Managing IT Riskduring a Global Business

Merger

Cheryl Danson April 2005

Managing IT Risk

My presentation is about Managing the IT challenges and risks in a Global Business Merger

What are the IT challenges and risks to be addressed in a global business merger?

What precautions should be put in place to manage these?

What are the priorities for IT integration to support the new business?

How should these be managed before, during, and after the merger?

Managing the IT challenges and risks in a Global Business Merger

Managing IT Risk

My career

1967 - Vauxhall Motors, IT apprentice

1972 - F International, IT consultant

1981 - Lipton Export (Unilever PLC)

Roles included IT manager, Supply Chain Logistics Manager, Head of business systems

1992 - Lever Industrial, Global IT Director applications and development

1997 - DiverseyLever Global IT (Unilever PLC)

Roles included, Head of the Project management office including Help desk, Head of IT security, IT Director for emerging markets, IT Director Global Account Management Supply Chain

2002 - DiverseyLever acquired by Johnson Wax to form a new company Johnsondiversey

My current role is IT Director, Functional Account manager IT for Global Supply Chain and EMA Research and Development

Managing IT Risk

Overview

1. Integrated approach to IT systems management

2. Integration steps

3. People

4. Costs and risks

5. Potential benefits

6. (some of) the risks

7. Summary

Managing IT Risk

Integrated approach to IT risk management

Processes

Systems& data

People

Business & Strategy

Managing IT Risk

Integration steps

Pre-plan1

Integrate2

Assimilate3

Best Practice4

Managing IT Risk

People

Retain1

Re-organise2

Restructure3

Retrain4

Managing IT Risk

Cost and risks

Process

Systems& data

People

During a merger cost spend increases from 2% NPS to typically 4% NPS. This will reduce with the implementation of improved business processes

Merged companies spend about 12% of their IT budget on training, consulting and severance at the outset of the merger;* source: Forrester research

Managing IT Risk

Potential benefits

Process

Systems& data

People

During a merger cost spend increases from 2% NPS to typically 4% NPS. This will reduce with the implementation of improved business processes

Merged companies spend about 12% of their IT budget on training, consulting and severance at the outset of the merger;* source: Forrester research

IT Benefits to be gained: Opportunity to improve people, processes and systems Retain best IT resources IT savings in applications and infrastructure synergies IT Organisational efficiency Centralisation of data centre facilities IT Contract negotiations and Buying power Shared IT disaster recovery Best practice processes Do more for less

Managing IT Risk

Risk 1

Risk: External and Internal Customer’s experience

reduction in service

Risk Management: Inform them about what is happening and what to

expect Web systems Customer Invoicing Service level definition and monitoring internal and

external

Managing IT Risk

Risk 2

Risk:

IT resources become unsettled and leave

Risk Management:

Get to know each other, ‘Face to face’

Keep everyone busy

Set up Retention schemes and Delivery bonus

Selective use of contractors/consultants

Ensure fair treatment in selecting people for roles in the New organisation

Managing IT Risk

Risk 3

Risk: Customers and employees have inadequate

Communication

Risk management: Implement quickly the internal IT communication

systems, for example office applications and Email Communicate regularly and appropriately to

employees Communicate regularly and appropriately to

customers

Managing IT Risk

Risk 4

Risk: IT costs escalate and loss of control over IT spend

Risk management: Align IT to business strategy Stop non priority projects Define the Governance processes and procedures

• Project priorities• Project budget • Project monitoring

Managing IT Risk

Risk 5 (i)

Risk:

IT applications and infrastructure do not support the merged business

Risk management:

Prepare Applications and Infrastructure Inventory

Determine interim Application and infrastructure systems strategy

Stop projects

Ensure quick integration of operations

Safeguard Financial reporting

Managing IT Risk

Risk (5) ii

Risk:

IT applications and infrastructure do not support the merged business

Risk management:

Determine location for Servers

Define standards for PC’s and management

Set up Help desk support for:• Application and system issue reporting• Define Service level• Monitor performance

Managing IT Risk

Risk (6)

Risk:

Unclear IT processes and ways of working

Risk management:

Define the IT ways of working

Set up a Project Management office

Be clear on Roles and Responsibilities

Monitor the implementation

Managing IT Risk

Risk (7)

Risk:

Business becomes vulnerable due to out of date IT security systems and tools

Risk management:

Ensure IT security is safeguarded

Identify IT risk and control

Set up Disaster recovery plans and testing

Managing IT Risk

Risk (8)

Risk:

Inadequate Management reporting to support the merged business

Risk Management:

Define the Key business statistics and KPI’s

Define and implement the business data structures• Standards• Products• Hierarchies

Develop reporting systems

Managing IT Risk

Summary A merger is hard work and stressful for IT and the business

Pre merger planning

Conduct Due diligence

Learn as much as possible about both companies IT systems

Ensure early involvement of IT

During the merger

Determine the IT priorities

Safeguard the external and internal customer interface

Retain IT resources

Implement Governance and controls

Merge as quickly as possible

After the merger

Improve people, systems and processes