The Strategic Value of IT in M&A Activities

A recent McKinsey article, “Understanding the Strategic Value of IT in M&A”, discusses how the success of any M&A activity is reliant upon giving proper attention to  IT and Operations integration.  McKinsey  research showed that “the integration of technology and operations often proved difficult, usually because it didn’t receive adequate consideration during due diligence.  One reason is that executives from IT and operations often aren’t included in the due-diligence process, preventing them from offering valuable input on the costs and practical realities of integration”.

As shown in the chart below, depending on your industry, more than half the synergies available in a merger are often strongly related to IT. 

Some of the key ideas to take away from the article were the following:

• IT can be a powerful factor behind M&A success, assuring synergies are realized and ultimately increasing the deal-making capacity of acquirers.
• Acquisition-minded companies with flexible, adaptive architectural platforms are less likely to experience postmerger integration difficulties.
• IT should have a seat at the due-diligence table to spot potential obstacles to integration such as poor technology at the target company.
• A solid postmerger game plan can speed up crucial decisions about which systems need to be maintained and integrated and which should be shut down.

 

For more information on how the Teal Group can work with you during your M&A , contact Philip Porreca at philipp@tealgrouptech.com or call 425.749.9468.

Exchange 2010 & Archiving

The following opening to the Microsoft White Paper “Addressing E-mail Archiving and Discovery with Microsoft® Exchange Server 2010” sets the context for thinking about archiving email in your environment:

“With businesses generating and sharing an ever-increasing volume of information through e-mail, the ability to protect and preserve these critical communications is essential. Whether your motivation is to improve storage management, meet regulatory requirements for data retention, or lower the costs of conducting electronic discovery (e-Discovery), implementing an effective e-mail archiving and discovery solution can offer a number of benefits.”

Some have considered their needs in terms of archiving, and in the past the only solution was to either archive older messages into local Microsoft® Outlook® Data Files (.PST files), removing  important historical records from their Exchange Servers, or a third party solution. PST files are burdensome for IT to manage, are quite often stored on local machines that aren’t backed up, and have their own set of limitations in size, creating sprawl. Corruption of .PST files happens on a regular basis as they get larger, causing loss of data. If a client decided to use a third party solution, in some instances, this could require additional software to be purchased (such as SQL Server) to store the archived messages. It was also likely that users and administrators would need to learn new skills and client applications to search or access the archived messages. The new archiving capabilities built into Microsoft® Exchange Server 2010 allow for administrators to manage archiving based on corporate policies, and personal archives created by users, directly from the same management interface they use for all other Exchange management.  

Additionally, to help deliver a familiar user experience, the Personal Archive appears alongside primary mailbox folders in both Outlook  and Outlook Web App. Just like any other folder or opened .PST file, your users can easily interact with archived e-mail using existing skills. For example, they can “drag and drop” e-mail messages to their Personal Archive, create folders, set flags, reply to messages, and even conduct searches across archived e-mail, all within Outlook and Outlook Web App. This greatly reduces the need for costly user training or additional support resources when rolling out a new archiving solution .

For more information on how your organization could benefit from upgrading to Exchange 2010, contact Phil Porreca at philip.porreca@thebtsgroup.com or call 425.749.9468.

Maintaining the Customer Experience During the Downturn

According to McKinsey research, customer experience satisfaction scores have been dropping recently in a number of industries. This is due in part to our challenging economy and the closing of stores, reduction in hours of operation, and reduction in staffing of customer facing roles. All items that cut back service levels customers have grown accustomed to in recent years.

This makes improving your customer service levels a competitive advantage in these difficult times. How can consumer businesses make necessary investments in service while facing the pressure on revenues and costs? Research shows that it all starts with challenging your beliefs about service and testing those beliefs analytically. Many businesses find that their assumptions about what customers want are wrong. Taking an analytical approach to your customer experience expenditures can minimize wasteful spending.

Companies that closely manage the customer experience have taken a rigorous approach to resetting service levels and save money while maintaining or improving customer satisfaction. These companies have carefully measured and determined “breakpoints” to find their customers’ sensitivity to service levels. For example, determining that answering a phone call in less than X seconds produced delight, while leaving customers on hold for more than Y seconds produced strong dissatisfaction, saved a company over $7 million in staffing costs. This money was then reinvested to improve other portions of the operation, including the problem resolution process.

Finding these types of savings extends to analyzing expenditures on technology, marketing campaigns, billing, and other customer related business processes. Sophisticated companies that figure out what matters most to customers, eliminate the expenditures that don’t matter, and finance the ones that do will thrive—and may find themselves, when the economy rebounds, with fewer competitors.

Effective IT Decisions via Process-Driven Approach

How a decision-maker views technology, quite often, determines its effectiveness in providing measurable improvements to the business. If you are enamored with technical bells and whistles, or view IT as a necessary evil, you will fall into traps that will ensure minimal returns if not losses from your IT investments.

Alternatively, if you take the dual approach of matching technology after developing your best-practices business processes, or requiring technology solutions to show how they support a new best-practice, you will have identified critical data to be collected allowing you to model and track the actual performance impact of your investment. It all starts with the process supporting a business strategy.

From the vantage point of understanding your business’ optimal processes you can then ask a set of questions and gather data to determine the usefulness of the technology you are considering:

• Does this investment help me to increase revenue or lower costs?
• Does the investment help me to make better business decisions through accurate and actionable data?
• Does the investment improve or maintain my alignment with the business strategy and key processes?
• Does the investment have suitable Return on Investment (ROI) or reduce my Total Cost of Ownership (TCO) of necessary IT assets?
• Is this solution scalable; what is it’s realistic lifecycle?

Pitfalls for Startup Spending

A startup company, whether bootstrapped or with some measure of modest investment, has to be more efficient in its expenditures than any other company. We all know that fundamentally “cash is king”, yet so many startups burn through what they have before they can gain any traction in the market with their product or service.
Here are some of the main reasons this happens:

• Technology Purchases – Rather than buying equipment and software, save your cash by renting or leasing. Major hardware vendors such as Dell have leasing programs you can qualify for online.” Software As A Service” (SAAS) companies provide online versions of Microsoft Exchange, CRM and SharePoint, providing all the collaborative power you need at a fraction of the cost of buying your own systems.
• Mega Marketing Campaigns – Be sure that your marketing dollars are spent wisely. Employ a “Guerilla Marketing” philosophy to your marketing strategy. Be sure to get the biggest bang for your buck by focusing your spending on realistic channels.
• Field of Dreams Hiring – Too many decision-makers are worried about how they will be able to handle all that business when it comes in the door and staff up before they have the business to support the overhead. If you’re smart about your business process development, and use strategies like SAAS technology and temporary contractors to support scalability, you can readily add people as you need them without disrupting your business.