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How CIOs Drive M&A Success

Here's a paradox for you: Successful acquisitions involve IT early, yet IT is typically brought in too late. Here's another: People are critical to a smooth acquisition, yet M&A teams often pay scant attention to employee communication. And finally: Leading an acquisition is a significant career opportunity for CIOs, yet many fail to live up to the challenge.

"CIOs tend to make two major mistakes during an acquisition," says Larry Rowland, formerly CIO and now VP of acquisition integration at Nuance Communications. "They delay the tough people decisions, and they assume that their own systems are better than anything run by the acquired company."

Randy Gaboriault, CIO of Christiana Care Health System, concurs that "a fatal flaw for CIOs during acquisitions is choosing diplomacy over the truth" when communicating the integration plan. He also finds that CIOs who believe they can they can create a perfect integration plan are missing a major M&A truth: "Sixty percent of your planning assumptions are going to be wrong, yet you still have to satisfy the financial commitments you based on those assumptions."

As if these potholes were not enough, Mike Brooks, CIO of Viterra, adds another: "CIOs who endlessly analyze both sets of systems in order to end up with a blended nirvana miss their targets," he says. "Both companies are hanging on your decisions, but you leave them in limbo while you try to develop paradise."

Clearly, the road to a smooth acquisition is fraught with peril. What can CIOs do to make it through?

Go early or go home. "Corporate development teams don't like to worry about IT up front; they want to bring you in after the deal is signed," say Rowland, who leads at least eight acquisitions a year at Nuance, which sells voice-recognition technology. "You need to buddy up to the M&A team, understand what deals are in the works, and get involved in the due diligence process," he says.

Brooks agrees. "CIOs need to build a business case for involvement," he says. "They need to let M&A know that when they don't bring in IT and miss a reporting deadline, the SEC tends to get a little grumpy."

Plan early and often. "Once the CEO gives a number to Wall Street, it is poured in concrete," says Gaboriault, who has led more than 50 acquisitions. "To meet that number, you need a solid integration plan defined by a team of business owners and IT that answers: What does a successful integration mean? What does our end-state look like? What systems will we be able to run on day one or 30 or 60?" he says. "If you and the business owners cannot articulate that before the integration begins, you have a problem with the deal rationale in the first place."

A well-communicated plan is particularly important to the IT team, says Rowland. "The executives talk about combined value and synergies, and the employees are thinking one thing: Do I have a job? The sooner you communicate those decisions, [the sooner] everyone can plan their lives and focus. If you wait, you risk losing your best people."

Get moving. "In our first major acquisition, we promised significant synergies in a year. We delivered in nine months, because we made aggressive decisions and went in with a plan," says Brooks, who has completed more than a dozen acquisitions at Viterra. "Remember that any decision is better than no decision. You're going to get some of it wrong, but you have to keep the ball rolling."

Running acquisitions is not for the faint of heart. But the rewards are rich if CIOs can roll up their sleeves and get it done, says Brooks. "They'll see a career's worth of issues in a year of integration."

Martha Heller is president of Heller Search Associates, an IT executive search firm, and is a co-founder of the CIO Executive Council. She can be reached at [email protected]


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