Even before the ink is dry on mergers or acquisitions, companies always set up mechanisms to quickly communicate with regulators, employees and the public about what they are planning and why.  These bottom-line tasks are so engrained in the M&A process that no one would think of postponing them just because an agreement is finalized late Friday afternoon or even on Christmas day. But they are not the only considerations that demand fast action.  The role of IT is now so pervasive within each insurance enterprise that effectively integrating technology systems, processes and resources can be a major factor in the success of the resulting enterprise.

IT needs a place at the table and needs to be an integral part of the governance structure of the merger. That enables senior management and IT management to develop a shared understanding of the business and IT decisions, and assures that both business and IT align properly within the new, combined organization.

When we are called in to help facilitate an insurance M&A, we bring an IT M&A “playbook” that is the product of our deep experience helping carriers of all sizes through the process.  We adapt it to fit a specific client’s needs, but every engagement will include certain guiding principles:

  1. We start by setting up a structure to move forward.   This includes establishing an IT core M&A integration team, freed from most of their other duties for a certain period of time, to make things happen.
  2. Once the governance structure is up and running, the key responsibility is for the team to identify and tackle its top five to eight critical decisions—all aligned with business needs or objectives—and ask them to identify a decision maker who will have the authority to make binding decisions. They will consider key areas like application, data and infrastructure integration, architecture, IT development and support processes, licenses and resources. Even if they must modify something later, progress beats perfection any day.
  3. Since each business had been operating separately before the M&A, there are often projects in the works at one organization that may conflict with something the new partner has been doing. For example, one company could be about to roll out a new customer relationship management (CRM) system, while the other company already has an existing CRM system.  IT leadership will have to provide project managers with clear direction on whether to accelerate, cancel or put projects on hold until all solutions can be vetted.
  4. The combined enterprise will be different, and its talent needs may be very different, so leaders must look ahead to determine the right talent for the future company.  This is more than a numbers game. Companies formerly justified mergers as a way to grow with fewer employees and lower operating costs—a simple economy of scale.  Today, companies merge to become bigger with a broader reach and deeper penetration, perhaps to acquire valuable technology or product or expertise. The merger partner may be in a totally different industry, or it may provide vertical synergy.  Competition comes from all over the world and from disruptive businesses throughout the economy, so the future business is more likely to seek out talent who have the skills to compete and give the company an edge.

So move forward and prepare to make those hard decisions early on, even if they are not perfect.  Perfection paralysis is usually the worst decision of all.

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