IT acquisitions and mergers are common
these days due to enormous trade benefits such as less competition, bigger
asset portfolio, better resource allocation, etc. Companies in the IT industry commonly
form an alliance to collaborate their resources and form a bigger company, with
a wider market capture and better products. It is also a common practice when
two or more companies form an alliance to continue the business that is unable
to self-sustain due to poor financial outcomes. This guide will give a glimpse
about the various pros and cons of IT acquisitions, the importance of
IT acquisition integration and key for best
results.
Pros
And Cons Oof IT Acquisitions
Just like any other alliance, IT
acquisitions are bound to present a few pros and cons to the entrepreneurs,
employees, and other stakeholders of the company. Here are a few of them:
Pros Of IT acquisition
Here are some of the pros of acquiring or
merging with another IT company:
One of the biggest and undisputed
advantages of merging with another company is the increase in market share.
Companies merging with other companies combine their individual market share to
capture wider market and improving their presence in the industry. This gives
the smaller competitors various challenges and increases barriers to entry for
newcomers.
Mergers technically reduces the number of
competitors in the market. When two or more IT companies merge, their conflict
for greater market share than the other company turns into a mutual objective.
The also increase in size considerably, making them a large player in the
market, reducing the barriers to entry in newer markets.
While every company strives to hire and
retain the best talent available in the market, a merger gives the companies
greater and wider access to a diverse talent pool. This means that they are
able to improve their productivity and work efficiency by combining the new
pool of talent. It also helps the company make use of various other combined
resources that the company now has at their disposal. Meaning that a merger
will considerably increase their technological resources,
human resources, and
other resources.
Needless to say, but merged organizations
gain greater access to capital investments, which can improve their product
development, research, and investing in new verticals quite easy.
Cons Of IT Acquisitions
Here are a few cons of IT acquisitions that an organization might face.
Every organization has its unique
corporate culture that may not always coincide with the merged organization.
This can lead to various conflicts between the employees and the management,
and can result in poor work efficiency and low motivation level.
Often, when two IT companies merge, they
need to lay off a certain percentage of their employee force, as they are
unable to create enough employment opportunities. For example, each
organization may have similar talent pool with limited work requirements. In
such cases, the company would retain the employee that is most suitable for the
organization and terminate the services of the other.
Every organization works to earn a profit,
but at the same time, they often have a greater objective and vision for the
organization, which might result in a
conflict after a merger. This can lead to
a chaotic situation and conflicts on the management level.
Importance
of IT acquisition integration
When an organization is acquired of merged
with another organization, there is an impending need to reap the benefits of
the merger and take advantage of the new alliance. However, without adequate
integration techniques and transition, the organizations would be unable to
reap the benefits and would lose due to loss of productivity. According to
studies, the integration process should be completed within the first 90 days
of the merger to keep the organization’s identity and brand image strong in the
market. Secondly, integration plays a critical role when it comes to work
efficiency, resource allocation, lowering conflicts, and working towards a
greater mission. The Integration process also helps in eliminating
inefficiencies in the current system and optimize productivity by formulating
policies and Standard Operating Procedures (SOPs) to ensure optimum resource
output. Companies that are unable to integrate their resources, policies, SOPs,
and organizational culture would continue to lose time and money.
Post a merger or acquisition, organization
needs to implicate a series of engagements to ensure positive work culture,
employee retention, and adequate allocation of resources. Here are a few tips
for engagements post a merger or an acquisition:
- Redefined
Organizational Objective
Every employee in an organization strives
to contribute to the organizational objectives i.e. the vision and mission.
However, after a merger, the organization and the employees would lack
direction. Organizations need to redefine the new objectives and create
awareness among the employees to improve concentration and motivation.
One of the biggest distractions for
employees posts a merger is the loss of direction and career path. With new and
redefined objectives and visions, the employees would be unable to associate
themselves with the organizational objective and would not understand the value
of their contribution to the vision. Moreover, employees might lose a sense of
their career progression in the organization due to the revised
hierarchical system. For example, an employee who was expecting to become head of the
department during the next promotion would be unable to understand how career
progression will be affected after a merger. Therefore, companies need to offer
career-counseling services to the employees and reassure their importance in
the organization.
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