IT representation on the functional design teams serves three purposes:

• Allows IT to help enable the new "one-company" capabilities and business processes
• Gives IT insight into new IT capabilities required by the business so that those capabilities can be developed in time
• Allows IT to work with the business to create unique, competitive-advantaged capabilities and business processes

In our experience, functional teams that did not have IT representation faced greater integration challenges, given their usual dependence on IT. Therefore, we believe that IT should be an integral part of the functional integration design teams.

Determine the Future Infra­structure Early The IT organization, in addition to supporting the business integration design teams, must also work to merge the IT infrastructures (back to the CIO's first hat). The potential level of rationalization is a function of the similarities within the two merging businesses.

Regardless, there will likely be overlap in the back-office systems such as HR, payroll and finance. In some cases, it will be clear which of the overlapping systems should be retained and which should be retired. While at other times, a more analytical approach is required.

An early decision on which applications will stay and which will go is crucial to capturing synergies and developing strategies across the business. For example, it is difficult to create one sales force (i.e., same organization, processes, and systems) until the supporting IT environment is agreed upon. Therefore, early in the integration IT should identify the applications that will be retained or killed in the merged organization. If more analysis is required, IT should determine the appropriate schedule for this analysis. In cases where there are competing systems and the analysis can occur after the integration is complete, IT should determine how the organization would operate under parallel systems.

A phased approach should be used to categorize infrastructure consolidation/sunsetting opportunities. Easy decisions that do not risk disruptions to operations should be made early and implemented early. Decisions that require extensive analysis or incur a great amount of operational risk should be pushed off to the long term.

The CIO's involvement in this exercise is to help drive the process and facilitate the tough calls. The CIO must also lead the charge in communicating to the business the rationale behind the tough decisions.

Keep the Best and the Brightest A merger is definitely a time of change and uncertainty. Most employees do not accept change or uncertainty very readily, especially when it could have significant impact on their individual livelihoods. They will naturally feel tense and anxious. This will potentially have a negative impact on their performance. Often in merger situations, the best staff starts searching for new employment opportunities. This is especially true within IT organizations where the skill set is highly transferable across companies and industries and the job market is more liquid than for other functions.

The organization should make every effort to ensure that the prized employees are identified and given incentives to remain with the organization through the integration and beyond. These incentives could take the form of key roles in the design of the new organization, stay bonuses, salary increases, promotions, etc. Key employees should be made to feel as if they are just that - key to the organization. Retention planning should be one of the first activities a CIO becomes involved with during the integration.

In addition to creating mechanisms for retention, it is important that an effective communication and change management plan be developed. Usually the Program Office is responsible for drafting the overall communication and change management strategies. However, Booz Allen has found that it is best to augment these overarching strategies with strategies developed at the functional level. In IT's case, the CIO should help shape and ultimately approve the IT communication and change management plans. This will help gauge the appropriate level of information flow to the employees (in a merger, management may not want to reveal all its plans because the overall direction may not be known or it may cause unnecessary disruption) and ensure that the CIO and his/her staff will fully support the execution of the strategies. When executed well, employee uncertainty and anxiety will lessen, valuable institutional knowledge will be less likely to walk out the door, and employee morale will be more manageable.

A Last Word

Throughout one's career, it becomes necessary to wear a number of hats. Very rarely, though, are the stakes as high as in a merger. During these events, the CIO must get comfortable with wearing two hats very quickly. If the aforementioned lessons learned are adhered to, the CIO will find that the "two merger hats" will not at all be a bad fit - and that the chances of merger success will be greatly enhanced.