IT

1
IT MA A Problem or an Opportunity?

• Research Findings
• Presented by F. Vielba
• BCS Consultancy Group Event

2
Agenda

• Key points from the research
• What should CIOs do when facing an MA?
• Future trends

3
Key Points from the research

• MA is increasingly a part of CIO life
• IT is more central to the business so the stakes
  are higher
• MA poses significant technical challenges
• MA calls for well-developed management skills
• IT needs to be involved in the MA process from
  the beginning
• Because MA is growing companies need to get
  better at learning

4
MA Activity over time (last 100 years)
10,000
Illustrative only
Number of Deals
Number of deals
0
1900
2005
TIME
1905
2005
. . . In waves which coincide with economic
activity
5
UK Scene Cross Border Acquisitions
Source FT, February 8 2006
In billions
6
The pitfalls are clearly sign-posted
Lack of attention to detail
Flawed rationale behind merger
Lack of understanding cultural sensitivities
Lack of post-deal acquisition plan
Machismo and hubris provide the motive force
Vision not clear or not articulated
Lack of strategic fit
Inadequate pre-deal plans
Lack of knowledge of target prior to deal
Lack of sponsorship
Victor mentality
Lack of clarity in the value creation logic
Underestimation of costs
Lack of credibility of implementation team
CEOs whim and prejudices dictate need for and
pace of acquisition/merger
Lack of communication
Focusing only on the financial arrangements
Underestimation of complexity of integration
Acquisition targeting was haphazard
. . . Most of these signs apply to IT
7
BTM Model Issues Encountered
Decision to merge or acquire
Company B
Company A
Technical issues
Management issues
Business issues
Normal Operation
8
IT is more central to the business
Prior MA experience MA strategy MA target MA
decision MA implementation timetable
IT Strategy within the business Role of IT in the
business Role of IT in the MA team Due
Diligence Management of the MA process
Business Context

• So the stakes are higher.

9
MA poses significant technical challenges
Untested technology Data migration Interface
problems Scalability
IT Context
Centralised/decentralised In-house versus
packages Lack of standard systems Incompatible
technology

• So ensure that your team has the right technical
  skills

10
MA calls for well developed management skills
Retaining key skills Dealing with cultural
issues Managing communications Dealing with
suppliers/customers Doing the review process and
learning points
Delivering the IT synergies Creating a shared
vision Leading the change Planning and Organizing
Selecting the MA IT team
Management Context

• So ensure that you are well equipped for the
  journey

11
Phase Model
PHASE 1
PHASE 2
PHASE 3
PHASE 4
Detailed Assessment
Due Diligence
Integration
Review

• I WILL CONCENTRATE ON THE FIRST AND LAST PHASES
• THE OTHER SPEAKERS WILL TALK ABOUT THE MIDDLE TWO
  PHASES

12
IT needs to be involved from the beginning

• To provide business continuity
• To estimate the technical risks and costs
• To enable business synergies
• To play an active business role
• So ensure that your CEO understands that

13
Companies need to get better at learning

• To avoid costly mistakes
• To beat the competition in a MA bid
• To be successful
• To avoid disappointments
• So ensure that your company has a process to do
  that

14
What should CIOs do?

• Have a clear IT strategy that includes MA
  planning
• Get the right technical and management skills
• Buy the expertise if you are new in the MA field
• Adopt a structured approach and integrate quickly
• Carry out due diligence as soon as you can
• Do detailed assessment and planning
• Carry out a post-implementation review

15
Future Trends

• The role of IT in MA will grow in importance as
  will the risks and opportunities for CIOs
• Companies will adopt a more holistic approach to
  MA and IT will be an integral part of it
• CIOs will become more adept at managing business
  transformation projects such as MA

16
A problem or an Opportunity?

• That depends on the approach
• For well prepared companies IT can represent an
  opportunity
• For the unprepared IT can be a big problem

17
If you want to know more

• You can buy the book here today at 50 discount
  or
• On any of the main book retailers or
• On the Internet
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• http//www.amazon.co.uk/exec/obidos/ASIN/140394678
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