In CapTech Consulting’s attached white
paper entitled “Maximizing Synergy Potential (MSP) in Acquisition Strategies”,
we sought to eradicate common provincial constraints that have notoriously
driven today’s status quo ‘2+2=5’ synergy perspective.
In doing so, we transformed variables
from their static state into a more representative dynamic depiction. Most notably,
we incorporated a 3rd less desirable, but necessary variable, to
account for the dis-synergies of an acquisition.
Since synergies are essentially
opportunities, we summarized the Maximum Synergy Potential of an acquisition as
the value summation of all potential synergies (identified and hidden) of the newly
combined company, subtracted by the sum of the value dis-synergies (synergy
realization costs, inefficiencies created by the merger, employee resistance,
etc.) resulting from the acquisition.
When we set out to define MSP, the intent
was not to provide another mathematical equation for determining value. In
fact, we focused the majority of the article’s remaining message on the
dis-synergy causes and their respective mitigation strategies by reflecting on
our vast experience and accomplishments in preventing integration dis-synergies
for Fortune 500 companies.
The vision was
to fundamentally transform the way organizations philosophically approach their
integration strategies. As Albert
Einstein once said, "To
raise new questions, new possibilities, to regard old problems from a new
angle, requires creative imagination and marks real advances in science."
A principal idea of that vision is to
free organizations from their own linear constraints, consequently accelerating
the integration cycles and decreasing the windows of opportunity for
dis-synergies. One way to accomplish this objective is through the employment
of an Agile Methodology for your technology post merger integration.
As IT becomes increasingly vital to
the success of enterprise strategies, technology integrations will have
significant impacts on your acquisition strategy’s MSP for better or worse. Recent
research has indicated that as many as 40% of potential synergies are directly
or indirectly dependent on IT.
Bill Gates could not have articulated
it better when he was quoted as saying, “Information technology and business are
becoming inextricably interwoven. I don't think anybody can talk meaningfully
about one without talking about the other.”
Leveraging an Agile Methodology may
provide several significant benefits that cannot be achieved with the more “conventional
and linear” waterfall methodology.
Agile Methodologies
promote development, teamwork, collaboration, and process adaptability throughout
the life-cycle of the technology integration. Below are some examples of how
employing an agile methodology may mitigate 5 of the top 10 most predominantly listed
causes of merger integration failures.
1.
Technology Integration
- Changes in requirements and scope have historically been failure points for
post merger integrations, causing late deliveries, missed schedules, and dissatisfied
customers. Agile’s iterative
approach enables IT flexibility and alignment to the continuously changing
business priorities so often experienced in mergers.
2.
Culture Conflicts
- Agile tends to create inspired, motivated and unified
teams through their accountability to process improvement, creative input, self-organization, team goals, and cross functional support.
3.
Customer Retention
- Facilitates a tight linkage between the
customer and the delivery teams through early and continuous customer feedback.
- Waterfall methodologies may generate a
scenario where customers receive a delivery of requirements a year after they
were requested. In today’s economic uncertainty, the Agile Methodology ensures delivery of the customer’s requirements when they truly need them.
4.
Integration Timing
- Agile is adaptive to changing business needs, giving the business sponsors more control over adding, changing, or removing
requirements than conventional methodologies.
- Agile enables faster speed-to-market, demand responsiveness, and
increased business efficiencies through more accurate estimations and
flexibility than the linear waterfall methodology.
5.
Risk Management
- Management realizes cost/time savings due to
waste elimination and efficiency, effectively transforming into "lean" organizations.
- Better resource management for shared team
members, specifically highly constrained subject matter experts, throughout the
merger integration.
- In many cases, unanticipated risks may surface during the integration
phase. The iterative approach identifies risks earlier, and essentially
quarantines their realized impacts to smaller deliveries.
For your
acquisition strategy to benefit from an agile methodology, it will take discipline,
commitment, and leadership from the top. This holds true even more so in
organizations that have invested heavily in the traditional methodologies driven
by a linear philosophy.
The challenges
of this philosophical transformation across organizations will be explored in
future CapTech Consulting blogs. CapTech Consulting has world-class consultants
with expertise integrating Fortune 500 organizations through the waterfall and
agile methodologies. If your organization is seeking to better understand agile
methodology benefits to your technology post merger integration, contact us.
