To answer this question requires firstly considering the deal type which impacts both your integration ambition and degree of transformation needed.  I typically think about three scenarios and its important early on to determine which situation you are in:

1, Keeping the two businesses separate ‘a bolt-on acquisition’.  In this scenario, you preserve the individual capabilities of both organizations.  The work from a process and technology perspective often is working through where business models align and where the key governance points are.  This approach is good typically for talent retention as the cultures of both organizations are preserved.

2, Integrate the businesses by blending the two businesses into one and find economies of scale.  This involves integrating all activities comprehensively and ensuring the approach is co-ordinated across geographies, functions, sectors, and business units.  This requires a detailed organization design, process mapping and working through the technology integration approach.

3, Use the integration to redesign the business, considering what activities should be performed and how and determining what elements will be retained.  This requires an operating model redesign and often significant cost take out, whilst repositioning the business for growth, hence undertaking a transformation.  This often involves new process and system design with different hand-off and control points, new capabilities, and different governance models.

After understanding the integration vision then it’s about mapping systems and processes that will require significant change and/or investment.  A blue-sky-only approach can create an overly ambitious scope and phasing so it’s important to put guardrails in place around changes to processes and systems early on. The critical activities to undertake are:

1. Defining the contribution and role of technology in the new business design and operating model
2. Understanding the impact of process and technology integration on synergy capture and delivery
3. Defining critical processes and systems and working out the integration approach for each
4. Defining future state processes and assessing gaps
5. Defining data, applications, and infrastructure needs
6. Determining what needs to be done by day 1 in conjunction with working on what needs to be covered in the Transitional Services Agreement (TSA)
7. Building any new systems and process, working on where are the critical hand offs
8. Training employees to use new systems and processes
9. Completing the cutover and monitoring issues forming hyper care for the critical first few months
10. Finally, having a section on your integration scorecard which looks at system and process integration success measures

In undertaking these 10 activities the lessons I have learned over the years includes: 

• Ensuring good technical due diligence is completed.  Due diligence on the technology can often get overlooked.  You need to understand the systems, how they operate and connect with others and principal risks, including cyber security risks.  You also need to understand how your synergies are predicated on technology and the migration of people and customer data onto systems. If your IT landscape is already unstructured and fragmented, the integration won’t change that. So, it’s about understanding where you are starting from, mapping out all of your current architecture, and then looking at what you’re trying to map in and how that fits together in practice.

• Manage the budget – This is often not so simple as there are so many components of technology and data. Firstly, you need to establish the strategy, the budget, and the timeline. Understanding where the data resides and having a team of data scientists to manipulate it is critical particularly if you’ve got a lot of migration work. Change management and training is also required. Moving someone say from Oracle into  Workday requires a mindset change. It’s not so much that the system is hard to learn, but getting teams used to a whole new way of working requires investment, time, and budget.

• Make it a Board issue – the Board need to challenge the Executive team on the technology integration approach, challenges, risks, synergies, and cost impacts.  Similarly, they need to ensure any process change has strong change management and training support.   It’s also important not to forget ESG and other non-financial value in your process and technology plans.  Buyers are switching on to the fact fast that a business’s future earnings will be impacted by ESG impact and progress. 

• Get ‘day one’ right – The first challenge is working towards the first big milestone of ‘day one’ and having a clear blueprint for how you are going to operate that everyone buys into. The best piece of advice is not trying to do everything on the first day. First focus on what you absolutely need to do to get the basics right and then consider what you could do. For example, can you pay people and suppliers on time, can you bill and receive cash? Getting ‘day one’ right is an important step in creating momentum and credibility in the organisation, so it’s not one to get wrong.

• Pace the change – It’s also important not to do too much and not to try to run before you can walk. Integration is a complex gradual process and too much change too quickly is the most common mistake particular involving systems and processes. The change needs to be paced and sequenced appropriately, balancing the need to achieve synergies with the need to engage people in the change.

• Remain customer focused – With the leadership often being distracted by the deal and integration process, it is not uncommon to lose focus on the customer. Organisations must keep delivering for the customer through the process, to prevent losing them to the competition. It pays early on to speak to customers about the deal, outlining if and how it will impact them and how the change can help them to deliver greater value in their business. Any process and systems changes that impact end customers need to be carefully mapped out and managed.

• Measuring success – Finally, measure success simply and pragmatically. The success of the integration should not be measured on activities completed for example, “plans done and delivered” or “systems integrated”, but rather on how it has achieved the desired impact on the business and unlocked the opportunities as set out in the deal. As such, monitoring the results and supporting the business to ensure the objectives are achieved is an integral part of the integration process. Think about success on a number of dimensions, for example systems migration and consolidation deadlines and ensuring no system outages that impact customers, suppliers, or employees.

By taking these actions you maximize your chance of a successful integration from the perspective of systems and processes.

Author

Karen Thomas-Bland

Founder and Director – Seven Transformation Ltd.