CIOs must develop world-class M&A integration capabilities

That's the view from analyst Gartner, which is advising CIOs to develop world-class M&A integration capabilities to deal with one of the biggest challenges for enterprises – even those equipped with good conventional leadership and management techniques. "Reaping the benefits of a merger or acquisition is a notoriously tricky business. There is no established governance body spanning the whole organisation; there are normally aggressive goals and time frames; and there are often many surprises along the way, as each side learns about the other," warns Dave Aron, vice president at Gartner. "On top of all this, the business must continue to serve clients, run operations and execute in the face of major, often disruptive, integration activity, making IT's role in M&As critical," he adds. He articulates five critical M&A integration phases: due diligence and planning; welcoming and signalling; initial commercialisation; main integration; and the reap-the-benefits phase. Unpacking the jargon, while the due diligence is obvious – although in the most successful integrations, integration planning happens concurrently with due diligence and data gathering, with an initial hypothesis that is refined as information becomes available, he says. However, welcoming and signalling is about "a limited number of visible changes to signal the new reality that the merged organisation brings". Tactics, according to Aron, should include giving everyone harmonised e-mail addresses, phone accounts and security badges, and moving key people to different physical locations. Important outcomes centre on setting expectations, reducing uncertainty and motivating key staff. Commercialisation, then, involves instituting the most urgent practical changes. Aron describes this as the initial phase of the actual integration, which needs to address urgently needed outcomes. Common activities, he says, should include dealing with legal and regulatory issues and achieving transparency through integration of financial and management information. The rest speaks for itself. "A good rule of thumb is that roughly 25% of a typical M&A integration effort will come from IT, but the time and effort that each phase requires from IT varies significantly," says Mary Mesaglio, research director at Gartner. "For example, a large amount of IT resources is typically needed for a relatively short time in the initial/commercial phase, whereas a smaller, but still substantial, IT effort is needed over a longer period in the main integration and reap-the-benefits phases."