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December 20, 2016

CIO Guide: Three-Steps Post M&A

Business guide for every CIO in cloud or cybersecurity.

By Hannah Williams

After the shine of a merger fades, it’s time for the CIO to kick into action. As well as considering the financials, personnel or visionary plans of the organisation, addressing the technology is crucial too. Different systems and techniques need to integrate and unknown policies and procedures need to be learned. The handcuffs that were on during the due diligence phase come off, and the entire organisation is looking at you to maintain stability.  The CIO’s ability to integrate the two organisations quickly and effectively, will be the difference between having a positive impact on the overall success of the deal and sucking out a lot of its value.

In the midst of that process, productivity levels and security are in jeopardy, so you can’t take your eyes off the ball. The job of the CIO is to drive productivity up and cost out and that has a direct positive or negative impact on the success of a merger. CIOs can support this journey with IT, but ultimately they need to ensure they are ready to work from day one to effectively manage the first 90 to 120 days of the process. Here are the top three steps CIOs must follow in the face of M&As.

Larry Biagini, VP and Chief Technologist at Zscaler

Larry Biagini, VP and Chief Technologist at Zscaler


Prioritise communication

Just because you merged doesn’t mean your business will pause for you to get up and running. In the first few days, it’s crucial for communications to flow seamlessly between teams. Employee engagement often dips following the announcement of a merger and it is paramount to be transparent and open in order to continue fostering trust.

It also helps curb general concerns and rumors. By integrating major communications channels and working effectively with IT teams, both old and new, you can ensure everyone has the right access, the right information and are working on the right task. Granted, there are bound to be some issues in the integration process. But the typical workforce knows this; all they need is evidence that the decision-makers are responding to it in one form or another.


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Assess your new risk profile

Immediately assessing risks and their impact is crucial to the playbook. What new risks is the new company bringing in—financial, operational, security? After the merger it’s important to go through things with a fine-toothed comb and evaluate the real situation rather than relying just on what was learned in the due diligence period.

The minute you merge, your risk profile goes up, both from a security and compliance perspective as well as from a financial perspective. There are different vulnerabilities, gaps and priorities to realign. There may be long-term contracts that will sit on your books for years to come. There may be a higher burden of regulatory compliance placed on the new organisation. Assess, re-evaluate and adapt initial plans and communicate that out to leadership so that you aren’t coming in a year later saying that you don’t have the tools to get the job done.

Of all these matters, the first you need to assess is security. A breach of any size can have a direct negative financial and competitive impact — not to mention, it is easier to attack an organisation in flux using methods like phishing attacks and identity theft. There is also an increased risk of intentional or unintentional data leakage; the insider threat. As such, organisations need to develop and execute a security strategy as soon as a merger or acquisition takes place.


Integrate every player

In the first few days, the CIO needs to really touch all parts of the newly combined organisation to make sure all players feel like they’re valued, integrated and that they will be evaluated and promoted based on their merits, not the side of the deal they sit on. Strong people often see a merger as an opportunity to move up or move on. As CIO, you want to influence that choice early in the situation to keep as many strong players on your team as possible.


Something old, something new

The cloud changes everything, and CIOs need to leverage that transformation in their planning. As the CIO learns what distinct aspects and technologies of each organisation should be kept and promoted, it’s worth considering the benefits of throwing out the legacy products of both companies, and using the merger as an opportunity to accelerate transition to the cloud, reduce capital costs and streamline processes.

Merger-driven IT consolidation is happening all around us and has a significant impact on the brand and customer experience. A lot of this rides on the IT executive who has made a decision to bet his company’s future on a particular set of products or a technology stack. Not only is s/he responsible to the president or CEO, but also to the many executives who manage lines of businesses and expect IT to just work. Knowing this, starting early and strong can go a long way.

In today’s active business climate it’s if, not when, you’ll be acquired or have to merge your business. That process doesn’t happen overnight. To hit the ground running, understanding which components of your business will impact on your overall success before you start work, will significantly increase your chances of not only ‘keeping the lights on’ but driving successful transformation. Will you be ready?

Read the interview with Zscaler CEO Jay Chaudhry


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