Adviser: When two become one

Mergers are nothing new. Most are driven by commercial opportunity or necessity. Admittedly, some are more challenging than others, none more so than that between the Inland Revenue and Customs and Excise. With the success of the merger hinging on the successful rationalisation of more than 1,000 IT systems, it’s a wonder CIO Steve Lamey is getting any sleep.

IT is a critical, but frequently overlooked component. Ignoring IT may result in – or at least contribute to – the merger failing to fulfil its objectives.

Just as no two businesses are identical, so no two IT systems are the same. At the very least, the ‘standard build’ for a partner’s desktop PC will invariably be different. More significantly there may be different operating environments, different application programmes and quite probably different database platforms.

These might seem like minor issues, but they can be major obstacles to success, and must be addressed early on in discussions.

Information is king. The partners to a merger will probably have significant quantities of customer, product and supplier data. Indeed this may be one of the drivers for the merger. Generally these data sources will have to be combined into a single system. There will be duplicates, missing lines and different file formats and layouts.

In the short term, it may be possible to continue with two applications, but ultimately there should only be a single system based on an objective assessment of the needs of the combined business. The systems used by the dominant party should not be automatically adopted.

Cost reduction is often one of the principle drivers of a merger. If IT is a support function then a reduction in headcount is inevitable. Careful planning is essential. There must be continuity of support for all systems until they are no longer required. This may delay some of the potential cost savings and could even have the reverse effect if staff have to be ‘locked in’ for the handover period.

Planning is the key to success. Once a review of systems has been completed, an overall strategy should be agreed and a detailed implementation plan developed. Cost and resource requirements should be agreed as a part of this process.

Careful management of the project is essential for success. A project manager should be appointed. Again, care should be taken to ensure the best candidate is chosen – that’s not necessarily the most senior member of the IT staff). He or she should be empowered to take tough decisions if required.

Contingency planning is also essential and appropriate controls and testing should be implemented. What would happen if a key member of staff cannot be persuaded to stay until the handover has been completed? What if an element of the data conversion fails?

Problems aside, mergers continue to be a fact of life. Ensuring that IT is considered early and then managed properly will greatly assist with the process.

Mark Holland is a partner in the ISAS group of Baker Tilly