Optimize: Best Practices For Mergers

One of the most common IT-related questions that comes up at the time of a merger or acquisition is: Who will emerge as the CIO? That misses the importance of business technology's evolution in an M&A situation. A better question might be: How will the new company leverage the hugely valuable best practices of its merged business-technology operations? All that other stuff about who's going to win out appears foolish when you look at the fact that some company—if it did its homework right—will walk away with exponentially greater IT assets than it had before.

M&As and joint ventures let companies share technical knowledge and best practices. Establishing common global processes and business-technology standards well before you become a target—or go on the hunt yourself—makes an acquisition or venture efficient and profitable more quickly. CIOs in the midst of a merger or acquisition must be able to take best-in-class technologies and incorporate processes from either the parent or the acquired company. A lack of IT structure can't be an excuse for endless debate about the optimal solution when rivals may be moving faster with an 80% solution.

Merged companies or joint ventures eventually make the determination of who should head the newly integrated IT operations based on many factors, but knowledge ownership is a big one. In most of General Motors' joint ventures, knowledge has been owned by and flowed from GM to its partners. But that isn't always the case.

Common templates for product development and a common philosophy concerning technology and process have helped GM achieve quick startups, as in China, and enabled our ventures—for example, Daewoo—to quickly become part of the GM extended enterprise.

GM leverages templates for engineering workstations, software packaging, server configuration, network gear, and storage-area networks across the globe. Getting to the same technology platform, the same work flow and processes, and the accepted governance and decision-making forums is a multiyear, serious undertaking.

Furthermore, it improves the customer experience, whether it's the end customer or supply-chain partners. For example, sharing customer-experience best practices across regions is a prelude to standardizing business processes, particularly in business-to-consumer commerce, such as our GMBuyPower Web site and dealer integration.

What are the lessons learned in M&As for CIOs? First, have a seat at the table. You must be involved in business decisions up front; process and infrastructure concerns can't be an afterthought. An acquisition agreement must include the cost of IT implementation and integration in order to arrive at desired acquisition results. Next, have your house in order: Great structure and systems facilitate smoother integration prospects—but understand that the acquiring company's systems will likely win out. Also, don't short staff. You need the right people on the ground to get the job done. And finally, focus on the critical. Don't sweat the small stuff; sweat business integration and cost savings.

Ralph Szygenda is CIO and group VP at General Motors Corp.