Key topics to ask IT during a Merger and Acquisition
As a follow-up to a previous post regarding IT’s role in a Merger & Acquisition (M&A) process, it’s valuable to look more deeper into what IT departments should specifically address to help M&A’s succeed. Many of the decisions that leaders make in this process require IT to seek out and provide high-quality information during the due diligence phase. More accurate and complete information will lead to more informed and presumably more profitable decisions, which should result in a higher likelihood that the merged organization’s ultimate corporate objectives will be reached. To ensure success, IT will need to provide leadership with information on these key topics:
Inventory & Capital Cost of Hardware Devices: Every reasonably sized organization has millions, if not tens or hundreds of millions of dollars invested in hardware infrastructure. These are vital financial assets in addition to being crucial to running operations. Corporate leaders need a precise understanding of what they are acquiring; they must know how many devices and of what types (from a financial perspective), even before IT Operations assesses them in terms of running the merged entity. This ultimately culminates in massive capital value that must be accurate.
Inventory & Licensing of Technologies & Applications in Use: Similar in nature to hardware inventory but somewhat more difficult to gather, is the listing of what applications and software technologies are actively in use. These software packages and licensing arrangements often overlap or conflict with existing license agreements as well as with their correlation to hardware that supports them. This requires an ability to aggregate and normalize data from various management systems such that a consolidated view of the software environment is available for leadership.
Lower IT Infrastructure Costs: IT needs to provide information related to the possible consolidation of IT resources, technologies and facilities while still delivering the requisite ongoing services. This can only be done with a complete accounting of the devices and software technologies discussed above. Once gathered, IT must leverage all of that data to analyze the current and projected services before providing management with recommendations for potential cost savings.
Resource & Operational Efficiencies: There are areas of IT Operations that can more easily be consolidated which ultimately enable the potential for some headcount reduction in the new joint entity. This requires that comprehensive operational data be gathered that demonstrates measurable operational efficiency and effectiveness gains. The IT personnel involved in due diligence must carefully generate reports on operational metrics, such as call volumes, Service Level Agreements, incident response details, as well as change volumes and failure rates for analysis.
Increase Procurement Power: If the two organizations eventually merge, there is the potential for benefits from increased leverage over vendor and service provider contracts. For example, in cases where volume thresholds are crossed or enterprise licenses might be available, it might be possible to lower future discrete costs. This requires IT personnel to recognize that data about technologies, vendors and licenses may be similar or even identical in the two organizations. Many times these are the same, but defined and described differently within the two organizations. Missed opportunities to normalize the two independent companies’ data could cost millions during the long term.
The ultimate goal for those in leadership positions executing a merger or acquisition is to ensure that the deal makes financial sense and achieves corporate objectives. That can only happen when company leaders have all the necessary data to describe the environment, which then allows them to make informed decisions. This is only possible when data quality is high; hence the vital role of IT efforts during an M&A. IT is the key provider of quality information, which directly affects the likelihood of success.
Blazent’s data quality management technology rationalizes related asset information between organizations, accelerating and validating the due diligence data gathering effort. You can learn more about the Blazent data quality platform here.