“The Trouble with the Future…

fortune_teller…Is that it arrives before we are ready for it.”  A bit of plainspoken wisdom from American humorist Arnold H. Glasow. Thanks to the miracle of google, it becomes our intro quote for today’s topic of acquisition integration readiness.

In an earlier post, we talked about data integration readiness, but that’s only one task on a list of things you should be doing now if you plan to acquire a company in 09. Readiness is the word of the day, and the best way to sum it up is you have to have a documented platform to integrate with across the board, or you will lose time during your integration period. Lost time means revenue drag–you won’t hit your projections.

So, let’s make a list.

1. Data integration readiness, already covered in detail here.

2. Process readiness – are your procedures for key business areas up to date? You will need to walk through them with business team leads on the acquisition side to rapidly understand the gaps between the way they do business and the way you do business. Can you rapidly train the influx of people you will be onboarding with the acquisition? An effective training plan is a solid way to minimize post-close chaos.

3. Collaboration readiness – don’t underestimate the amount of time those new employees will take up with endless “How do I?” questions. Hopefully, you have a corporate knowledge portal in place already and you can give them access and a navigation walkthrough on Day 1. Make sure it includes discussion groups, so that the answers to their common questions can be searchable and institutionalized. There was a great post on this recently describing how IBM is using collaboration tools to help with acquisitions, and Edgewater’s Ori Fishler and Peter Mularien have posted extensively on Web 2.0 tools for corporate collaboration.

While we are on the subject of collaboration tools, let me tip you off to an important secondary benefit. The people that use them and participate actively in discussions are your change agents, the people that can help lead the rest of the acquired workforce through the integration. The people that don’t participate, well, they are your change resistors. They need to be watched, because they may have emotionally detached from this whole acquisition thing. If they are key employees, you want to make sure they don’t have one foot out the door.

4. System integration readiness – It’s oh-so-much-more-challenging (meaning time consuming and costly) to integrate into an undocumented or underdocumented architecture. Get your data flow diagrams and infrastructure diagrams, as well as your hardware and software inventories up to date before you close.

That first quarter after you close will still be a wild ride, but you can be sure you’ve cut the stress level down significantly if you make these readiness tasks a priority before closing day.

Legacy Modernization: Don’t forge a Jackson Pollock

jp5Well here I am again and “here he goes”, I hear you say as you brace yourself for some off the wall tenuous link. Well this time it is even more fun: Jackson Pollock, creator of No. 5, the world’s most expensive piece of art is back alive and kicking creating wonderful deployment diagrams at an enterprise near you.

Don’t believe me? Quick have a little play with this great web app and see if you can create the chart that you already have in Visio; you may be surprised.  That’s right, just move the mouse around and off you go, you are an online abstract artist or an individual with a serious issue – an ever evolving and morphing enterprise that seems to simply grow.

Alright, let us get serious here for a second.

Over the past decade or even decades we have heard from all the brightest and smartest in the world that Legacy applications were dead, your mainframe was going to keel over and draw its last breath and there was nothing you could do about it but go buy the latest technology and sunset. How did that work out?  Oh yeah, what happened was we all went around adding more and more applications to our architecture without the real stability or payback to ever do the sunset.

Well done to the brightest and smartest, not only was their advice totally wrong and unfounded it came with a heavy price tag: an enterprise more convoluted and costly to run than before with so many places for change that time to market, the holy grail, became longer and more cumbersome.

I have ranted enough……for now.

So what can we do? Well the answer comes with integration, it comes with technology and innovation – I know I know, I said we tried the latest technology and it failed – but we are not talking about wholesale replacement, we are talking about the use of technology to remove the need to sunset – ah ha!!!

Sure there are applications that make sense to re-platform or re-write; if your app changes heavily and would be better served with the ability to extend and integrate readily then yes, let’s take that Cobol app and create the wiz-bang .Net app. However, there are many others where it makes more sense to simply integrate – why try to port a 20 year old admin system that runs perfectly fine? Why not take 5 or 6 of them and represent them on the web with one integrated, low maintenance front end? Can it be done? Of course it can, it was just we were blinkered by the “sunsetters” and I do not mean late afternoon autumn drinks on the porch, which would be a good thing right now.

So what about Mr. Pollock? Expensive art, expensive deployment model……let’s go with Single View – the minimalist approach…..plus it is a lot easier to explain to guests you have over.

Image courtesy of the National Portrait Gallery (http://www.npg.si.edu/)

Platform Company Integration Pitfalls

cookie cutter integrationCookie-cutter approaches to integrating platform companies are a surefire way to limit your abilities to achieve acquisition goals. There are many ways to do it wrong, and no single, one-size-fits-all approach to doing it right. Some of the more common mistakes include:

  1. Letting earnout terms play out in the operating infrastructure for too long. If it’s hands-off during the earnout period, you need to evaluate whether keeping the acquisition on a separate P&L really makes sense after the earnout ends. Too often, these structures persist and limit the company’s ability to achieve full economies of scale by centralizing key functions such as accounting or call centers.  Instead of compensating former owners on full P&L, it may actually make more sense to move key functions such as AR and collections into a centralized service model before the earnout ends. It’s important to get these considerations on the table during IT due diligence.
  2. Assuming that it always makes sense to integrate all of the acquisition’s business functions into the parent company’s model. Evaluate each functional area on a case by case basis. Leverage better and newer technology and business processes within the acquisition. Remember that the most successful mergers are transformative of both the acquirer and the acquired company.
  3. Assuming that you can just dust off the m&a integration plan for your last acquisition, adjust the dates, and march to the same tune. Every acquisition is unique, and while it makes sense to follow a common integration approach and methodology, flexibility and agility are keys to success.
  4. On the tactical level, one big mistake we often see is trying to integrate a new business into a business operating architecture that is not adequately documented. Every implementation or transition date for a particular business function/system has impacts that must be defined and communicated to multiple stakeholder groups within and outside the company. Put your entire business platform (people+process+technology) under change control and understand and communicate the changes appropriately.