Computerworld -
CIO Ken Piddington says business mergers and acquisitions are a bit like football games. Unfortunately, for years his company kept him on the bench for much of the action.
So Piddington set out to change that. He spent a few months last year developing a playbook that describes how the company's IT department can help M&A deals succeed. It covers everything from the pregame meetings through the post-game commentary.
The strategy worked. "I've gone from not being included to having [a role] fairly early in the deal," says Piddington, the IT leader at oil distributor Global Partners in Waltham, Mass.
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Computerworld - CIO Ken Piddington says business mergers and acquisitions are a bit like football games. Unfortunately, for years his company kept him on the bench for much of the action.
So Piddington set out to change that. He spent a few months last year developing a playbook that describes how the company's IT department can help M&A deals succeed. It covers everything from the pregame meetings through the post-game commentary.
The strategy worked. "I've gone from not being included to having [a role] fairly early in the deal," says Piddington, the IT leader at oil distributor Global Partners in Waltham, Mass.
Given that analysts are predicting an uptick in M&A activity this year, CIOs would be wise to be prepared. The age-old complaint is that IT is often sidelined during the early discussions and brought in only after the deal has been signed, in order to integrate the systems. That means companies don't find out about serious system incompatibilities until it's too late. Or they lose out on the cost-saving and revenue-generating benefits that motivated the deal in the first place.
While M&A deals don't usually begin with technology as the raison d'être, they can end badly because of poor IT planning.
"When you look at synergies -- why you do a deal and what drives a deal -- it's not IT-focused. It's savings, better market share, access to new markets. Yet IT seems to be cited as a key failure point to making any of those things work," says Jeff Shaffer, leader of the IT advisory practice at consulting firm Crowe Horwath in Chicago.
IT's role in mergers and acquisitions, he explains, goes well beyond making sure systems actually run when the companies come together -- although that aspect can't be ignored. Shaffer says IT needs to do the following:
• Assess the strengths and weaknesses of both parties' IT infrastructures, how best to integrate them, and how much will it cost.
• Deliver the systems that enable the head-count reductions, process efficiencies or cross-selling synergies that the merger is meant to deliver -- and do it on the timeline executives set.
• Look for opportunities to improve IT, from deploying more efficient systems to negotiating better terms with vendors.
Piddington says he has demonstrated how delving deeper into IT issues before the deal is done brings value back to his company. He has, for example, been able to lower costs by renegotiating deals with vendors earlier on rather than paying a premium for a last-minute purchase. And in another case, he showed his colleagues how their initial estimated costs for IT integration were off by $5 million -- a difference that helped the company decide that the deal wasn't worth doing.
Post-Merger Career Outlook
Will You Stay or Will You Go?
A big question facing any CIO going through a merger is whether he or she will still have a job when the deal is done.
Granted, the CIO at the company that's doing the buying usually has an edge, but even then there's no assurance of job security, consultants say. The best way to secure your professional future is to be well prepared, says Jeff Shaffer, leader of the IT advisory practice at Crowe Horwath. "The CIO who is prepared for the M&A helps prepare for his or her own success, because if you're invaluable to the integration, you're at the very least guaranteed to have a role through the integration process," he says.
Ken Piddington, CIO at Global Partners, says CIOs improve their chances of staying on post-merger -- even if they're from the acquired company -- if they've built a standout IT organization with the kind of talented leaders and staffers that any company would want to keep on.
"If you've done a great job and built world-class IT, you've positioned yourself to be the IT department of choice," he says.
But even if you're not retained as the post-merger CIO, how you handle yourself during the transition can be critical to your future, Piddington says. "You've got to be a team player. You just don't burn bridges," he says. "This is a small field, and you might end up working for the same people down the road."
— Mary K. Pratt
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