How flexible is your IT Enterprise Architecture ?

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Innovative technologies <more>

The wheel of technological innovation:

​​IT landscapes are evolving at an accelerated pace. Innovative and disruptive new technologies and trends, combined with business changes, such as mergers and acquisitions, are providing a constant flux of IT challenges.  Now combine this complexity with ongoing economic instability, the accompanying pressure to reduce costs, and rising business expectation and dependency on IT.

Whether a business acquisition, divestiture or carve-out, IT is commonly impacted the most out of all the functional areas. Both as a function in its own right and also in the services it provides to the other business functions. This impact is not limited to in-house, buts across vendors, outsourced partners, SaaS, digital, cloud and ERP service providers. In the case of an acquisition,  IT due-diligence findings should also confirm the 'health' of the IT landscape in the acquired company and which of these services will be acquired or subject to TSA's, discontinuation and replacement. The latter, often being the case where the target company is divested from a parent company and dependent on its corporate IT shared services.​

IT landscapes are evolving at an accelerated pace.  

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IT Rationalisation, Consolidation & Transformation

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IT Integration requires fulfilling three separate high level priorities. The first is "keeping the wheels on" the existing pre-integration IT services. Second, IT must combine the IT functions of the merging companies, often with the aim of rationalisation and cost reduction . Recommendations may include IT services improvements, decommissioning redundant applications, minimising the diversity of the technology stacks, identification and mitigation of IT risk and potential to leverage new cost-cutting technologies. Third, is the enabling IT platform changes required by the integrated business functions.

The complexity and timing of the IT changes required by these three priorities, will size the IT challenge confronting the CIO. There will clearly be tightly coupled dependencies between the business and IT integration roadmaps. Many with 'hard stop' dates, including regulatory, compliance and statutory reporting deadlines. Maintaining this alignment is often a significant challenge and requires strong integration governance across workstreams. There will also be a need to consider tactical as well as strategic IT integration solutions, such as the provision of IT transitional services.

Three separate priorities confront the CIO.

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IT Separation in Divestitures and carve-outs

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The impact of a divestiture on the IT landscape varies enormously depending on the level of IT separation required by the transaction.  In the case of the divested business being highly dependent on corporate IT services, the separation effort can be substantial. Particular areas of IT complexity often include ERP, CRM, BI, MI, document management and a wide-gamut of operational systems. The elected separation mechanisms for each will depend on whether TSA's are required and the integration strategy of the buyer. This may require a logical separation for Day-1 and prior to full physical separation (Day-2). The task of standing-up transitional IT services is in itself non-trivial and in part driven by legal, regulatory and compliance requirements.

The physical IT separation activities are a collaborative undertaking between the seller and buyer IT teams. This may include clone and purge, data extraction, system ring-fencing and standing-up new system instances for configuration, then loading relevant master and transactional data. The approach adopted can vary for each system, however system integrations and synchronisations must be accommodated for in the separation approach. Cut-over windows may also be severely constrained and roll-back mechanisms, disaster recovery, resilience and redundancy are important considerations. The final transition of IT services should also be planned and prepared for well in advance, including service cessation, restructuring and decommissioning.

Don't underestimate the complexity of IT separations.