThe Business of Information Technology: Managing Acquisitions,” I wrote, “Unfortunately, many companies do not have a defined and documented process for conducting due diligence on the business operations of a target acquisition. The financial and legal procedures for due diligence are usually better defined, and are supported by experienced third-party service providers. Rarely is this the case for other business functions including information technology, operations, human resources, marketing, sales, customer service, etc. Yet, many acquisitions that fail to achieve the financial objectives of the transaction often do so because of operational ‘surprises’ that were not discovered until after the acquisition was consummated. The IT function is strategically important because of its unique role as ‘keeper of the corporate data’.” [1]

Once the acquisition is done, the focus of executive management often moves on to the next deal. By this time, the integration work needs to have been planned, resources assigned and roles clarified. This means that IT must have been involved in the due diligence in order to have a chance of integrating two IT departments within the financial parameters of the merger or acquisition agreement. IT needs to have the opportunity to identify potential costly integration challenges during due diligence, identify the workforce needed to manage both integration and normal business operations in parallel and prioritize integration tasks according to the strategic assumptions of the acquisition. IT can add significant value to the benefits of a merger or acquisition but only if they have an opportunity to be involved from the beginning. Considering IT’s role in acquisitions as tactical can only result in unpleasant surprises later on.

THE OCTOBER 2008 CUTTER IT JOURNAL invites useful debate and analyses on what approaches organizations are taking to improve the productivity, efficiency, and profitability of their IT functions specifically with regard to mergers and acquisitions. Topics of interest include, but are not limited to, the following:

  • What are the critical success factors for IT integration?
  • Are IT functions are now considered strategic participants in acquisitions?
  • What are the crucial elements to uncover during due diligence?
  • Are there formal business practices in place to guide the due diligence and integration teams?
  • Who holds (or should hold) ultimate responsibility for the success of integration programs?
  • What are the appropriate metrics by which to measure both due diligence and integration performance?
  • What are some examples or models of good, bad, and ugly acquisition programs?
  • Where are the hidden costs typically found when integrating two IT operations?
  • What are the key lessons to be learned from each of these models?
  • What role does accountability (or lack thereof) play in managing acquisitions?

TO SUBMIT AN ARTICLE IDEA

Please respond to Dave Rasmussen at drasmussen[at]stratner[dot]biz with a copy to itjournal[at]cutter[dot]com, by 23 July 2008 and include an extended abstract and an article outline.

ARTICLE DEADLINE

Articles are due on 29 August 2008.

EDITORIAL GUIDELINES

Most Cutter IT Journal articles are approximately 2,500-3,500 words long, plus whatever graphics are appropriate. If you have any other questions, please do not hesitate to contact Chris Generali, Group Publisher, at cgenerali[at]cutter[dot]com or the Guest Editor, Dave Rasmussen, at drasmussen[at]stratner[dot]biz. Editorial guidelines.

AUDIENCE

Typical readers of Cutter IT Journal range from CIOs and vice presidents of software organizations to IT managers, directors, project leaders, and very senior technical staff. Most work in fairly large organizations: Fortune 500 IT shops, large computer vendors (IBM, HP, etc.), and government agencies. 48% of our readership is outside of the US (15% from Canada, 14% Europe, 5% Australia/NZ, 14% elsewhere). Please avoid introductory-level, tutorial coverage of a topic. Assume you’re writing for someone who has been in the industry for 10 to 20 years, is very busy, and very impatient. Assume he or she will be asking, “What’s the point? What do I do with this information?” Apply the “So what?” test to everything you write.

PROMOTIONAL OPPORTUNITIES

We are pleased to offer Journal authors a year’s complimentary subscription and 10 copies of the issue in which they are published. In addition, we occasionally pull excerpts, along with the author’s bio, to include in our weekly Cutter Edge e-mail bulletin, which reaches another 8,000 readers. We’d also be pleased to quote you, or passages from your article, in Cutter press releases.

If you plan to be speaking at industry conferences, we can arrange to make copies of your article or the entire issue available for attendees of those speaking engagements — furthering your own promotional efforts.

ABOUT CUTTER IT JOURNAL

No other journal brings together so many cutting-edge thinkers, and lets them speak so bluntly and frankly. We strive to maintain the Journal‘s reputation as the “Harvard Business Review of IT.” Our goal is to present well-grounded opinion (based on real, accountable experiences), research, and animated debate about each topic the Journal explores.

FEEL FREE TO FORWARD THIS CALL FOR PAPERS TO ANYONE WHO MIGHT HAVE AN APPROPRIATE SUBMISSION.

REFERENCE

1. Rasmussen, David. “The Business of Information Technology: Managing Acquisitions.”

Cutter Consortium Enterprise Risk Management & Governance Executive Report, January 2006.

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Christine Generali

Christine Generali is a Group Publisher for Cutter Consortium - responsible for the editorial direction and content management of Cutter's flagship publication, Cutter IT Journal.

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