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Gartner Executive Programs Says CIOs Must Develop World-Class Merger and Acquisition Integration Capabilities

July 19th, 2010 Posted at Organization Behaviour, business, management

acquisition, business, M&A, Stakeholders, strategy

Analysts Highlight IT’s Role in Five Critical Integration Phases

STAMFORD, Conn., July 7, 2010 — While merger and acquisition (M&A) activity dipped during the recession, it is widely expected to rise again, especially strategic M&As, in which one company buys and integrates another, as opposed to pure financial plays. IT’s role is becoming ever-more-critical in ensuring integration success, and Gartner’s Executive Programs analysts say CIOs in both the public and private sectors must develop world-class M&A integration capabilities.

Gartner Executive Programs analysts believe that M&As are among the biggest challenges for enterprises and their IT organizations to navigate and that conventional leadership and management techniques often are not enough.

“Reaping the benefits of a merger or acquisition is a notoriously tricky business. There is no established governance body spanning the whole enterprise, there are normally aggressive goals and time frames, and there are often many surprises along the way, as each side learns about the other,” said Dave Aron, vice president at Gartner. “On top of all this, the business must continue to serve clients, run operations and execute in the face of major, often disruptive, integration activity, making IT’s role in M&As critical.”

Mr. Aron explained that IT plays a key role, along with other parts of the business, in five critical M&A integration phases:

The Due Diligence/Planning Phase, in which a basic plan of action is sketched out. In the most successful integrations, integration planning happens concurrently with due diligence and data gathering, with an initial hypothesis that is refined as information becomes available. That integrations must be conducted quickly is a myth. Rather, planning and communication should be conducted as quickly as possible. The speed of integration depends on the context and goals.
The Welcome/Signaling Phase, in which a limited number of visible changes are instituted to signal the new reality that the merged organization brings. Tactics include giving everyone harmonized e-mail addresses, phone accounts and security badges, and moving key people to different physical locations. Important outcomes center on setting expectations, reducing uncertainty and motivating key staff.
The Initial/Commercial Phase, in which the most urgent practical changes are instituted. This initial phase of the actual integration addresses urgently needed outcomes, which vary depending on the nature and goals of the integration. Common activities include addressing legal and regulatory issues and achieving transparency through integration of financial and management information. Other goals may include presenting one face to the customer and addressing human capital management disparities. Execution risk is highest during this phase, as a high level of personal uncertainty, along with transitional governance and project management, normally exist.
The Main Integration Phase, in which most of the big process and system changes are executed. In this main phase of integration, the pieces of the post integration landscape are put in place over time, in a series of waves. For absorption-style integrations, it means bringing everything in the target organization onto the parent platform. For best-of-breed-style integrations, it means putting the integration architecture in place.
The Reap-the-Benefits Phase, in which the remaining benefits such as cost synergies or increased market share are harvested and monitored. This phase can also help capture lessons for subsequent M&A activities and other major transformations.

“A good rule of thumb is that roughly 25 percent of a typical M&A integration effort will come from IT, but the time and effort that each phase requires from IT vary significantly,” said Mary Mesaglio, research director at Gartner. “For example, a large amount of IT resources is typically needed for a relatively short time in the initial/commercial phase, whereas a smaller, but still substantial, IT effort is needed over a longer period in the main integration and reap-the-benefits phases.”

Each phase of integration breaks down into workstreams — with IT representing one workstream, while functional areas and business units represent others. IT also normally has a role in the other workstreams, uncovering their dependencies and coordinating between them. The IT workstream normally breaks down further into substreams, such as data conversion and end-to-end integration testing. This creates complex areas of activity requiring high degrees of coordination, project management and governance both within IT and with other business workstreams. In enterprises where IT traditionally has strong project and service management skills, IT has an opportunity to play a larger role in the integration.

The different phases of integration may have multiple subphases, or waves — particularly Phases 3, 4 and 5. For example, Phase 3 may have a pilot wave to prove, with minimal risk, that the integration approach works. Similarly, Phases 4 and 5 may be implemented first by geography or by line of business to reduce effort and risk, and to maximize improvement through ongoing learning. Phases may also overlap — especially the due diligence/planning phase, which may continue through Phases 2 and 3.

“M&A integrations are among the most challenging situations that CIOs and their IT organizations will ever face, and they are fraught with risks. However, they also present a powerful opportunity to demonstrate the capabilities and business value of IT, and to stretch the performance of IT team members,” said Mr. Aron. “While successful M&A integration does not rely exclusively on the CIO and IT, they bear a large part of the burden, since integrating people, operations, information and processes requires significant technology investments.”

Additional information is available in the Gartner Executive Programs report “Mergers and Acquisitions: Integration Without Tears.” The report is available on Gartner’s website at http://www.gartner.com/resId=1384319.

About Gartner Executive Programs
Gartner Executive Programs is a membership-based organization of 3,800 CIOs worldwide. Members benefit from the convenience of a single source of knowledge, one-to-one counsel, personalized service, the shared knowledge of the world’s largest community of CIOs, and the assurance of Gartner objectivity and insight. Additional information about Gartner EXP can be found on the Gartner Web site at www.gartner.com/exp.

Contacts:

Tom McCall
Gartner
+1 408 468 8312
tom.mccall@gartner.com

Laurence Goasduff
Gartner
+ 44 1784 267 195
laurence.goasduff@gartner.com

About Gartner:
Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner deliver the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to approximately 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has approximately 4,300 associates, including approximately 1,200 research analysts and consultants serving clients in 80 countries. For more information, visit www.gartner.com.

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IBM Takes Blame for Massive Bank System Failure

July 14th, 2010 Posted at Operations Management, management

Operations Management, outsourcing, strategy

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As in my previous blog entry. Outsourcing has its danger. You basically lose control and sight of your operations. I have seen how the operator works in the data center and I am not convinced that mission critical systems are well taken care of when it is being outsourced. First of all, the quality of the staff operating your systems are beyond your control. They are hiring cheap labors in large quantity to run 3 – 4 shifts in order to fulfill the SLA obligation! And I always believe that what you pay is what you get.

Click to continue reading “IBM Takes Blame for Massive Bank System Failure”

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Delegate…Empower…Back them up!

June 28th, 2010 Posted at Organization Behaviour, management

leadership, management, MBA, Operations Management

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Often I see managers who delegate but do not empower their staff enough to get things done.
Those who empower, does so with reservation.

For me, I delegate by communicating clearly what is the desired outcome, empower the individual to do what is necessary to deliver the result and back them up ALWAYS when they are being challenged by peers and external forces.

Give your delegates the confidence to get things done. Do not leave them alone when there is trouble. Even if they are wrong, you will support them to make things right. At the end of the day, your employees should be the one getting the credit. Not you as a Manager.

I truly believe in making myself redundant by being that invisible force behind all the successes.

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If you want to hire, don’t fire!

May 10th, 2009 Posted at business, management

CSR, economy, freelance, hiring, HRM, lean, outsourcing, recruitment, resources, retrenchment, talents, training

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“Hire and Fire” is not going to work in this new economy. If businesses do not get their act together soon, they will soon have to pay a dear price in the war for talents.

Retrenchment is in the news everywhere and we are looking at 5 figures loss of jobs every month. This is a cyclical problem where companies purge excess in bad times. When economy picks up, companies will be rushing to fill up vacancies to meet the renew demand of the market. To avoid retrenching employees, during good times, companies should exercise discretion in their hiring process. Perhaps this is one area to focus on when we discuss on Corporate Social Responsibility (CSR).

Click to continue reading “If you want to hire, don’t fire!”

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Keep the Change!

April 26th, 2009 Posted at management, project management

business, Change Management, communication, culture, document control, leadership, management, metrics, project management, Stakeholders, strategy, team

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Keep the Change! discusses the basics on how to achieve permanent result after change implementation. Managing change effectively and efficiently is key to success for any business. Companies must be flexible and agile to face changes. M&A (like the recent Oracle-Sun deal), market volatility, disruptions in traditional ways of doing business (crowd sourcing, web 2.0…) and technological advancement are some reasons why business will fail if there are not enough emphasis being put on Change Management.

Click to continue reading “Keep the Change!”

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If you want to be successful, start making yourself redundant now

April 17th, 2009 Posted at Organization Behaviour, management

Getting Things Done, leadership, management, process, project management, redundant, Stakeholders, value creation

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A successful consultant and project/department manager makes him/herself redundant by selflessly building the foundation that others will use to solve problems, operate a business and deliver results.

To be a successful, you must find ways to consistently add value to the organization (your employer, your own business or your client) you work for. For that to happen, you need to constantly challenge yourself and be innovative.

Click to continue reading “If you want to be successful, start making yourself redundant now”

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What it takes to be a manager?

April 1st, 2009 Posted at Organization Behaviour, management

communication, culture, Getting Things Done, GTD, leadership, management, team

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To be a good manager, you need the passion to pursue the Art of Management. Have you got what it takes to be a (good to great) manager?

If you are a manager, you have a much wider scope and responsibilities than you can imagine. Management is an art that requires constant learning and practice to get it perfect. There are no hard rules on how you should behave. Different environment and situation calls for different set of management style. You may be doing well in a chaotic environment but using the same management style in a matured IT environment may lead to high turnover and low quality output from your team.

Here are some experiences I would like to share with you. There are definitely more work to be done than those listed here if you aspire to be a good manager and leader.

Be an innovative leader. Having a “Manager” title does not automatically endow you with leadership quality. You can be a leader even if you do not manage a team. You know you are a leader if you take on the challenges (where others shun) to bring your peers (and even your boss) from current to desired state. Read books and articles on leadership and good management skill. Sponsor your own training to enrich yourself with soft skills (specifically skill that can make you a better leader). Most importantly, You must apply what you have learn but be creative in your management approach because textbook style management does not work! Creative management begins with knowing the skill sets of your team, how fast they can adapt to change, what are the goals and purpose of your team in the organization. As a leader, you constantly monitor the performance of your team and tweak your approach to deliver maximize the potential of your team. Take the lead to identify and close the gaps in the organization. A leader does not wait for something to happen. S/he anticipates problems, identify opportunities and accept challenges without being told to do so.
Be reliable. If your actions are not aligned with what you advocate, you will soon lose the respect of your team and colleagues. If you want them to deliver their work on time, make sure you do the same on what you have committed. Do not get into the habit of postponing meetings. You staff has their own set of activities and they may have to re-arrange their time just to fit your schedule (if at all possible). I have come across managers who are habitually late for meetings and have the tendency to cancel their own meetings few hours before the actual meeting starts. These actions send the wrong message to your staff that the meetings you host are not important and they can also make excuses not to attend your future meetings. You must realize that if you lack the energy to follow through all your meetings (especially those setup by yourself) and reading reports submitted by your staff, there will be adverse impact on your team’s morale and quality of deliverables. As a manager, you need to put effort to read reports submitted to you (that you asked for in the first place anyway) and feedback accordingly. If your staffs realize that you did not read their reports, they will not give you quality reports or worse, not submitting reports at all until you ask for it. A structured report is an extremely valuable tool for you to manage your team effortlessly (by not micro-managing them).
Energize yourself. Without a strong mind, you will not be able to manage your team effectively. I encourage you to start a strict exercise regime to strengthen your body and mind. You will be more alert and always ready for actions and the energy aura will affect your team in a positive way. A leader must be strong, make decisions on the fly and accept challenges without a second thought.
Delegate. Delegate and trust your staff to deliver. Never delegate (or for that matter, outsource) responsibilities or tasks if you do not know what you want to achieve. Never micro manage your team – once the plan has been finalized, do not interfere in your team’s execution of their work packages. Steer the direction of a project by analyzing key performance metrics and with regular checkpoint meetings. I recommend creating a register of issues, risks and key activities, then assign an owner to each line item. Monitor the progress of each item with weekly review meetings and dashboard reporting to ensure the team is on track.
Be precise, focused and communicate effective. As a manager, you must share your vision with the team and help them visualize the goal. Use road maps and key milestones to give your team a better understanding of what needs to be done to achieve the goal. If your team does not grasp what you want to achieve, you will not get the desired result. If your strategy or plan is still work in progress, do not communicate to your staff as though it is the final version. You can imagine the confusion and frustration when you communicate a different strategy every week.
Building a sustainable team. Every individual is unique and has a different point of views because of their diverse background. A smart manager would want to have diversity in his team so that s/he can tap on the broader range of experience to aid him/her in achieving goals.
Build a continuous improvement culture. We are constantly challenged in our career. The processes and skill sets built up last year will not be relevant as new business and regulatory requirements are introduced. The only way your team can be effective is to have a continuous improvement mindset. For starter, you need to allow people to make mistakes because this is the best way for them to learn and be fearless when challenging the unknown. If you penalize on mistakes, then your team will not take the chance to “rock the boat” which leads to lost of innovation. No high impact improvement can be made if you cannot innovate and think outside the box.
Stop procrastinating and start getting things done. A long list of “To-Dos” will sap your energy immediately. If you can do it right this instant, then just do it. I like the way Allen advocates on how to “Getting Things Done (GTD)”. He has an excellent system for keeping things under control and regaining productivity with 4 easy to follow steps (extracted directly from http://www.davidco.com/what_is_gtd.php).

Capturing anything and everything that has your attention

Defining actionable things discretely into outcomes and concrete next steps

Organizing reminders and information in the most streamlined way, in appropriate categories, based on how and when you need to access them

Keeping current and “on your game” with appropriately frequent reviews of the six horizons of your commitments (purpose, vision, goals, areas of focus, projects, and actions)

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Does anyone have the opposite point of view?

March 29th, 2009 Posted at Organization Behaviour, management

communication

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The success of a meeting depends on how how involved are the attendees and whether the chairperson has done enough to facilitate active communication.

I chair at least 3 operations meeting a week with each lasting for 1 hour. This is usually done first thing in the morning so that everyone is prep up with sufficient operational objectives for the day and week.

The challenge is always getting the team to speak up. So what I would do is go round the table to obtain updates from every member. This works well when the objective is to get everyone in the room to realize what is happening within the operations team. Issues that are raised or activities/projects that will be performed should interest other team members as everything in operations are intertwined to deliver the required services to our customers. I reckon that if any team members are only interested to do his/her stuff, s/he is not suitable to be part of an operations team where everyone and everything is dynamic and, again intertwined. Operations manager plays an important role to bond the team, assign the right people for the job and ensure that communications are not inhibited within the team. I will discuss more on Operations manager in future articles.

People do not speak up in meetings for a couple of reasons:

· They do not understand the topic

· They are not interested in the topic

· They are afraid to be penalized if the wrong thing is said

· They are too shy to speak in the room

· They have given up on a particular issue which is being brought up time and again

· The chairperson is not facilitating proper flow of discussion

· The chairperson did not communicate the purpose of meeting and its agenda

(The list can go on forever…)

Going round the table forces people to think and react but the quality of the response may not be desirable due to one or more of the reasons listed above. If you want a successful meeting with quality action items and decisions, you must first understand your attendees and their set of agenda. Do not invite someone to your meeting if they are not interested or can add value in any way. You need to get people to prepare for every single meetings by giving them very clear objectives of the meeting (for weekly meetings, you have fixed items in the agenda as well as one or 2 variables). If you know they are not prepared for the meeting, don’t waste time on him/her. Move on to the next person. If no one prepared for the meeting, adjourn the meeting and call for another one. This is to give everyone a clear message that meetings should not be treated like a time waster.

Dave’s blog (http://blogs.netapp.com/dave/2009/03/does-anyone-hav.html) has a great suggestion on how to get people to argue and challenge a proposal or decisions that are presented in meetings. However, asking, “Okay, I think we’ve fleshed out the argument in favor of the proposal well enough. Does anyone have a completely different point of view?” will not work in a room filled with shy people or people who are too afraid to speak. If they do speak, they could be the “yes-man/lady” who cannot say no to anyone. Prior to using this approach, I would suggest preparing the mindset of the attendees. They have to trust you even if they do not trust the person sitting next to him/her. Create a relaxing environment where people feels more comfortable to speak their mind without being shot down for saying their piece. If you do not feel comfortable being questioned about your decision as a manager or chairperson, then you should not expect alternative views.

So now, ask yourself, are you able to admit mistakes and accept the views of others? If yes, that’s one hurdle down. The next thing is to build a culture of active communication and involvement

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Can an MBA provides you the competitive edge?

March 28th, 2009 Posted at management

Education, MBA, value creation

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Invest in an MBA degree only if you know what you want to achieve in your career and professional life.

Having an MBA provides you with the right discipline and mindset to understand your organization’s business.

Whatever role you play in the organization, if you do not have any business sense, you are basically doing what you are told without understanding why you need to do it. This will lead to poor deliverable quality simply because you do not understand the rationale of the business requirement. In IT domain, we often talk about aligning IT to Business. With an MBA education, you are better equipped with financial and operation skills that facilitates the building of a comprehensive IT Portfolio that makes sense to the management.

If you are a project manager of a large complex project which spans across the various business entities in the organization, you need the business domain knowledge to gather requirements, identify risks and interpret potential issues.

However, having an MBA does not automatically makes you a good manager. This paper is worthless in the hand of those who are not driven or creative in applying the business concepts and methodologies. You do not just apply textbook style management to your area of work. Instead, you establish a new model that works for your organization and team.

MBA trains individual to think strategically. Take for example the role of an operations manager. Everyday your team is firefighting on issues that never seems to go away. As a manager, you would gather the statistics on what are the top 10 problems that are challenging your team daily. Analyze the result and sponsor a project that can eradicate multiple problems in one sweep. You have successfully maximized your resources to deliver the deep impact result in your organization.

MBA is the starting point in your pursuit for management perfection. After your graduation, you need to continuously update your knowledge and skill by reading and attending relevant courses/seminars. Most importantly, your MBA is not going to worth anything if you do not apply what you learn on a daily basis.

All said, you do not need an MBA to be a good manager. Everything is self learning and if you can put your heart and mind into perfecting your management skill, you are as good or better than some MBAs.

Good luck in your pursuit.

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Focusing on Cost

March 26th, 2009 Posted at management

cost, projects

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If you do not have a clear definition of you costs and their associated impact to your organization, your cost cutting initiatives may end up costing more.

Here are some cost saving guidelines:

Don’t squeeze the margin of your vendors. Even though this is a buyers market. You would not want your vendors to go out of business. However, you need to do your due diligence to avoid being overcharged. Take this economic downturn to establish better relationships with your vendors. Lasting allies are usually made during the toughest time.
Don’t get too fixated on cost when you are managing a project. Consider the impact of quality and operational maintenance of the end product/services. Your immediate savings may lead to cost overrun in the near future.
Have a holistic approach in cost saving initiatives. Instead of zooming in on a particular line cost, why not seek the next aggregated cost level and save from there? It is definitely more justifiable to initiate a project at this level. 10% savings of $100 vs 10% savings of $1,000,000. Which will contribute more to the bottom line? And which will motivate staff to contribute more?
Spend to save. Now is the time for company to spend on projects and training. Have your project portfolio ready and filter out projects that can generate the greatest cost savings impact. Invest in training, process improvement and technology refresh. A classic example is for company to save on hardware maintenance cost and ended up paying more for each service call.

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