Mergers and IT Sprawl –

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Functionality.

What does it mean to assess the functional capabilities of an organization? The first thing to dismiss is that this is a skills assessment of the actual humans.

I worked with a company many years ago that played the MAD game like it was, well, a game. (Merger, acquisition and divesture). There were limits as to what percentage of the market they could own in their industry so they skirted around that by buying and selling assets. It made for a very complicated IT infrastructure.

The merger of two organizations results in a metamorphic growth of IT Sprawl. In some cases the reality of the merger generates a rapid IT Portfolio assessment, but you always have to wonder if that will take. There is an enthusiasm of the initial merger, but frankly most mergers are as much about saving money over time and increasing market share as they are about anything. Additionally few organizations in an industry that may merge, consult with each other about their overall IT Portfolio.

So, we are left with a couple of initial questions:

  • What types of mergers fail?
  • What type of IT Sprawl is generated from a merger?

Mergers don’t in fact produce a unique type, the tend to fit into one of the three. You’ll see in highly similar organizational mergers a blending of two sedimentary IT Sprawl issues into one over time. Companies that are “traditional” and “innovative” merging will result in a more metamorphic IT Sprawl issues. Companies that are market leaders merging or growing into a new market will experience more volcanic IT Sprawl during the merger process.

Now the real interesting thing is the answer to the first question. We see failed mergers all the time, where the two companies end up separating and going back to their separate business’. What we don’t see is mergers that fail because the resulting IT Sprawl is so unmanaged the merged company loses its way and fades from the market. The sad thing is, there are a  number of those…

.doc