RSM Resources

Successfully integrating the information technology (IT) infrastructure of two or more disparate organizations can be one of the costliest, most complex and most critical tasks associated with a merger or acquisition. However, experts warn that too many midsized companies fail to adequately prepare for this inevitable clash of systems, software, data and staff.

"The time to start planning your IT integration strategy is the moment the merger or acquisition agreement is signed, if not before," says Joe Topinka, chief information officer of RSM McGladrey Inc., which is managing its own IT integration after recently acquiring the tax and business services division of American Express. "The sooner you define your key transition personnel and identify your essential tasks for Day One and beyond, the better chance you will have to ensure a smooth transition and create a cohesive new organization that is even greater than the sum of its parts."

While plenty of IT integration tasks result from either a merger or an acquisition, the former typically generates more-complex integration problems than the latter. That’s because acquisitions typically spawn fewer technology battles, because the acquiring company often has clear authority to absorb the acquired company into its own. With mergers, however, officials from each company must often jockey for position and make a case for their own organization’s technology.

Merger and acquisition activity is booming in the United States, achieving levels not seen since the Internet-fueled economic boom in 1999 and 2000. Each merger or acquisition brings with it its own special set of IT integration opportunities and difficulties. Whether your company is merging, acquiring or being acquired, the following steps can help you develop a workable IT integration plan to smoothly integrate your people, processes and technology with as little disruption as possible to core functions.

Step 1: Choose a leader
The first step in creating a successful IT integration plan is to identify who will lead integration planning and decision-making in the new company. The leader may be a member of either organization or a third party, but make sure the person or organization you select has a broad understanding of each organization’s processes and functions as well as experience with IT processes and integration project implementation. While nobody advises rushing this important decision, the faster you define this role, the sooner you can begin the painstaking process of building your new company.

Step 2: Analyze IT and company goals
Companies merge and acquire for many reasons ranging from expansion to retrenchment and beyond. Too often, officials planning to merge IT departments scramble to bolt their organizations together as quickly as possible, thereby overlooking the opportunity to make improvements and bolster corporate initiatives. A good IT plan will reflect the vision of the new organization and define structures and processes that help further the company’s strategic goals.

Step 3: Identify your core IT team
Experts advise caution to avoid laying off any IT staff prematurely. Most IT departments already are running lean for normal business operations, and integration tasks can require significant resources. No matter which technology you ultimately choose, you will want to avoid brain drain from either organization before your processes and data structures are sufficiently defined. To ensure that you have sufficient IT personnel to migrate systems, convert files, port data and provide connectivity across your new organization, consider offering retention incentives to key IT staff members. Such incentives will help you maintain a cohesive staff at least through the integration.

Step 4: Develop a technology plan
Deciding which technology to keep and which to toss can be among the most difficult tasks of IT integration. While a common goal is to eliminate redundancy and promote efficiency, many other factors may come into play, including employee knowledge and training needs, vendor agreements, data backup and retention requirements, and data migration issues. Be sure your IT integration plan adequately addresses the following technology issues:

• Enterprise systems. Determining which organization’s enterprise resource planning (ERP) system to use in your new organization may differ from shopping for a new system altogether. Instead of picking the system with the most bells and whistles, you might instead consider the one that will cause the least disruption during the migration process, is familiar to most employees or that already processes the highest volume of data.
• Software and hardware. As with choosing ERP systems, when selecting which hardware and software items to standardize in your new organization, you may want to take the path of least disruption. Additionally, factor in maintenance costs or vendor agreements before making your choices. Don’t forget that your new, larger company may be in a stronger position to negotiate a better deal on both.
• Data retention. As several recent high-profile court cases illustrate, deleting or destroying company information too soon may invite grave legal consequences. It’s important to ensure any data migration plans adequately address your industry’s data retention requirements.

Step 5: Define Day One
IT integration projects can take anywhere from six to 10 months or more to complete, depending on the size and complexity of the integration tasks as well as the similarity or dissimilarity of the merger partners. While there’s no magic remedy to expedite the process, not everything must be complete before going live within your new organization. Preparing an initial checklist can help you identify which items must be in place before you launch your new organization. Required Day-One items may include:

• Network connectivity across the organization.
• E-mail addresses for all employees.
• A re-branded Web site.
• Common critical business applications such as accounting, order entry and warehouse management systems.
• Appropriate system security safeguards.

RSM McGladrey did not deploy an off-the-shelf solution for its own IT integration. That’s because, as in any business combination, each company has a distinct culture as well as unique business requirements and systems. No single integration plan will work for everybody.

"But following basic steps for IT integrationcan help ensure that your project will produce the greatest benefits to your company at the least disruption and cost," Topinka says.