Mergers and acquisitions speed up digital transformation
IT organizations at traditional enterprises are overwhelmed by keeping the light on, fending off a growing technical debt, and keeping up with a flood of new requests, all under an intense cost pressure. Speed is a competing priority for them, and since the conventional IT operating models aren’t designed to govern speed, it is the first one to give in.
The conventional IT practices, e.g., investment planning, functional specialization, labor arbitrage, among others, were optimized for the industrial age, and they are underperforming during digital transformation: Over one-fifth of technology efforts are potentially wasted on outputs that are never used, up to forty percent of expected business outcomes are at risk due to delivery delays, and outdated management practices are taxing the IT workforce productivity by double digits.
IT wastes are the problem – i.e., getting the wrong things done that are unnecessary, redundant, low value, delayed, obsolete, cancelled, or defective. They are contained when execution is plan-driven, pace is moderate, governance is centralized, and teams are dedicated to projects. In a digital world, where execution is agile, pace is fast, product-team dependencies are abundant and architectures are componentized, IT wastes unexpectedly mushroom. Worse, they remain hidden below the conventional management radars until damages become highly visible in terms of delays, defects or outages.
New technology management techniques, such as business outcome management, product organization, lean IT and continuous improvement can predict and prevent IT wastes, free up capacity and improve IT delivery speed as much as forty-five percent.
A sustainable reduction of IT wastes will visibly speed up digital transformation, and the consequent speed synergies will contribute to the overall M&A transaction value far more than the traditional IT cost synergies. It is now possible to articulate a post-transaction speed enhancement in digital transformation programs and incorporate the associated speed synergies into the M&A value case.
Furthermore, post-integration IT productivity gains will help create better career opportunities for employees, accelerate innovation, protect technology know-how and nurture a stronger domestic IT workforce. By articulating these benefits, executives at traditional enterprises will be able to broaden the narrative for the M&A value case and engage a wider stakeholder group, including investors,
regulators, employees and local communities.
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