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A fully developed and well-designed strategy is crucial for an organization to effectively join two separate entities into one seamless, integrated piece. To gain more insight into Merger and Acquisitions integration and on how to ensure they are successful, I have spoken with Oscar Flamingos, Principal Consultant - Global IT M&A Practice for Softtek. With more than 18 years of experience in IT, his focus has been Software Quality Assurance in diverse industries such as Health Insurance, Retail, Banking and Technology.
Lilian: Oscar, Where do you see the biggest challenges companies are facing when entering into Mergers & Acquisition discussions? How do you think companies can successfully balance the demands of the M&A integration with day-to-day operations to make it a seamless transaction?
Oscar: When a company enters into IT M&A, it is much like inviting more people to join the family. It is a greatly complex and involved process. There is more to it than just moving things from one place to the other, or deciding what needs to be moved in and what should be left over. M&A is about how we can make this new expanded family become faster, better and more valuable to the organization through the newly extended capabilities. It involves not only technical skills, but also people skills and a clear vision for the future of the joint venture and the expected results. A successful mergers and acquisition integration represents an opportunity to revisit our goals as an organization, and start building a greater future that perhaps wouldn’t have been possible or non-imaginable with the hectic pace of day-to-day operations.
Lilian: What are the trends that you see emerging in M&A, and how should companies prepare for these coming trends?
Oscar: In the past, M&A’s were more about the acquirer setting a good portion of the rules of the game, and the acquired company adopting these rules and fighting for the differentiators that they want to survive. Nowadays, an M&A strategy may involve the integration of a smaller organization but one that has a greater industry differentiator than the acquirer. M&A’s are about more than just establishing a footprint; they are also about acquiring talent and innovation. Companies going through an integration have to understand that a good amount of flexibility and openness is required to adopt certain strategies rather than creating and implementing on your own.
Lilian: What new technologies and innovations are available in the world for successful M&A implementations and how should companies be mindful of these for the future?
Oscar: Typically, IT has a bottom-up mindset, with a big focus on migrating from one technology to another or on making two IT assets communicate. The business factor, however, is usually left out or approached in the old fashioned way of interviewing business users and then trying to map the business process to the application that enables it. Today there are several tools that can help expedite the business process and map it to the different IT layers, and all of this can be reutilized to expedite future integrations. These new technologies are of great help when understanding that during an integration the approach has to be top-down — starting from the business process that is the core of what we want to integrate, and leading down to the hardware box that hosts that business process.
Lilian: What are the top three suggestions you have for companies about to embark on an M&A initiative and how they can best manage their time and resources?
Oscar: The first thing to remember is that a Mergers and Acquisitions IT integration is not a regular IT project. The reality is that in-house resources will not be enough, and thus you will have to partner with a company that is flexible, agile and that has experience with M&A’s. Otherwise, the partnership may harm your organization more than help it. Also, I recommend being extremely careful in validating and understanding the business goals behind the M&A, and from there defining the IT goals, vision and priorities to enable the M&A. Without a proper plan, the company may experience a misalignment that will be painful at all levels. Finally, do not underestimate the people factor of an M&A strategy. Change management can either expedite or almost bring an integration to a stop. It is important to put forth the appropriate effort and focus to ensure that talented people from both sides feel safe throughout the M&A journey.
Lilian: Softtek has participated in several M&A projects. Can you walk us through one of the most prominent ones you have taken part in and the key lessons learned from the experience?
Oscar: During a multi-country M&A, we had a problem with one particular division in a country with complex tax regulations, and that almost became a show stopper for the entire integration. The solution involved key experts traveling to the client site and working side by side with the client team. The rest of the team was included through video conferencing from all different locations. The onsite IT project team was given a hands-on tour to the client facilities so that they could gain a full understanding of why the solution they were building was so important and complex to implement. In the end, the team implemented an agile process in which small deliverables were validated with the user, and with a strong focus on collaboration. All of these people focused on actions that enabled technology and helped deliver a strong IT solution that fulfilled user needs. Technology is here to make lives easier, but we first need to communicate and work effectively as a team to achieve the best value through technology.
Lilian: Are there any final words or suggestions you have for organizations facing IT M&A engagements?
Oscar: I’ll leave you with a simple fact. An IT M&A initiative starts and ends with the company stakeholders. Aligning business goals, defining the business processes needed to achieve the goals, and using technology to enable them, along with a good amount of openness to adopt the best of both sides, is crucial. Technology by itself, though, is useless if the people that will use it are not in alignment with the desired end results.