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Pride Only Hurts
No one envies the CIO of a company that has just been bought. The new owner often keeps most or all of its own IT staff, while many employees of the acquired firm are shown the door. The new owner's technology often takes precedence, and the owner's CIO is more likely to retain the top spot. At acquired companies, the senior IT executives often feel helpless as their work, their employees and their IT systems are scrutinized, criticized and perhaps discarded.
Many CIOs in this position react emotionally. But pride needs to be checked at the door. When Certance was acquired, Carlson was very proud of the work that he and his team had done, but he was determined not to let that color his assessment of the value those IT systems might bring to the new organization. "The danger with pride is that it becomes arrogance," he says. "Scott [McIntyre] and I have a wonderful chemistry of trust and respect. Hopefully, pride will stay within reasonable boundaries."
Emotion must be kept out of the picture, agrees Allen Gula, former CIO of $245 million Franklin Templeton Investor Services LLC in San Mateo, Calif., and now a CIO consultant. He's worked on many acquisitions and knows that CIOs must put all of their energies into bettering the new organization, even if their own future in that company is in question. "Understand the acquirer and try to help the new company make the right decisions," says Gula.
The ability to see clearly and make recommendations based on strategy rather than emotion is part of the reason Young believes she was retained at CP Kelco. After the acquisition, she found herself faced with a CIO's worst case scenario. Her organization had spent years implementing SAP, and the technology was finally starting to show benefits. But acquiring company J.M. Huber was an Oracle shop. After considering the complexities and cost of managing two ERP systems, Young set aside her pride and recommended that CP Kelco migrate to Oracle. The company ultimately decided to stick with SAP, however, given the risk involved in converting the company's far-flung locations to Oracle.
The Visionary Factor
CIOs may also be judged on their ability to visualize and articulate the IT future of a new entity. Business priorities may change, such that IT no longer aligns with them. So business leaders particularly value CIOs who can envision how IT can help -- or lead -- those new business directions.
But the CIO also needs to be willing to slow down and make careful decisions. Sometimes "forward-thinking" means building in contingency plans and hedging bets. Consider Young's ERP decision, where one system had to be chosen over the other. Whichever system wins, some of the IT staff are likely to resent it and leave, costing the organization valuable talent. Some CIOs in this situation choose to run two instances of an ERP system for a while, as they evaluate which one better suits the combined company's needs.
That's what Quantum did. It retained two Oracle systems-- Certance's Oracle 11.5.9, plus Quantum's own Oracle 11.5.8 -- to stay flexible while it addressed different legacy customer issues. Since running two systems creates expensive redundancies, McIntyre and Carlson plan to migrate the core ERP system to Oracle 11.5.10. The waiting period helped to show the best direction to take.
IT staffing is another area where visionary CIOs can help. It's easy to fall into the trap of agreeing to significant cuts in IT staff, which can be a mistake in the long run, says Burkle. CIOs must first evaluate staff from both organizations to make sure they retain the most talented employees.
Former CIO Gula says he went into staffing discussions aware of the weak links in his organization and expected the same from the CIO of an acquired firm. "The key is to create a staff that supports the new organization," he says.
Surviving an M&A situation may well be the biggest challenge of a CIO's career, and success often calls for redefining the role itself. At CP Kelco, for example, Young is expected to know the technology cold but also to understand the nuances of the merged business as she now plays a central role in mapping out its future. "It's more than just about the business that IT supports," she says. "It's about being a leader in the company."
Jim Rendon is a freelance writer based in New York. To comment on this story, email editor@ciodecisions.com.
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