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CIO Perspective: How To Keep Your Sanity In a Merger/Acquisition

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During the past months, I was a consultant in two acquisition issues in one small and one medium sized company. Financial, accounting and inventory issues were draining the employees’ and consultants’ times. IT issues did not seem as complex as the others but once the management tipped their toe, they understood how out-of-world things tend to go. Here are my notes for the CIO to keep his/her sanity during a merger/acquisition, freshly from the field.

Mergers and acquisitions are hard for the business side – financials, books, records, inventories, whatever you name them but they are harder for the employees. During these times, as an IT executive be as transparent as you can. Whatever staff decisions are ahead, let your departments know. If you have the chance, try to reach everyone, even with a small online meeting. That way you will be able to eliminate any rumors.

And when the time comes, communicate it to your employees. If the decision means changing positions, let them know. If the decision unfortunately means layoffs, do your best to find them other positions in the company. Remember, this is maybe the only chance to do something for your staff. Fight hard to do something. That will make everyone feel better. But if there is nothing you can do, instruct all your managers to support your staff during the termination process. Instruct them to assist your staff in finding new employment. Try to get as much compensation for each staff member as possible.

Then comes the technical issues. Let me make a list of them and then talk about each one:

  • Governance
  • Discontinued systems
  • Vendors
  • Failover
  • Security
  • Disaster recovery

Governance issues top the list because it is about the government, legal issues and – God forbid – about investors, lawsuits etc.. As an IT executive make sure that you understand all the legal issues. There are some industries that are highly regulated, like healthcare and financial industries. During a merger the two companies will be from the same industry but what if the other one also has operations outside your industry? What if – say – they are producing some health-related products? It is so easy to miss these intricacies, so my recommendation is to consult with a lawyer.

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From both a business and IT perspective, at first, you need to agree on which systems are business critical and which systems will be kept. The other systems that are decided to be discontinued will be done with, but their supporters will not leave them so easily. It is easier to decide with a small group of executives on which systems to keep and then go ahead, but it is better to get as much users as possible in the decision process (key users and power users will help a lot). This way, everyone will be part of the decision and will own it. There will also be the fans of the systems. Most probably they are the type of employees who know how to use a system more than they know their jobs. Therefore switching to another system means losing every power they have in the company. During one of my consultancies, I had a case like this. The company’s infrastructure was more than 99% Microsoft. We had installed System Center products and naturally recommended System Center Service Manager for service management. What a mistake it was. What I had was not rejection, but an utter uprising against everything I did. I learned it the hard way that the department used CA Service Desk for some time, learned it to some extent and the recommendation to change it was the same as insulting their religion. And the issue was so escalated that they received another consultancy to integrate CA Service Desk to their infrastructure, costing months and thousands of dollars. Moral of the story: mind the fan base.

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During mergers/acquisitions most probably there will be different systems in both companies for the same jobs. It is natural to reduce one system for each job. But on the other hand, that means terminating the contract of one vendor possibly for each system. Naturally, no vendor will be happy to lose its contract. This unhappiness may extend to being uncooperative and unresponsive. It is better to think about such scenarios in advance and decide what to do if the vendor becomes “unavailable.”

When the issues are being discussed, people tend to be optimistic. They know that the transition is a complex issue, will not go smooth and unexpected problems will surface but the “air of the meetings” make everyone willing to contribute and eager to solve the problems. Let me tell you once again that there is absolutely no flawless transition. As an IT executive make sure that there are at least two failover scenarios for each transition. I spent countless hours in making what-if decision trees for everything that we thought could go wrong and in the production case the problems we had were the ones that nobody could think about. Ask your managers to plan ahead, push them to think every scenario and then push them again to think the unthinkable. Do not accept “meeting optimism” as an answer. Do not settle less than a complete failover scenario. You can’t tell anybody that you did not have a backup plan for the mission critical systems.

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Another big issue on the merger/acquisition is the security. There are now more networks, network nodes, ports and access control lists to think about. The security issues may get lost during a merger because there are so many things for the IT departments to do. To avoid any backdoors ask your managers to rethink about the open ports and other possible security holes. Better, establish a security team.

Bear also in mind that the security holes may come from the upset employees; and considering that they have more privileged access to corporate networks, the damage they can do can be extensive. Tighten the security in risky areas. And if anything goes wrong and you suspect a breach, immediately call outside expertise. Do not try to handle the situation with your company staff alone.

Once everything gets moving, review the disaster recovery plans for each company. Ask your managers to consolidate them into one, and update the consolidated plan with the new infrastructure. It is OK to review the DR plan annually when everything is in place, but during a merger, it is better to check it once in every two months and make sure that is 100% consistent with the infrastructure and the decisions made.

This my list, gathered from the observations and first-hand experience from the past months. Did you take part in a merger/acquisition? What are your experiences? Share with us in the comments below!

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