Developing a strategy to deal with a merger or acquisition is becoming an increasingly important area of expertise for CIOs, according to research from CIO Connect.
In a survey of its membership, 54% of CIO respondents said they had been involved in up to three M&A transactions, with 42% reporting involvement in four or more during their career.
And as M&A activity continues to rise across the globe, topping £2tn worldwide last year and predicted to peak at around £2.5tn in 2008, the role of the CIO in M&A looks set to grow.
The majority of CIOs surveyed (58%) said that they should be involved in any merger plan right from the outset, and 46% reported that theirorganisations already gave them this responsibility in the area of systems infrastructure.
As mergers got underway 77% took responsibility for carrying out due diligence of the target company, with 81% of CIOs reporting it was also their responsibility to negotiate with any new business over deadlines and budget levels.
When it came to the impact of IT on M&A, CIOs believe they are delivering for the business. Almost half of CIOs (42%) reported IT merger costs accounted for less than 20% of the total M&A integration costs and 54% believed that IT was responsible for delivering at least 20% or more of any post acquisition benefits.
But the business IT specialists were critical of post acquisition and merger measurements. Although 92% of CIOs said their organisations undertook some form of review to measure the performance and success of M&A IT projects, one in five (19%) reported there were no accurate measurements
of IT integration costs or post acquisition benefits across the organisation.
The global nature of M&A was also borne out by the research, with 25% of respondents
having been involved in projects in the emerging economies of Brazil, Russia, India and China, 19% in Eastern Europe and 12% in other countries.
“These findings demonstrate that the CIO involved in M&A needs to be an effective business leader, strategist, communicator and influencer, with appropriate levels of cultural sensibility and effective people management skills,” said Nick Kirkland, managing director of CIO Connect.
“Indeed, those surveyed believed these business and people skills were considerably more important for the CIO than technical or operational management skills, which most respondents felt could be delegated to members of their team.”
But Kirkland said one key concern cited my many was the lack of accurate measurement of IT integration costs and post acquisition benefits.
"Without proper measurements, it is very difficult to improve efficiencies or processes for future M&A activity, or even to judge the merits of such activity," he said.
"If organisations are not prepared or able to carry out such assessments, the CIO must use their influence to press upon senior management the need for this assessment.”
In light of the research, CIO Connect has recommended that CIOs: get involved as early as possible in any M&A activity and take the trouble understand the business model, since other functions will make assumptions about what can be integrated that may be incorrect.
It also warned CIOs in those industries where M&A is ever present to be "ever ready," even to the point of considering having a permanent M&A team.