In the past few years there has been a significant increase in mergers and acquisitions between housing organisations, each of which requires major infrastructure and personnel changes. As a result, software and IT service providers have had to mirror these changes in order to accommodate the changing organisational needs of their customers.
At the moment, decisions over whose IT system should be used have centred on who is the larger organisation, whose system is the most established or who has the strongest relationship with their supplier. Of course, this ignores the key business requirements and how the IT system can promote and enhance them. There is no rule that states that either IT system must dominate following a merger or acquisition; in fact, consideration is rarely given as to whether it would be better to remove data from both and invest in a new one more suited to the suddenly expanded needs of the newly-formed company.
In the IT decision-making process, it is vital that the practical and functional requirements of the organisation are not just considered, but treated as critical. Otherwise, the new structure will simply not achieve all it can out of the merger nor achieve the cost savings and service improvements that were promised before the merger.
The biggest challenge? Culture
It is almost unavoidable that the main challenge of any merger is the consequent shift in culture. Every organisation has different ways of communicating, both internally and with residents. If there isn’t a wholesale change, and instead one company is forced or encouraged to change working practices overnight, then any business benefit will almost certainly be sacrificed.
Good practice would be to define the new processes precisely and ensure that the software complements them in the most suitable business-focused way. This will inevitably mean re-training the staff, which appears at first to be expensive and avoidable, but it should be remembered that this in itself brings a focus to the business and its goals.
A sensible investment in processes can save massive expenditure. Large organisations spend a substantial amount of money on repetitive administrative procedures, where a saving of just £1 on each action, such as an invoice, can deliver massive cost savings in the long term, far exceeding the initial investment on the infrastructure.
The key is to identify the processes that are the most repetitive and which can be automated or simplified. Although many might be found, it is crucial to also consider which are the most appropriate for investment and the consequent changes that they would involve.
Don’t lose sight of central goals
It is very easy for newly-merged organisations to lose sight of their key functions. The most pressing integration objectives following a merger can often distract the organisation from its principal activity and prevent the board from taking a holistic view. This is quite natural and understandable, but it will not be justifiable to the residents, who will of course expect service to continue as usual during the acquisition process.
As a result of the loss of focus, the housing organisation may find itself in an almost interminable cycle of catching up. Following a complex merger, it can easily take more than 12 months to fully finalise all infrastructure activities and then re-focus on the primary aims of the business, i.e. the residents.
However, if IT services and support are high on the agenda from the outset, then early decisions can be made on how to prevent a drop in service delivery. A firm plan for the IT system is often neglected and as a result, the merger as a whole is unfocused as IT underpins almost every aspect of the business.
If a reduction in service efficiency is allowed, the residents will only see the negatives of the merger or, at best, see it as entirely administrative and of no benefit to them. However, if a strong IT plan is created, then the residents too will see the advantages and the business case that was in place from the beginning.
Lies, damn lies and due diligence
Never has the phrase ‘caveat emptor’ been more appropriate than in the merger and acquisition arena. Both organisations want the other to think that their processes are perfect and that their own IT projects will deliver the expected business benefits. However, due diligence can often be misleading rather than revealing and so a new IT system could be the best route to take, rather than take the risk that the previous systems will meet the needs at face value.
Joanna Sedley-Burke is business development director at Sovereign Business Integration.