Mentor Q&A – August 14, 2008

Great call today with discussion between Rick Furino, Tom Minich, Cameran Haire, Ananth Arunachalam and me. From the mentors’ perspective the program is progression nicely with all participants busy working up their schedules for meetings and topics for discussion over the next 5 months.

Our main topic of discussion today: Surviving Acquisition

With consolidation rampant in the market place, something all organizational leaders need in their pocket is the ‘How to Survive Acquisition’ manual. Here, in summary, are few tips from the seasoned professionals of our Mentor ranks:

1) Do not take your eye of the ball – basic business metrics for a service organization should remain intact: utilization, margin, customer satisfaction. Leadership within a newly acquired organization need to be able to articulate their efficiency and effectiveness during delivery, thereby defining their value to the customer and the organization. Upwards of 75% of time should be spent focused on keeping the service/satisfaction/profitability levels steady. The other 25% is redefining success criteria in the newly created organization, and this may mean redefining some of the metrics.

2) Gaining clarity of strategy driving the newly formed organization. During M&A, it is very typical for both sides to revamp their go-forward strategy, whereby a newly formed strategy will emerge. Once this happens, the redefinition of success criteria can be completed and solidified into organizational goals, objectives and measures.

3) Understand the rationale behind the acquisition: filling a strategic/technical gap or net incremental revenue and customer growth. When an acquisition is driven by the need to fill a gap, typically the delivery organizations merge over time bringing together the best practices from both sides and create an expanded service offering to the clients. This opens the way to sell back into existing clients on both sides with additional value add product and service. When the driving factor is net incremental growth, typically delivery organizations are consolidated and duplicate processes removed.

4) SaaS delivery vs. traditional service delivery. SaaS models are measured on a transactional basis whereby making it extremely difficult to link to service hours. Connecting billable hours and transactions by client is something to be discussed further as more and more organizations migrate to the software as a service method of delivery. SaaS is the ultimate redefinition of measurements and success criteria on the current horizon.

What do you think? Please let us hear from you on other ways of surviving merger and acquisition.