1. The Seven Deadly Sins of Post-Merger Integration
NTT DATA
www.nttdata.com/uk
The Seven Deadly Sins of Post-Merger Integration
Tobias Lin, senior consultant at NTT DATA, highlights how to avoid seven common
pitfalls when chasing the synergies of merging two organisations.
Post-merger integration is one of [if not the] most
complex transformation events that a business can
encounter. While all mergers will have particular
differences in their challenges, there are certain
areas where integration efforts repeatedly fall down.
1. Short-sightedness – Losing the Strategic Vision
Once the myriad of integration activities begin, it is
easy to focus on micro-managing the day to day
trials and tribulations. This can result in significant
waste of precious time, delaying positive results. A
clear vision must be presented to staff, to ‘make it
real’ and encourage them to stay the course.
Use strategic integration objectives to define a set of
integration goals of primary, secondary and tertiary
importance (think of long-term importance as well
as short-term urgency).
These integration goals can be used as a
framework, against which all projects and
investments are assessed. Rank and prioritise
the relative benefits, strategic importance, time to
value realisation, and risk of each (vs. “do nothing”
scenarios). Use this to discover the most powerful
integration levers.
Establish clear and open decision-making
procedures. Agree the KPIs to measure performance
and define success.
2. Prevarication – Planning for Business
Value “eventually”
The integration plan should be sequenced to deliver
return on investment throughout the integration
lifecycle. Not just at the end.
Identify the most valuable parts of both portfolios.
Look for product synergies that deliver increased
revenues and drive product rationalisation. Don’t
forget R&D! Integration is a prime opportunity
to create new and exciting propositions that will
differentiate the new business.
Develop a common product development roadmap
and governance processes. From this, create a
prioritised product delivery plan – but remember
to revisit the prioritisation regularly. It’s vital this
plan is delivered in parallel with internal integration
activities.
Don’t leave it for delivery at an unspecified
future date – use it to realise benefits sooner and
keep customers engaged. From the customer’s
perspective there should be something tangibly
different arising from the merger.
3. Insufficiency - Trying to manage integration “on
top of the day job”
Integration managers need space to think clearly
and act objectively towards strategic integration
objectives, as well as adequate time to devote to the
tasks at hand.
Establish a dedicated transformation management
function. Staff it with full-time with experts who have
done it before.
Empower this team to be ruthless in the prioritisation
of integration efforts towards the integration goals.
Ensure that critical early activities are not dependent
on capabilities or systems that don’t already exist –
this will help to build change momentum quickly.
4. Opacity - Keeping employees in the dark
Employees are the agents of change. Involve and
collaborate with those affected by the merger as
early as possible. The retention of high-performing
salespeople, people managers and innovators is
vital to the success of the integration - it’s crucial
they own and feel part of shaping the integration
process. Without this engagement, they will become
a flight risk.
Change does not just happen; it must be
driven through. It is important to retain and
leverage employees with the completer-finisher
characteristic.

2. The Seven Deadly Sins of Post-Merger Integration
NTT DATA
www.nttdata.com/uk
Functional, Technical, and DBA Support
New Capability Delivery
– Application roll outs
– Acquisitions and
divestitures
NTT DATA is a leading IT services provider and global innovation partner headquartered in Tokyo, with business operations in over 40
countries. Our emphasis is on long-term commitment, combining global reach with local intimacy to provide premier professional services
varying from consulting and systems development to outsourcing. Learn more at www.nttdata.com/uk.
© Copyright 2016 NTT DATA UK Limited.
Integrations can fail due to poorly managed
cultural differences alone. Internal champions
should be identified, to promote shared values and
cultures. Where cultures and values are different,
create bilateral working groups to address these
differences.
Provide opportunities for staff from each entity
to interact with their peers and share information
and cultural values. Communication between
management and staff is best done face to face, but
digital and internal social channels should also be
exploited.
5. Vagueness - Allowing ambiguity in the new
organisation
Define the new organisation well in advance of day
one. Every pair of hands counts at a time when
there is so much to get done. Leaving it unclear as
to what roles staff will assume in the new landscape
can present risk and result in wasted time as well as
complex political tensions that are time-consuming
to defuse and sapping on company morale.
This requires definition of not only reporting lines,
but also the purpose of each role in the new
organisation. Everybody must be clear on their
mission and responsibilities as well as where they sit
and who they report to.
6. Disorder - Allowing Proliferation of Complexity
The second law of thermodynamics states that
when two systems are joined together, the entropy
(disorder) of the combined system is greater than
the sum of the entropies of the individual systems.
The same principle applies to a merger.
A key goal in any integration is the reduction of
duplication. Left untouched, duplication means
missed opportunities for the biggest efficiency
savings as well as increasing the risk of confusing
customers.
Develop an objective understanding of the
strengths, weaknesses and maturity of each
organisation. Maintain a tireless focus on
simplification and reduction of complexity and
redundancy across the enterprise – including
supply-chain. Identify quick wins to realise savings
early.
Be aware of areas where both entities suffer
the same capability gap – a merger can amplify
it. Address them early if they are critical to an
integration goal or business objective.
7. Neglect - Forgetting about Customers
Customers are the judge, jury and executioner,
deciding whether the integration succeeds or
fails. It’s imperative that customer confidence is
maintained. If it’s diminished, they will quickly look
elsewhere.
Minimise interruptions to customer experience and
service delivery. Keep them informed from an early
stage – establish a dialogue with friendly customers
and take action on their insights.
Align integrating entities to a joined-up customer
segmentation model and go-to-market approach.
Ensure consistent marketing messaging across the
integrating entities.
Shareholders are another key group that must be
managed carefully. However bear in mind that it
is the customers that provide the revenues that
shareholders are looking for – and it is employees
that create value for customers.