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