Behind the Scenes in IT after a Merger.
BEHIND THE SCENES IN IT AFTER A MERGER
Just watch the Delta and Northwest IT staff slug it out behind the scenes!
With the Delta and Northwest mega-merger now imminent, journalists have already conducted in-depth analyses of what it’s going to mean from a business perspective. But what’s it going to mean from an IT perspective? Nobody talks about that – and yet, this where a lot of organizational battles, turf wars and power plays are going to take place, as frightened IT staff wonder whose systems will win out, and whose will be relegated to oblivion.
What happens to IT departments after a merger offers a fantastic insight into organizational politics. But first, let’s start out by saying that in reality there are no mergers, only acquisitions. Even in the very rare case of a ‘merger of equals’ (ha!), with complementary products or services contributing to a better overall portfolio, there will still be a dominant player calling the shots: one of the parties must have a greater ‘need’ to be acquired than the other. So merger is really a politically correct term which is bandied about for press consumption to placate employees and shareholders. For example, have you ever heard of Scopus? You haven’t? Well, you’ve just dated yourself as an IT rookie – they ‘merged’ with Siebel in 1998 (at least Larry Ellison had the good grace to call Peoplesoft an acquisition). Daimler-Chrysler 10 years ago might have been a ‘merger of equals’, but is was clear to everyone in Detroit that merger was spelled a-c-q-u-i-s-i-t-i-o-n.
So what awaits the new CIO after a merger? Well, to start with, both companies will in all probability have different infrastructures, architectures and technical standards. They will also be running different types of applications in terms of ERP, CRM, billing, etc, and probably using different vendors such as SAP, Oracle, etc. The term driving a square peg into a round hole does not even begin to describe the complexity of the task at hand. And this already tall order must in addition be accomplished without disruption to existing operations, and without upsetting any customers.
With this firmly in mind, let’s try and answer the following question: ‘ which of the following criteria should be used when deciding which systems to keep and which to phase out? ’
(a) cost-effectiveness
(b) customer satisfaction
(c) total cost of ownership
(d) reliability
(e) scalability
(f) ease of integration
(g) process effectiveness
(h) level of ROI to date
(i) some of the above
(j) all of the above
(k) none of the above.
The correct answer is of course (k) – none of the above.
After the official merger announcement, a photo op of the two CEOs back-slapping and high-fiving in front of the cameras appears on CNN and in the press, and great care is taken to achieve a politically acceptable balance at board level, for employee and shareholder reasons. However, there is no such requirement for IT – who the new CIO is and which company’s architecture and systems are going to dominate is of absolutely no interest to CNN and the Wall Street Journal. Which essentially means that the rules of engagement are not very different from those of the animal kingdom, ie the instinct for survival and protection of the herd decides the outcome.
So what should in reality be a fairly complex process of identifying the ‘best’ systems based on a set of rational and objective criteria actually turns out to be fairly straightforward. The dominant company puts its key people in place, makes some token concessions, then essentially tells its team to take what they think is useful from the other side and phase out the rest. Period. It’s as simple as that. Oh sure, some mega-mergers put on a show of actually going through an objective selection and consolidation process, but the end result is rarely in doubt. Which is just as well, because it is questionable whether a consultative, democratic and rational approach could ever work. After all, a systems manager from company A is hardly going to tell his counterpart from company B, ‘You know Jim, your CRM system and underlying architecture are really much better than ours. We should definitely standardize on yours. I therefore agree to trash our system and phase myself out of existence.’
Objectively merging the IT departments of two large companies is an impossible task, from a technological, organizational, political and cultural perspective. Key people will understandably seek survival by protecting the herd that constitutes their power base, and that power base comes with a number of systems attached. So by definition there’s going to be a painful transition period in which you’re going to have to phase out both people and systems, and you want to try and keep that period as short as possible. And in a perverse way, this pre-historic approach is probably the best answer amongst a host of bad choices. MG
