THE CIO PLAYBOOK NINE STEPS CIOS MUST TAKE FOR SUCCESSFUL DIVESTITURE

1. SNP | The Transformation Company
PRACTICAL GUIDE
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THE CIO PLAYBOOK
NINE STEPS CIOS MUSTTAKE FOR
SUCCESSFUL DIVESTITURES

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In 2015, global merger and acquisition activity exceeded $ 5.2 trillion, making it a record-setting year.
As one company seeks to onboard and integrate a new acquisition, the original owner seeks to spin
it off in the shortest possible time. Since divestitures are not considered everyday business for most
organizations, they typically land on the CIO’s already-full plate.
NINE STEPS CIOS MUST TAKE FOR
SUCCESSFUL DIVESTITURES
the buyer are just the beginning. Additionally, improperly
executed divestitures lead to audit problems, legal and
regulatory compliance issues and crippled business pro-
cesses for both the buyer and seller.
Fortunately for technology leaders, the tools and know-how
for successful divestitures have matured. Solutions exist
that can save well above 50 percent on divestiture costs,
while ensuring on-time delivery. SNP has opened its vault
on 4,000+ transformation projects to give you this CIO
playbook for divestiture success – and the dangers to
avoid.
Once senior management approves the divestiture, the
pressure on both the buyer’s and seller’s IT departments
intensifies. Studies have shown that if you don’t complete
your divestiture within the first 100 days, your chances of
realizing the anticipated benefits take a nosedive.
For the CIO who sits in the organizational cross-roads
between executive management and technology, a fork in
the career road lies ahead. Do a divestiture the right way,
and you will set your company up with a repeatable system
for carving out and eliminating under-performing busines-
ses. Do it the wrong way, and late delivery penalties from

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Step 1
Conduct a thorough review of the
transition services agreement.
The transition services agreement (TSA) will give you the
parameters you need to work within. The TSA will spell out
the timeline to deliver the purchased company‘s systems
and what support is required after the system is delivered.
If you frequently divest, your company may have a Dives­
titure Management Office (DMO) that can provide those
details, or they may have formed an ad-hoc executive team
to handle the transaction. After you have reviewed theTSA,
get clarification from the TSA team on questions such as:
■■ What are the regulatory factors? (Example: The FTC has
given you 90 days to divest the company, or face anti-
trust violations.)
■■ What data and which systems need to be carved out for
the buyer?
■■ How many years of data is the buyer expecting?
Tip: It’s a common misconception you can’t deliver ten
years of divested data. It’s technically feasible to deliver
the volume/years of data the buyer needs.
■■ What services will your IT team be providing to the new
buyer, and for how long?
■■ Does the buyer have the systems and knowledge to
integrate the data you will be providing?
■■ Is the buyer expecting the data to exist on-premises, or
hosted in the cloud?
■■ In some cases, the actual buyer won’t be finalized yet,
and the systems can be moved to the cloud and turned
over the day the deal is signed.
Step 2
Form a team to manage the IT part
of the divestiture.
This team will work with the DMO as needed. You will
need a cross-disciplinary group to pull this off, including
stakeholders from the impacted lines of business. Other
team members will include:
■■ IT members who know how to separate ERP system
components.
■■ Business and finance members who can support the
carve-out from an accounting and business process
perspective.
Depending on its scope, you may need additional divestiture
team members, such as HR staff, who can assist with
employee-related issues like separations or transfers. You
may also need team members who can support a market­
ing and sales transition.
If your company has agreed to provide services to the
acquiring organization after the sale, you may also need to
pull in the talents of your shared services team.
Step 3
Don’t start with data – prepare for
a top-down approach instead.
Instead of a bottom-up “What tables do we need?” ap-
proach, start with a top-down, process-centric approach.
After you get clarity from the executive team on which
processes the buyer expects to execute on day one, bake
those expectations into your project plan.
You may have to plan with limited buyer information. You
may be told, “It’s going to be a legal entity.”, or “It’s going to
be a factory.”, or a product line, or a division. You may also
be given a list of plants, assets, or products lines to be
divested.
Based on this high-level information, you can now scope
the project, identifying the processes to be carved out.
With this approach in place, you can now identify the
systems and data needed to run those processes.
Step 4
Define a project methodology that
includes a high degree of automation.
Use a methodology that makes the most of automation,
and reduces manual effort. Choosing an automated testing
tool is one key factor.You will also want a tool that can help
you build or adapt pre-defined scenarios, such as how to
cut out a product line, division, or whichever Use Case you
are dealing with.
Pick a solution with pre-built content for each stage in the
project – analysis, planning, design, execution, testing, and
go-live.
The CIO’s Nine Steps to a Winning Divestiture

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Step 5
Get a gut-check on the impacted
systems with an automated
validation tool.
Don’t go the tedious way of the spreadsheet; there are
now tools that will give you a precise simulation of the
divestiture’s system impact. Use that tool to get a “rough
cut” of the divestiture. A first iteration through an auto­
mated validation tool will identify which processes are
going to break based on the attributes you selected.
For example, you might learn that the chair product line you
are divesting shares components with the table product
line. These shared components make a clean carve-out
more difficult. Is this problem due to incorrect or incom­
plete selection attributes or human error? A good validation
tool will alert you to this before it becomes a post-divestiture
nightmare. In addition, the tool might discover that migrated
customers don’t match with the customers on the carved-
out orders.
Consider the use of a “system scan” with a tool that will
give you a technical baseline for the divested landscape.
Instead of wasting your time in painstaking documentation
and testing, use the scanning tool to flag the processes
and operational systems impacted. Hundreds of thousands
of data points can be automatically reviewed. Your goal?
Obtain an initial view of the logistics of divestiture and
where the problems might lie – before you attempt to
migrate any data. If the seller can’t deliver a functioning
business to the buyer, then IT has failed the business.
Step 6
Use a next-generation data
migration tool.
ETL tools are a recipe for a carve-out failure. The good
news?Today’s next-generation migration tools allow you to
move data along with the process content that data sup-
ports. Aim to carve out working businesses not just data.
Select your tool carefully, and make sure it automates the
migration process. Your goal: reduce the risk and human
effort of the migration, while streamlining the testing cycle.
Some managers think data migration tools can’t access
closed periods within the ERP system. Make sure the
migration tool you select can pull the depth of historical
data your buyer needs.
Step 7
Automated testing +
iterative approach = success
Testing is an unavoidable part of data transformation. Minimiz­
ing that testing is a huge key to a speedy, successful project.
Execute a series of tests with an automated test­ing tool.
Each time, you will narrow the scope and potential glitches.
With an agile, iterative approach, after two or three trial
iterations, you will have resolved many of the data and pro­
cess issues, and also will have completed a large portion of
the testing.This will reduce your entire project timeline and
eliminate many post-transformation issues, as well as
simplifying your support role under the TSA. Now you can
avoid manually combing your system at the table level in
search of issues.
Step 8
Make sure your system isaudit-ready.
You may need to audit your system prior to turning it over to
the buyer, and without a doubt your auditors will eventually
need to look in there. In most cases, you will want an ap-
proved audit on record for when the divestiture is reviewed
in the years following.
Step 9
Handle the post-delivery transition,
and store all your rules and content
for the next divestiture.
Divestitures rarely end when the system is handed over.
Honoring this phase of theTSA requires the same planning as
the divestiture itself. Review theTSA and prepare your team:
■■ What do I have to provide to the buyer and for how long?
■■ What will be the financial cost and human resource
requirements?
■■ Do I have the internal staff to support the transition or
do I need to ramp up talent?
■■ Are my procedures aligned with the buyer? Example: the
buyer’s help desk procedures may be different than yours.
Additionally, after executing a successful divestiture, the last
thing you want if for that know-how to walk out the door in
the high-priced brain of a consultant at the end of the pro-
ject. Use a tool that can store your divestiture content and
rules for re-use.

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Danger signs:
ERP divestitures gone wrong
If you want to end up in the divestiture victory lane, avoid
these pitfalls:
This is not a software development project
– so don’t use a software development
methodology.
ERP and technical managers are used to water-
fall processes that drill into the minutia of table-
level data during design before a single step of the imple-
mentation is performed. This “bottom-up” approach will
fail you here. Divestitures are NOT software development
projects – a different, iterative, agile project management
methodology is needed.
A data migration mindset is dangerous.
Don’t get caught in the divestiture data trap.
You’re not carving out data – you’re carving out
a working business. You can migrate the data,
the sales orders, and the purchase orders, but
that means nothing if business users can’t get their jobs
done on business day one. Start your divestiture plan by
asking what the business needs to do and which proces-
ses they need to be able to execute on that system from
day one.
Field example:
Let’s say you make tables and chairs, and you‘re selling
your chair-making division. When they take ownership, the
buyer might expect to be able to make those very same
chairs. That’s not just about the chair-making data. As the
technical manager, you need to bring over the processes
the buyer needs to run that factory, forecast demand, get
paid for the product, ship the product, and even design the
next generation of chairs.
A tech-only team will botch a divestiture.
Form a diverse team of business leaders that
understands buyer expectations - this will aid in
identifying showstoppers early. For example, a
divested product might depend on systems
that are also needed for products not part of the divesti­
ture. That’s an issue buyer and seller must resolve before
IT can move forward.
ETL is the wrong approach.
Bad news: your ERP system has no documen-
tation telling you: “Here’s all the related data
you need to migrate along with a sales order
to make it work properly.” Maybe that’s why
companies think ETL is the way to handle a divestiture –
big mistake. ETL just moves data; it doesn’t move proces-
ses. With ETL, there’s nothing to stop you from inserting
customer master records into the general ledger trans­
action file. There’s nothing to prevent you from inserting
your sales order into your purchase order table. Fortunately,
ERP-aware, context-sensitive, process-savvy migration tools
are now available.
Don’t treat your divestiture like a one-off
project.
Approach your divestiture by building repeat­
able steps. Emphasize automated tools over
consulting labor. Commit to automated testing
rather than manual build-and-fix.
Don’t try to go it on your own.
Why build a plan from scratch, when it’s pos­
sible to use or adapt a divestiture project plan
with pre-built content? Divestiture projects are
high stakes affairs for busy CIOs. Make sure
your team has access to guidance from divestiture experts.
Final thoughts
A divestiture is a CIO’s chance to become the exception, not the rule.
Like any other MA project, the burden of divestiture migration falls on the CIO. It has been reported that two thirds
of divestiture projects do not generate the desired financial results. But with a process-driven approach, the CIO can
become the exception – and deliver a repeatable divestiture framework to the business.

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