Disney had acquired 21st Century Fox for $71.3 billion to enhance its content portfolio and streaming capabilities. It had to integrate 21^st Century Fox's vast library of content, systems, and operations with its own during the acquisition. This involved consolidating data centers, aligning content management systems, and ensuring seamless transition for ongoing projects and platforms like Hulu and Disney+. It has been observed that some aspects of mergers and acquisitions (M&As) are more complex than others. Post-merger IT integration, in particular, poses significant challenges for senior leadership, especially the CIO or CTO. Technology integration includes understanding the current state of technology in both organizations, target technology and IT state design, and rigorous execution towards the target IT state.

“For many navigating the M&A process, managing data can be overwhelming and must be properly managed or else run the risk of unorganized and displaced data. Organizations need to integrate on-premises systems, like mainframes, with cloud platforms to best manage influxes of data and stay ahead of the curve amongst competitors”, mentioned Milan Shetti, CEO, Rocket Software.

There are a few aspects about IT integrations in M&As that needs to be taken care of by organizations in order to achieve a successful transformation in IT systems and processes. Let us delve deeper and know a little more about them.

High Level Technology Understanding

This is a primary aspect on which organizations need to concentrate in the beginning of M&A. They need to focus on understanding the key technology segments that need to undergo transformation during the process. These segments include the IT infrastructures of the stakeholders and the technology ecosystems that surround them like Windows, Google, legacy and cloud solutions. Organizations must look into the key infrastructure elements that include the locations of all the data centers and the inbuilt ERP systems. Here the establishment of an integrated IT helpdesk for end-user computing also becomes vital.

A notable example of IT integration in M&A that required a high level of technological understanding is the merger between Sprint and T-Mobile in 2020. Engineers had to integrate different bands of spectrum (Sprint’s 2.5 GHz and T-Mobile’s 600 MHz and mmWave) into a unified network. This required a deep understanding of radio frequency engineering and network architecture to optimize the combined network's performance and coverage.

Technology Support Uninterrupted

It is very important to decide on the right IT service provider to achieve a successful IT integration during M&A because understanding of services is of utmost importance. IT support for a large scale IT integration can be off-shored and even outsourced. Clarification on the source of IT services can ensure uninterrupted support from Day 1 to the end of integration. In this regard, a transition service agreement (TSA) can add value to the complete process and provides thorough guidance to all employees about the changes that are going to reflect in the IT framework and how to work on them.

In this regard, an IT integration in M&A that required uninterrupted technology support is the acquisition of LinkedIn by Microsoft in 2016. Microsoft at all times ensured that LinkedIn’s platform remained operational and available to its users all across the integration. The process involved synchronizing data centers, maintaining uptime, and ensuring seamless connectivity between LinkedIn's services and Microsoft's cloud infrastructure.

Enabling IT Governance

Enabling IT governance during IT integration in mergers and acquisitions (M&A) is crucial for ensuring alignment with strategic objectives, maintaining compliance, and managing risks effectively. It involves establishing clear policies, frameworks, and processes to oversee the integration of IT systems, data, and infrastructure. This includes setting up steering committees, defining roles and responsibilities, and implementing robust monitoring and reporting mechanisms to track progress and address issues promptly.

To give an example, Disney had to effectively manage and integrate Pixar's IT systems, processes, and culture into its own. The success of this integration was facilitated by a strong governance framework that ensured the alignment of IT strategies and operations between the two companies. This enabled them to operate efficiently as a single entity while preserving the unique creative culture that made Pixar successful.

Apart from the above, there are several other aspects that organizations need to take care of while processing the IT integration in M&As. These include in-depth understanding of technologies, designing of the targeted IT state, aligning stakeholder infrastructures and end-user computing and few others. However, with the progress in the IT industry and innovation of advanced software systems, IT integrations for M&As have become more easier than before and we will be observing further progress in the years to come.