Considering IT in mergers and acquisitions
 

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Acquisitions are a large component of company growth. In order to ensure the most cost-effective and risk-free integration of technology systems between two companies, it’s good practice to include ...

Acquisitions are a large component of company growth. In order to ensure the most cost-effective and risk-free integration of technology systems between two companies, it’s good practice to include the IT staff on the deal. Cisco experts explain how to best position your company for integration of systems and how to identify potential barriers in this article featured on Cisco and Intel's technology resource website, UnleashingIT.com.

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Considering IT in mergers and acquisitions Document Transcript

  • 1. Unleashing IT Considering IT in mergers and acquisitions Cisco and Intel® partnering in innovation Why IT executives and specialists should have a seat at the table before deals are signed. Revenue potential is the primary consideration and driver of most acquisitions. But according to industry experts, the cost of integration— particularly in relation to IT systems and resources—should also be at the forefront of merger and acquisition decisions. “IT likely won’t make or break a deal,” says Armando Morales, senior IT manager for acquisitions and integration at Cisco. “But it will impact the cost, risk, and efficiency of the integration that takes place after the deal is signed.” These costs and impacts aren’t always well understood, Morales adds, which means they can eat into the revenue potential and anticipated outcomes of the deal. This is especially true when purchasing companies that have “mature” infrastructure systems, operations, and business models—where IT decommissioning and migration can take years. “It’s a matter of asking the right questions,” Morales explains. “Does the company have a different IT operating model? Are the collaboration technologies different? Is the infrastructure in-house or sourced out of the cloud? Significant differences will inevitably lead to a lengthy integration process, unless it is decided to keep separate operating entities.” Morales acknowledges strict NDA requirements and confidential meetings between chief officers sometimes preclude IT executives and specialists from preliminary acquisition discussions. Nevertheless, questions can be supplied in advance that will help identify potential integration delays, costs, and hurdles. Focusing on people and systems In every acquisition discussion, two things must remain top of mind: people and systems. “IT executives and specialists need a seat at the table during the diligence phase of any deal,” Morales says. “They will be able to help estimate integration costs and timeline, and set expectations accordingly.” • Integration teams need to determine how to bring the collective workforce up to speed on the technology systems of choice. • In the past 20 years, Cisco has acquired more than 150 companies and developed a proven methodology for handling the IT integration process. • Focusing on user connectivity, access, and training allows for better understanding of how to get on the network and utilize the selected applications. • Cisco® IT has refined models for assessing a prospective company’s critical and unique IT requirements, which may necessitate increased capital for the integration or the prolonged existence of the pre-existing infrastructure. “In addition to integrating productivity workers, you can’t overlook the IT staff,” Morales says. “IT personnel will want to know what’s going to happen to their systems and ultimately to them. Early assessment will uncover both answers.”
  • 2. Unleashing IT This is when systems must be considered, from servers and storage to networks to business applications. Integration teams must determine which systems will be retained and which ones will be retired—considering the resources available at both companies—and identify any new technology systems that may be needed. “It’s like a domino effect,” Morales explains. “Decide how the business will run first, then identify the systems required to run the business and those that need to be decommissioned. After that, you can determine the timelines and personnel needed for both, plus the estimated cost.” Focusing on people and systems should happen in parallel, he adds, but they are two distinct efforts. “After any acquisition, you want to get people productive as quickly as possible, and you want to decommission systems as quickly as possible,” Morales says. “Doing so not only leads to a faster, more cost-effective integration, but it can also create new synergies among people, processes, and technologies.” This publication describes how Cisco has benefited from the deployment of its own products. Many factors may have contributed to the results and benefits described; Cisco does not guarantee comparable results elsewhere. CISCO PROVIDES THIS PUBLICATION AS IS WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some jurisdictions do not allow disclaimer of express or implied warranties, therefore this disclaimer may not apply to you. Speak to a Cisco subject matter expert You have questions, we have answers. For a complimentary consultation with a Cisco subject matter expert about your challenges and opportunities, request a meeting at: www.UnleashingIT.com/MeetingRequest.aspx. This article first appeared online at www.unleashingit.com, available after subscribing at www.unleashingit.com/LogIn.aspx. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. To view a list of Cisco trademarks, go to this URL: www.cisco.com/go/trademarks. Third party trademarks mentioned are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. (1309) Intel and the Intel logo are trademarks or registered trademarks of Intel Corporation in the U.S. and/or other countries.