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New Style of IT: How to Mine M&A Success

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By: Dan Gonos, Chief Technologist, Global Healthcare and Life Sciences, Applications and Business Services, HP Enterprise Services, and HP Fellow

 

Enterprises pursue mergers and acquisitions for compelling reasons. They want to go to market as a combined force to generate exponential growth. They want to add capabilities and maximize organizational efficiencies. They want to generate significant competitive advantage.

 

But the process is risky. Mergers and acquisitions are complex logistical transitions with details spanning the entire business model. What stays? What goes? What gets integrated? The process all too often fails to meet initial expectations or generate business value. Without a structured approach to evaluating what you have and where the business value lies, successful execution is all but impossible. 

 

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Merging value from multiple agencies

San Diego County is the fifth largest county in the United States—larger, in terms of residents (3.1 million) than some U.S. states. As is typical for California, the county government offers many health, human and law enforcement services that are regulated elsewhere at the state level. To support this breadth of services, the county’s payroll includes 16,000 employees. If it were a private enterprise, it would rank as one of the top 1,000 largest U.S. employers. In addition to its size, San Diego County is also unique in its approach to IT as it was the first and the largest government organization to completely merge all of its agencies’ information technology operations.

 

This enhances the county’s technical stability, reduces IT spend and introduces innovative technologies to better engage with residents and its employees. In support of the county’s mission to use sustainable IT efficiently, effectively and strategically, HP helps to further streamline processes, consolidate operations, modernize technology and improve consistency as well as performance across the organization. 

 

Reinvesting savings to drive transformation

The savings provides an economic engine to a number of other initiatives. A phone technology project will make it easier for citizens to access county websites from mobile devices. A virtual private cloud will enable host applications more flexibly and cost-effectively, . essentially driving the agility needed to scale up and down as needed.

 

Sounds impossible? But by getting the right stakeholders together to establish a vision of the final outcome, the merger was successfully realized. With HP’s support, San Diego County gains the agility through innovative technologies necessary to become an information gateway, enhancing access to citizen-centric services. The county has received recognition for its web and digital capabilities, and is now working to become the leading U.S. provider of IT-enabled, countywide health and justice services.

 

Enterprise M&A lessons

The tangible results achieved from this California case study are a valuable example for commercial mergers and acquisitions. When organizations embark on a merger, there has to be an overriding vision. You have to know exactly where you want to be at the end of the journey. 

 

As was the case with San Diego County, when companies combine there are often hundreds of redundant systems across each organization. Organizational leaders often don’t know what to keep, what to throw away, and how to move forward. That’s why you’ve got to approach the process strategically. This is a critical component of the New Style of IT.

 

At the start, the most critical thing to get right is governance. You’ve got to know where you’re going from a business perspective, as well as an IT perspective. Most people think IT simply enables business. This is mistaken. In this new “Fourth Wave” landscape, IT is a critical part of the business. So there has to be a governance structure where both business and IT stakeholders are sitting at the same table working toward the same goals.

 

Once governance is firmly established, it’s time to scope the merging organizations to discover where the low-hanging fruit may be. What areas can be addressed quickly with the least resistance and the lowest risk? These might include redundant systems and applications. Is there any strategic value in these redundancies? Are there any ingrained clienteles an organization serves that find value in a particular redundancy?

 

At the same time you sweep for low-hanging fruit, you must begin to focus on the big business outcomes. You want to be continually and incrementally driving improvements toward these outcomes as the merger process advances.

 

Dodging M&A pitfalls

The biggest mistake enterprise leaders make when undertaking a merger is failing to establish a key vision at the start. They go through the motions with a hazy idea of how to proceed, hoping the vision becomes clearer as the journey unfolds. This is foolhardy. To succeed, you’ve got to know where to go next. You can’t proceed in an ad hoc fashion.

 

Another mistake is failing to bring an outsider on board to shepherd the process. When merging organizations, you’ve got to have a neutral partner who knows how to execute the process well. It can’t be done with leaders from within the merging organizations. Proceeding along this route sets up turf wars, and somebody’s going to lose. That’s why it’s crucial to bring in a strategic partner who knows how to successfully bridge the cultural and technological gaps.

 

As business and IT gradually fuse into one process in the New Style of IT, successful mergers increasingly depend on bringing the right stakeholders together to drive the process. They can then assess portfolios to make sure they are aligning to drive the right strategic value. That’s how organizational marriages can sidestep disappointment and move straight to success.

 

 

Learn more in the webcast, “New Style of IT: Four ways to thrive.” Watch now.

 

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About Dan Gonos

Dan Gonos is the Chief Technologist for HP Enterprise Services Healthcare and Life Sciences. Gonos has more than 28 years of IT experience and is an expert in developing technological implementations of business process improvements through the application of best practices. Gonos is also an HP Fellow, a title awarded to HP’s most innovative thought leaders.


 

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