Monday 17 March 2014

Merger Analytics solution for M&As

Why successful mergers and acquisitions harness analytics to drive engagement around a shared vision, while reducing the headaches of system integration.

The ideal merger of two organisations should be a 'match made in heaven', but how rare they are. It has been said that 'successful mergers are usually about people and culture'. But by the time the executives discover that one culture is largely incompatible with the other, the merger has already disintegrated into a 'hellish wedlock'. What a headache.

When it comes to mergers, you have likely heard experts say how important it is to align people and culture. Jonathan Chadwick, finance chief at software company VMware is one of them, he stresses that "you need to make sure there is a tight alignment of management teams and that budget is allocated." The level of investment in a shared vision and shared system may indicate how successful collaboration will be between two different organisational cultures.

Both executives and managers desire to communicate the benefits of alignment, revealing the vision for the merger with the help of analytics. With the richness of combined data, it's possible to convey a concrete feeling of what’s to come, building trust in the benefits of shared information technology and business processes.

A shared vision

Seamless mergers and acquisitions call for engagement around a vision that is created in collaboration between the C-Level executive team and those involved in implementation. When both sides of the merger can see the benefits of the new culture and technologies, the force of the shared vision will strengthen.

Of course, not everyone will find their place in the new vision, so that's why it's important to communicate it early. Consultants Hill and Weiner warn in Seven Steps To Merger Excellence that day-to-day decision-making can "grind to a halt" during post-merger implementation if executives don't initially take charge with a "cascading communications strategy" to drive engagement.  Using data-driven storytelling as a strategy, executives can show the value each party can contribute to the whole.

Piecing together the 'people puzzle'

A shared vision will only matter to those people who feel they are a valued piece of the merger jigsaw puzzle. Hill and Weiner point out how mergers and acquisitions (M&As) often create "winners and losers" throughout the organisation. Battle lines are drawn between people as they struggle to answer, "Where do I fit?" Jane Kimberlin, IT director at Spirit Group tells ComputerWeekly about how she had to pick teams quickly during the pub operator's acquisition of Scottish and Newcastle Retail (SNR). She adds,
"Take away or try to minimise their worries about their post-merger jobs and they will jump through hoops for you. But anyone who is anti the new set-up needs to go as soon as possible."
By benchmarking business units, human resources can reallocate people where the data shows the need. Deploying social analytics can enable HR to resolve potential misunderstandings between teams with different cultures. By nurturing an environment conducive to innovation, 'culture shock' and potential 'trench warfare' can be reduced.

A shared system

IT departments can be inundated with responsibilities during a merger in their effort to forge a system that works for the combined organisations. Integrating data from disparate systems into a unified data warehouse, along with a firm master data strategy is essential. However, Chris Digby, a partner in consulting at Deloitte, warns, "There is no one-size-fits-all integration solution". He explains:
"It depends where each IT department is in its refresh/investment cycle; what business model each is supporting and whether that is going to change post-merger; what new IT capability is required for the new company; and so on."

Data-driven culture 

When the technical challenges take the forefront, the human factors might be neglected. Eric Colson, chief analytics officer at online clothing retailer Stitch Fix, stresses the importance of instituting a "data-driven culture" in Wayne Eckerson's book Secrets of Analytical Leaders: Insights from Information Insider:
"A data-driven culture that values empiricism keeps politics and opinions in check. People frame their ideas as hypotheses and submit them to testing and experimentation. Although decisions are evaluated scientifically, there is still room for judgment and intuition. This kind of culture values data and analytics immensely, creating a supportive environment in which data developers and analysts thrive. The right culture also minimizes rules and processes to prevent stifling innovation and learning. It continually prunes processes that don't add value and is willing to incur some risk to ensure a fluid, fast-moving environment." 
Organisations that come together to forge a shared system that supports the capacity of data-driven decision-making will collaborate more effectively.

Outsource your M&A headache

One thing is certain - when the headache of juggling all the factors at play in successful M&As become more than an organisation can handle, it's often too late. Hearing of the high rate of failed mergers, often ranging between 50 - 90%, is particularly worrisome for executives who fear that their efforts may contribute to an increase in such figures.

In recognition of the headache that M&As can cause, Cause Analytics worked with an organisation undergoing the process. It realised that balancing the focus between people and systems is possible with self-service business intelligence. Collaborative dashboards that do not require in-house implementation make it possible for teams with different cultures to see the same data in ways that make them comfortable. Better decisions are more quickly made when there is a shared sense of what is possible.

With all the number crunching in the hands of BI specialists, managers are freed up to match, motivate and merge teams. Utilising data visualisation in benchmarking and comparing business units makes the process more straight-forward. This kind of capability can also enable other departments to predict possible improvements in their processes—such as sales, purchasing or production.

Anticipate change in reputation

Also, with text analytics organisations are able to spot changes in sentiment that might affect the merger, particularly those conversations between industry analysts and journalists. Reputation matters, so it makes sense to anticipate change in perceptions by listening to the conversations happening in social networks and enterprise collaboration communities. With the added benefit of data-driven storytelling using interactive charts and maps, the shared vision of a new organisation's identity can be communicated to all of the team and interested third-parties.

I'm interested to hear your experiences with M&As. What helped or hindered the process? What role have you seen data play in supporting the decisions that people make during times of change? Check out our what Cause Analytics can do with merger analytics - there's a downloadable guide - and please let me know what you think.

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