What are some guiding principles for merging information technology platforms?

The general premise of IT \integration is first understanding what has been purchased and why (recalling some of the themes of Chapter 2 on strategy), then being certain to maintain the security and integrity of the new environment.

Then, just as important, is developing a team of resources from both separate entities, focused on (and investing in) delivering on the postmerger strategy. It is critical that resources be identified to help drive the activities. These people should have the necessary incentives to complete activities based on timelines established.

What are the key IT items to focus on for Day 1–Day 100 as a key milestone?

The first 90 to 100 days of any deal are critical.

• First, this period sets the tone for the new entity—for culture, for employees, and for speed to combine the two entities.
• Second, it typically will involve combined financial reporting.
• Third, this period is usually when combined senior leadership is identified.

Additionally, this time frame is critical for information technology. People need to be able to collaborate effectively, technology platforms need to remain secure, and businesses cannot lose productivity. However, technology is the backbone of all integrations; therefore, it cannot remain stagnant. The balance to achieve this should be the first area of focus post-deal close.

To illustrate this, a sample plan for 30-, 60-, and 90+-day milestones.

30 Days

• Establish secured temporary network connectivity – Wi-Fi
• Initial employee platform access (dedicated company solution and outside vendor such as Teams, Zoom)
• Email (address book/calendar sync)
• Determine nonexempt time reporting
• Launch assessments:
• Security
• Network/telecom
• Cloud
• Software license
• Data center
• IT inventory
• Vendors

60 Days

• Security remediation: mitigation plan; critical items addressed
• Long-term network connectivity plan
• Remediate end-of-life equipment
• End user support strategy
• Consolidate billing
• IT contract consolidation
• Software licenses exposure/true-up
• Email migration

90+ Days

• Security remediation completed
• Active directory integration
• End user support strategy implemented
• Long-term network in place
• Determine communications road map
• Data center plan (closure/consolidation)

If two companies use different cloud infrastructures, what happens then?

In the first six months, there should be an assessment of the merged company’s cloud infrastructure. Existing cloud infrastructure for companies can be maintained, or there can be a careful and secure migration to the acquiring company’s cloud infrastructure. But the merger can be an opportunity to implement a new cloud infrastructure for merged companies. These may be private, public, or hybrid, but in any case must be monitored for security.

What are some of the databases that must be managed after the merger?

There are basically three main data sets: employees, vendors, and customers.

Employee Databases

Most companies today use a human resource information system (HRIS)—and sometimes more than one. If the acquirer is far larger than the target company, it simply maintains its HRIS. But in mergers of equals, there may need to be a hybrid approach, where some systems of the acquirer remain and some are replaced with target systems. In addition, new systems are also possible.

Vendor Databases

Companies with many critical vendors, such as global manufacturing companies, typically manage those relationships with the help of a vendor database. A tool such as this has become even more important as a result of varying federal requirements, ranging from the conflict mineral rules under the Dodd-Frank Act of 2010 to the more recent 2021 Executive Order on America’s Supply Chains. Such regulations elsewhere have motivated companies to keep tabs on suppliers all along their supply chain. These are often supplemented by systems to track logistics (logistics systems) and assets (asset management systems), which should be selected based on current practical considerations (related to integration and operations) as well as strategic considerations.

Customer Databases

In the initial months after closing, the best course may be to maintain existing customer databases. But later in year one or in year two, the merged company may want to establish a central customer database. (Establishing this will take time to clean data.) And if not already implemented at the merged company, a best practice is to move master data to a system that fosters a positive customer experience (CX). Part technology, part operations, a CX system seeks to analyze and optimize the customer’s entire interaction with a business, and the customer’s resulting perception of the company. CX systems enable salespeople, customer service representatives, and managers to optimize customer interactions. The CX system selected for the merged company should look beyond the here and now; it should meet global needs and plan for the customer experience in the future.

Is it always necessary to merge databases?

Until there is accurate and trusted data, it may be best for acquiring and target companies to maintain separate finance systems. But once data on employees, vendors, and customer data sets are cleaned and optimized, they can be put into a holistic system. With accurate employee and vendor data, and with a central customer database in place, the merged company may be ready for an enterprise resource planning (ERP) system for finances, often located in a secure cloud. To accomplish this, there must be an accurate chart of accounts—a list of all the general ledger accounts used to record transactions. The accounts can be coded using numbers, letters, or both.

Why and how can an acquirer harmonize IT practices following a merger?

Increasing the productivity of employees in the merged or acquired organization should be a goal. In the first six months, efforts should be made to harmonize IT practices (e.g., brand choice) for PCs, mobile phones, and other devices. In many cases, these practices default to one of the companies—typically the acquirer. In such cases target company employees receive PCs, phones, and devices from the acquirer—often brand-new ones to ensure secure access to corporate systems and technology.

What kind of documentation is necessary in this process?

As the technology network, systems, and databases are developed and selected, it is important to document applications, databases, systems, hardware, servers, licenses, networks, and vendors. This is the beginning of documenting the enterprise architecture of the merged company. And with clean(er) data, there is an opportunity to implement meaningful data governance in the merged company—with protocols around collecting, retaining, using, and protecting data, especially personal data subject to regulation (e.g., the European Union’s General Data Protection Regulation).