Develop a Targeted Flexible Work Program for IT

Select flexible work options that balance organizational and employee needs to drive engagement and improve attraction and retention.

Executive Summary

Your Challenge

• IT leaders continue to struggle with workplace flexibility, and it is a top priority for IT employees; as a result, organizations who fail to offer flexibility will have a difficult time attracting, recruiting, and retaining talent.
• The benefits of remote work are not available to everyone, raising fairness and equity concerns for employees.

Common Obstacles

• A one-size-fits-all approach to selecting and implementing flexible work options fails to consider unique employee needs and will not reap the benefits of offering a flexible work program (e.g. higher engagement or enhanced employer brand).
• Improper structure and implementation of flexible work programs exacerbates existing challenges (e.g. high turnover) or creates new ones.

Info-Tech's Approach

• Uncover the needs of unique employee segments to shortlist flexible work options that employees want and will use.
• Assess the feasibility of various flexible work options and select ones that meet employee needs and are feasible for the organization.
• Equip leaders with the information and tools needed to implement and sustain a flexible work program.

Info-Tech Insight

IT excels at hybrid location work and is more effective as a business function when location flexibility is an option for its employees. But hybrid work is just a start. A comprehensive flex work program extends beyond flexible location, so organizations must understand the needs of unique employee groups to uncover the options that will attract and retain talent.

Flexible work arrangements are a requirement in today's world of work

Flexible work continues to gain momentum…

A 2022 LinkedIn report found that the following occurred between 2019 and 2021:

In 2022, Into-Tech found that hybrid was the most commonly used location work model for IT across all industries.

("State of Hybrid Work in IT," Info-Tech Research Group, 2022)

…and employees are demanding more flexibility

Offering workplace flexibility benefits organizations and employees

Higher performance

IT departments that offer some degree of location flexibility are more effective at supporting the organization than those who do not.

35% of service desk functions report improved service since implementing location flexibility.
("State of Hybrid Work in IT," Info-Tech Research Group, 2023).

Enhanced employer brand

Employees are 2.1x more likely to recommend their employer to others when they are satisfied with their organization's flexible work arrangements (LinkedIn, 2021).

Improved attraction

41% of IT departments cite an expanded hiring pool as a key benefit of hybrid work.

Organizations that mention "flexibility" in their job postings have 35% more engagement with their posts (LinkedIn, 2022).

Increased job satisfaction

IT employees who have more control over their working arrangement experience a greater sense of contribution and trust in leadership ("State of Hybrid Work in IT," Info-Tech Research Group, 2023).

Better work-life balance

81% of employees say flexible work will positively impact their work-life balance (FlexJobs, 2021).

Boosted inclusivity

• Caregivers regardless of gender, supporting them in balancing responsibilities
• Individuals with disabilities, enabling them to work from the comfort of their homes
• Women who may have increased responsibilities
• Women of color to mitigate the emotional tax experienced at work

Info-Tech Insight

Flexible work options are not a concession to lower productivity. Properly implemented, flex work enables employees to be more productive at reaching business goals.

Despite the popularity of flexible work options, not all employees can participate

IT organizations differ on how much flexibility different roles can have.

IT employees were asked what percentage of IT roles were currently in a hybrid or remote work arrangement ("State of Hybrid Work in IT," Info-Tech Research Group, 2023).

However, the benefits of remote work are not available to all, which raises fairness and equity concerns between remote and onsite employees.

Offering schedule flexibility to employees who need to be fully onsite can be used to close the fairness and equity gap.

When offered the choice, 54% of employees said they would choose schedule flexibility over location flexibility ("Global Employee Survey," EY, 2021).

When employees were asked "What choice would you want your employer to provide related to when you have to work?" The top three choices were:

Disclaimer: "Percentages do not sum to 100%, as each respondent could choose up to three of the [five options provided]" ("Global Employee Survey," EY, 2021).

Beware of the "all or nothing" approach

There is no one-size-fits-all approach to workplace flexibility.

Understanding the needs of various employee segments in the organization is critical to the success of a flexible work program.

Working parents want more flexibility

Historically underrepresented groups value more flexibility

Workplace flexibility must be customized to the organization to avoid longer working hours and heavy workloads that impact employee wellbeing

Longer hours and unsustainable workloads can contribute to stress and burnout, which is a threat to employee engagement and retention. With careful management (e.g. setting clear expectations and establishing manageable workloads), flexible work arrangement benefits can be preserved.

Info-Tech Insight

Employees' lived experiences and needs determine if people use flexible work programs – a flex program that has limited use or excludes people will not benefit the organization.

Develop a flexible work program that meets employee and organizational needs

Insight summary

Overarching insight: IT excels at hybrid location work and is more effective as a business function when location, time, and time-off flexibility are an option for its employees.

Case Study

Expanding hybrid work at Info-Tech

Challenge

In 2020, Info-Tech implemented emergency work-from-home for its IT department, along with the rest of the organization. Now in 2023, hybrid work is firmly embedded in Info-Tech's culture, with plans to continue location flexibility for the foreseeable future.

Adjusting to the change came with lessons learned and future-looking questions.

Lessons Learned

Moving into remote work was made easier by certain enablers that had already been put in place. These included issuing laptops instead of desktops to the user base and using an existing cloud-based infrastructure. Much support was already being done remotely, making the transition for the support teams virtually seamless.

Continuing hybrid work has brought benefits such as reduced commuting costs for employees, higher engagement, and satisfaction among staff that their preferences were heard.

Looking Forward

Every flexible work implementation is a work in progress and must be continually revisited to ensure it continues to meet organizational and employee needs. Current questions being explored at Info-Tech are:

• The concept of the "office as a tool" – how does use of the office change when it is used for specific collaboration-related tasks, rather than everything? How should the physical space change to support this?
• What does a viable replacement for quick hallway meetings look like in a remote world where communication is much more deliberate? How can managers adjust their practices to ensure the benefits of informal encounters aren't lost?

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.”

Guided Implementation

“Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.”

Workshop

“We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.”

Consulting

“Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”

Diagnostics and consistent frameworks used throughout all four options

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.

A typical GI is 3 to 5 calls over the course of 4 to 6 months.

Workshop Overview

Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889

Step 1

Assess employee and organizational needs

1. Assess employee and organizational flexibility needs
2. Identify potential flex options and assess feasibility
3. Implement selected option(s)

After completing this step you will have:

• Identified key stakeholders and their responsibilities
• Uncovered the current and desired state of the organization
• Analyzed feedback to identify flexibility challenges
• Identified and prioritized employee segments
• Determined the program goals
• Identified the degree of flexibility for work location, timing, and deliverables

Identify key stakeholders

Organizational flexibility requires collaborative and cross-functional involvement to determine which flexible options will meet the needs of a diverse workforce. HR leads the project to explore flexible work options, while other stakeholders provide feedback during the identification and implementation processes.

Info-Tech Insight

Flexible work is a holistic team effort. Leaders, flexible workers, teammates, and HR must clearly understand their roles to ensure that teams are set up for success.

Uncover the current and desired state of flexibility in the organization

Info-Tech Insight

Hybrid work is a start. A comprehensive flex work program extends beyond flexible location, so organizations must understand the needs of unique employee groups to uncover the options that will attract and retain talent. Provide greater inclusivity to employees by broadening the scope to include flex location, flex time, and flex time off.

Identify employee segments

Using the data, feedback, and challenges analyzed and uncovered so far, assess the organization and identify employee segments.

Identify employee segments with common characteristics to assess if they require unique flexible work options. Assess the feasibility options for the segments separately in Step 2.

• Segments' unique characteristics include:
• Role responsibilities (e.g. interacting with users, creating reports, development and testing)
• Work location/schedule (e.g. geographic, remote vs. onsite, 9 to 5)
• Work processes (e.g. server maintenance, phone support)
• Group characteristics (e.g. specific teams, new hires)

Identify employee segments and sort them into groups based on the characteristics above.

Examples of segments:

• Functional area (e.g. Service Desk, Security)
• Job roles (e.g. desktop support, server maintenance)
• Onsite, remote, or hybrid
• Full-time or part-time
• Job level (e.g. managers vs. independent contributors)
• Employees with dependents

Prioritize employee segments

Determine whether the organization needs flexible work options for the entire organization or specific employee segments.
For specific employee segments:

• Answer the questions on the right to identify whether an employee segment is high, medium, or low priority. Complete slides 23 to 25 for each high-priority segment, repeating the process for medium-priority segments when resources allow.

For the entire organization:

• When identifying an option for the entire organization, consider all segments. The approach must create consistency and inclusion; keep this top of mind when identifying flexibility on slides 23 to 25. For example, the work location flexibility would be low in an organization where some segments can work remotely and others must be onsite due to machinery requirements.

High priority: The employee segment has the lowest engagement scores or highest turnover within the organization. Segment sentiment is that current flexibility is nonexistent or not sufficiently meeting needs.
Medium priority: The employee segment has low engagement or high turnover. Segment sentiment is that currently available flexibility is minimal or not sufficiently meeting needs.
Low priority: The segment does not have the lowest engagement or the highest turnover rate. Segment sentiment is that currently available flexibility is sufficiently meeting needs.

1. What is the impact on the organization if this segment's challenges aren't addressed (e.g. if low engagement and high turnover are not addressed)?
2. How critical is flexibility to the segment's needs/engagement?
3. How time sensitive is it to introduce flexibility to this segment (e.g. is the organization losing employees in this segment at a high rate)?
4. Will providing flexibility to this segment increase organizational productivity or output

Identify challenges to address with flexibility

Uncover the lived experiences and expectations of employees to inform selection of segments and flexible options.

1. Collect data from existing sources, such as:
   • Engagement surveys
   • New hire/exit surveys
   • Employee experience monitor surveys
   • Employee retention pulse surveys
   • Burnout surveys
   • DEI pulse surveys
2. Analyze employee feedback on experiences with:
   • Work duties
   • Workload
   • Work-life balance
   • Operating processes and procedures
   • Achieving operational outcomes
   • Collaboration and communication
   • Individual experience and engagement
3. Evaluate the data and identify challenges

Example challenges:

• Engagement: Low average score on work-life balance question; flexible work suggested in open-ended responses.
• Retention: Exit survey indicating that lack of work-life balance is consistently a reason employees leave. Include the cost of turnover (e.g. recruitment, training, severance).
• Burnout: Feedback from employees through surveys or HR business partner anecdotes indicating high burnout; high usage of wellness services or employee assistance programs.
• Absenteeism: High average number of days employees were absent in the past year. Include the cost of lost productivity.
• Operational continuity: Provide examples of when flexible work would have enabled operational continuity in the case of disaster or extended customer service coverage.
• Program uptake: If the organization already has a flexible work program, provide data on the low proportion of eligible employees using available options.

1.1 Prepare to evaluate flexible work options

1-3 hours

Follow the guidance on preceding slides to complete the following activities.
Note: If you are only considering remote or hybrid work, use the Fast-Track Hybrid Work Program Workbook. Otherwise, proceed with the Targeted Flexible Work Program Workbook.

1. Identify key stakeholders. Be sure to record the level of involvement and responsibility expected from each stakeholder. Use the "Stakeholders" tab of the workbook.
2. Uncover current and desired state. Review and record your current state with respect to culture, productivity, and current flexible work options, if any. Next, record your desired future state, including reasons for implementing flexible work, and goals for the program. Record this in the "Current and Desired State" tab of the workbook.
3. Identify and prioritize employee segments. Identify and record employee segments. Depending on the size of your department, you may identify a few or many. Be as granular as necessary to fully separate employee groups with different needs. If your resources or needs prevent you from rolling out flexible work to the entire department, record the priority level of each segment so you can focus on the highest priority first.
4. Identify challenges with flexibility. With each employee segment in mind, analyze your available data to identify and record each segment's main challenges regarding flexible work. These will inform your program goals and metrics.

Download the Targeted Flexible Work Program Workbook

Download the Fast-Track Hybrid Work Program Workbook

Input

• List of departmental roles
• Data on employee engagement, productivity, sentiment regarding flexible work, etc.

Output

• List of stakeholders and responsibilities
• Flexible work challenges and aims
• Prioritized list of employee segments

Materials

• Targeted Flexible Work Program Workbook
  Or
• Fast-Track Hybrid Work Program Workbook

Participants

• IT department head
• HR business partner
• Flexible work program committee

Determine goals and metrics for the flexible work program

Info-Tech Insight

Implementing flex work without solid performance metrics means you won't have a way of determining whether the program is enabling or hampering your business practices.

1.2 Determine goals and metrics

30 minutes

Use the examples on the preceding slide to identify program goals and metrics:

1. Brainstorm program goals. Be sure to consider both the business benefits (e.g. productivity, retention) and the employee benefits (work-life balance, engagement). A successful flexible work program benefits both the organization and its employees.
2. Brainstorm metrics for each goal. Identify metrics that are easy to track accurately. Use Info-Tech's IT and HR metrics libraries for reference. Ideally, the metrics you choose should already exist in your organization so no extra effort will be necessary to implement them. It is also important to have a baseline measure of each one before flexible work is rolled out.
3. Record your outputs on the "Goals and Metrics" tab of the workbook.

Download the Targeted Flexible Work Program Workbook

Download the IT Metrics Library

Download the HR Metrics Library

Input

• Organizational and departmental strategy

Output

• List of program goals and metrics

Materials

• Targeted Flexible Work Program Workbook
  Or
• Fast-Track Hybrid Work Program Workbook

Participants

• Flexible work program committee

Determine work location flexibility for priority segments

Work location looks at where a segment can complete all or some of their tasks (e.g. onsite vs. remote). For each prioritized employee segment, evaluate the amount of location flexibility available.

Note

If roles within the segment have differing levels of location flexibility, use the lowest results (e.g. if role A in the segment has a high degree of flexibility for work duties and role B has a low degree of flexibility, use the results for role B).

Identify work timing for priority segments

Work timing looks at when work can or needs to be completed (e.g. Monday to Friday, 9am to 5pm).

Note

With additional coordination, flex time or flex time off options are still possible for employee segments with a low degree of flexibility. For example, with a four-day work week, the segment can be split into two teams – one that works Monday to Thursday and one that works Tuesday to Friday – so that employees are still available for clients five days a week.

Examine work deliverables for priority segments

Work deliverables look at the employee's ability to deliver on their role expectations (e.g. quota or targets) and whether reducing the time spent working would, in all situations, impact the work deliverables (e.g. constrained vs. unconstrained).

Note

For segments with a low degree of work deliverable flexibility (e.g. very constrained output), flexibility is still an option, but maintaining output would require additional headcount.

1.3 Determine flexibility needs and constraints

1-2 hours

Use the guidelines on the preceding slides to document the parameters of each work segment.

1. Determine work location flexibility. Work location looks at where a segment can complete all or some of their tasks (e.g. onsite vs. remote). For each prioritized employee segment, evaluate the amount of location flexibility available.
2. Identify work timing. Work timing looks at when work can or needs to be completed (e.g. Monday to Friday, 9am to 5pm).
3. Examine work deliverables. Work deliverables look at the employee's ability to deliver on their role expectations (e.g. quota or targets) and whether reducing the time spent working would, in all situations, impact the work deliverables (e.g. constrained vs. unconstrained).
4. Record your outputs on the "Current and Desired State" tab of the workbook.

Download the Targeted Flexible Work Program Workbook

Input

• List of employee segments

Output

• Summary of flexibility needs and constraints for each employee segment

Materials

• Targeted Flexible Work Program Workbook
  Or
• Fast-Track Hybrid Work Program Workbook

Participants

• Flexible work program committee
• Employee segment managers

Step 2

Identify potential flex options and assess feasibility

1. Assess employee and organizational flexibility needs
2. Identify potential flex options and assess feasibility
3. Implement selected option(s)

After completing this step you will have:

• Created a shortlist of potential options for each prioritized employee segment
• Evaluated the feasibility of each potential option
• Determined the cost and benefit of each potential option
• Gathered employee sentiment on potential options
• Finalized options with senior leadership

Prepare to identify and assess the feasibility of potential flexible work options

Evaluate feasibility by reviewing the option's impact on continued operations and job performance

Info-Tech Insight

Every role is eligible for hybrid location work. If onsite work duties prevent an employee group from participating, see if processes can be digitized or automated. Flexible work is an opportunity to go beyond current needs to future-proof your organization.

Assess the option's alignment with organizational culture

Determine the resources required for the option

Examine the option's risks

Determine whether the benefits of the option outweigh the costs

Include senior leadership in the net benefit process to ensure any unfeasible options are removed from consideration before presenting to employees.

1. Document the employee and employer benefits of the option from the previous feasibility factors on slides 29 to 32.

• Include the benefits of reaching program goals identified in Step 1.
• Quantify the benefits in dollar value where possible.

• Quantify the costs in dollar value where possible.

Info-Tech Insight

Flexible work options must balance organizational and employee needs. If an option is beneficial to employees but there is little or no benefit to the organization as a whole, or if the cost of the option is too high, it will not support the long-term success of the organization.

2.1a Identify and evaluate flexible work options

30 minutes per employee segment per work option

If you are only considering hybrid or remote work, skip to activity 2.1b. Use the guidelines on the preceding slides to conduct feasibility assessments.

1. Shortlist flexible work options. Review the Flexible Work Options Catalog to identify and shortlist five to seven flexible work options that are best suited to address the challenges faced for each of the priority employee segments. Record these on the "Options Shortlist" tab of the workbook. Even if the decision is simple, ensure you record the rationale to help communicate your decision to employees. Transparent communication is the best way to avoid feelings of unfairness if desired work options are not implemented.
2. Evaluate option feasibility. For each of the shortlisted options, complete one "Feasibility - Option" tab in the workbook. Make as many copies of this tab as needed.
   • When evaluating each option, consider each employee segment individually as you work through the prompts in the workbook. You may find that segments differ greatly in the feasibility of various types of flexible work. You will use this information to inform your overall policy and any exceptions to it.
   • You may need to involve each segment's management team to get an accurate picture of day-to-day responsibilities and flexible work feasibility.
3. Weigh benefits and costs. At the end of each flexible work option evaluation, record the anticipated costs and benefits. Discuss whether this balance renders the option viable or rules it out.

Download the Targeted Flexible Work Program Workbook

Download the Flexible Work Options Catalog

Input

• List of employee segments

Output

• Shortlist of flexible work options
• Feasibility analysis for each work option

Materials

• Targeted Flexible Work Program Workbook
• Flexible Work Options Catalog

Participants

• Flexible work program committee
• Employee segment managers

2.1b Assess hybrid work feasibility

30 minutes per employee segment

Use the guidelines on the preceding slides to conduct a feasibility assessment. This exercise relies on having trialed hybrid or remote work before. If you have never implemented any degree of remote work, consider completing the full feasibility assessment in activity 2.1a.

1. Evaluate hybrid work feasibility. Review the feasibility prompts on the "Work Unit Remote Work Assessment" tab and record your insight for each employee segment.
   • When evaluating each option, consider each employee segment individually as you work through the prompts in the workbook. You may find that segments differ greatly in their ability to accommodate hybrid work. You will use this information to inform your overall policy and any exceptions to it.
   • You may need to involve each segment's management team to get an accurate picture of day-to-day responsibilities and hybrid work feasibility.

Download the Fast-Track Hybrid Work Program Workbook

Input

• List of employee segments

Output

• Feasibility analysis for each work option

Materials

• Fast-Track Hybrid Work Program Workbook

Participants

• Flexible work program committee
• Employee segment managers

Ask employees which options they prefer and gather feedback for implementation

Deliver a survey and/or conduct focus groups with a selection of employees from all prioritized employee segments.

Share

• Present your draft list of options to select employees.
• Communicate that the organization is in the process of assessing the feasibility of flexible work options and would like employee input to ensure flex work meets needs.
• Be clear that the list is not final or guaranteed.

Ask

• Ask which options are preferred more than others.
• Ask for feedback on each option – how could it be modified to meet employee needs better? Use this information to inform implementation in Step 3.

Decide

• Prioritize an option if many employees indicated an interest in it.
• If employees indicate no interest in an option, consider eliminating it from the list, unless it will be required. There is no value in providing an option if employees won't use it.

Survey

• List the options and ask respondents to rate each on a Likert scale from 1 to 5.
• Ask some open-ended questions with comment boxes for employee suggestions.

Focus Group

• Conduct focus groups to gather deeper feedback.
• See Appendix I for sample focus group questions.

Info-Tech Insight

Prioritize flexible work options that employees want. Providing too many options often leads to information overload and results in employees not understanding what is available, lowering adoption of the flexible work program.

Finalize options list with senior leadership

1. Select one to three final options and outline the details of each. Include:
   • Scope: To what extent will the option be applied? E.g. work-from-home one or two days a week.
   • Eligibility: Which employee segments are eligible?
   • Cost: What investment will be required?
   • Critical implementation issues: Will any of the implementation issues identified for each feasibility factor impact whether the option will be approved?
   • Resources: What additional resources will be required (e.g. technology)?
2. Present the options to stakeholders for approval. Include:
   • An outline of the finalized options, including what the option is and the scope, eligibility, and critical implementation issues.
   • The feasibility assessment results, including benefits, costs, and employee preferences. Have more detail from the other factors ready if leaders ask about them.
   • The investment (cost) required to implement the option.
3. Proceed to Step 3 to implement approved options.

Running an IT pilot of flex work

• As a technology department, IT typically doesn't own flexible work implementation for the entire organization. However, it is common to trial flexible work options for IT first, before rolling out to the entire organization.
• During a flex work pilot, ensure you are working closely with HR partners, especially regarding regulatory and compliance issues.
• Keep the rest of the organizational stakeholders in the loop, especially regarding their agreement on the metrics by which the pilot's success will be evaluated.

2.2a Finalize flexible work options

2-3 hours + time to gather employee feedback

If you are only considering hybrid or remote work, skip to activity 2.2b. Use the guidelines on the preceding slides to gather final feedback and finalize work option selections.

1. Gather employee feedback. If employee preferences are already known, skip this step. If they are not, gather feedback to ascertain whether any of the shortlisted options are preferred. Remember that a successful flexible work program balances the needs of employees and the business, so employee preference is a key determinant in flexible work program success. Document this on the "Employee Preferences" tab of the workbook.
2. Finalize flexible work options. Use your notes on the cost-benefit balance for each option, along with employee preferences, to decide whether the move forward with it. Record this decision on the "Options Final List" tab. Include information about eligible employee segments and any implementation challenges that came up during the feasibility assessments. This is the final decision summary that will inform your flexible program parameters and policies.

Download the Targeted Flexible Work Program Workbook

Input

• Flexible work options shortlist

Output

• Final flexible work options list

Materials

• Targeted Flexible Work Program Workbook

Participants

• Flexible work program committee

2.2b Finalize hybrid work parameters

2-3 hours + time to gather employee feedback

Use the guidelines on the preceding slides to gather final feedback and finalize work option selections.

1. Summarize feasibility analysis. On the "Program Parameters" tab, record the main insights from your feasibility analysis. Finalize important elements, including eligibility for hybrid/remote work by employee segment. Additionally, record the standard parameters for the program (i.e. those that apply to all employee segments) and variable parameters (i.e. ones that differ by employee segment).

Download the Fast-Track Hybrid Work Program Workbook

Input

• Hybrid work feasibility analysis

Output

• Final hybrid work program parameters

Materials

• Fast-Track Hybrid Work Program Workbook

Participants

• Flexible work program committee

Step 3

Implement selected option(s)

1. Assess employee and organizational flexibility needs
2. Identify potential flex options and assess feasibility
3. Implement selected option(s)

After completing this step, you will have:

• Addressed implementation issues and cultural barriers
• Equipped the organization to adopt flexible work options successfully
• Piloted the program and assessed its success
• Developed a plan for program rollout and communication
• Established a program evaluation plan
• Aligned HR programs to support the program

Solve the implementation issues identified in your feasibility assessment

1. Identify a solution for each implementation issue documented in the Targeted Flexible Work Program Workbook. Consider the following when identifying solutions:
   • Scope: Determine whether the solution will be applied to one or all employee segments.
   • Stakeholders: Identify stakeholders to consult and develop a solution. If the scope is one employee segment, work with organizational leaders of that segment. When the scope is the entire organization, consult with senior leaders.
   • Implementation: Collaborate with stakeholders to solve implementation issues. Balance the organizational and employee needs, referring to data gathered in Steps 1 and 2.

Address cultural barriers by involving leaders

To shift a culture that is not supportive of flexible work, involve leaders in setting an example for employees to follow.

Shift symbols, values, and behaviors

• Work with senior leaders to identify symbols, values, and behaviors to modify to align with the selected flexible work options.
• Validate that the final list aligns with your organization's mission, vision, and values.

Info-Tech Insight

Leaders' collective support of the flexible program determines the program's successful adoption. Don't sweep cultural barriers under the rug; acknowledge and address them to overcome them.

Equip the organization for successful implementation

Info-Tech recommends providing managers and employees with a guide to flexible work, introducing policies, and providing training for managers.

3.1 Prepare for implementation

2-3 hours

Use the guidelines on the preceding slides to brainstorm solutions to implementation issues and prepare to communicate program rollout to stakeholders.

1. Solve implementation issues.
   • If you are working with the Targeted Flexible Work Program Workbook: For each implementation challenge identified on the "Final Options List" tab, brainstorm solutions. If you are working with the Fast-Track Hybrid Work Program Workbook: Work through the program enablement prompts on the "Program Enablement" tab.
   • You may need to involve relevant stakeholders to help you come up with appropriate solutions for each employee segment.
   • Ensure that any anticipated cultural barriers have been documented and are addressed during this step. Don't underestimate the importance of a supportive organizational culture to the successful rollout of flexible work.
2. Prepare the employee guide. Modify the Guide to Flexible Work for Managers and Employees template to reflect your final work options list and the processes and expectations employees will need to follow.
3. Create a communication plan. Use Info-Tech's Communicate Any IT Initiative blueprint and Appendix II to craft your messaging.

Download the Guide to Flexible Work for Managers and Employees

Download the Targeted Flexible Work Program Workbook

Input

• Flexible work options final list

Output

• Employee guide to flexible work
• Flexible work rollout communication plan

Materials

• Guide to Flexible Work for Managers and Employees
• Targeted Flexible Work Program Workbook
  Or
• Fast-Track Hybrid Work Program Workbook

Participants

• Flexible work program committee
• Employee segment managers

Run an IT pilot for flexible work

Assess the pilot's success and determine next steps

Review the feedback collected on the previous slide and use this decision tree to decide whether to relaunch a pilot or proceed to a full-scale rollout of the program.

Prepare for full-scale rollout

If you have run a team pilot prior to rolling out to all of IT, or run an IT pilot before an organizational rollout, use the following steps to transition from pilot to full rollout.

1. Determine modifications
   • Review the feedback gathered during the pilot and determine what needs to change for a full-scale implementation.
   • Update HR policies and programs to support flexible work. Work closely with your HR business partner and other organizational leaders to ensure every department's needs are understood and compliance issues are addressed.
2. Roll out and evaluate
   • Roll out the remainder of the program (e.g. to other employee segments or additional flexible work options) once there is significant uptake of the pilot by the target employee group and issues have been addressed.
   • Determine how feedback will be gathered after implementation, such as during engagement surveys, new hire and exit surveys, stay interviews, etc., and assess whether the program continues to meet employee and organizational needs.

Rolling out beyond IT

For a rollout beyond IT, HR will likely take over.

However, this is your chance to remain at the forefront of your organization's flexible work efforts by continuing to track success and gather feedback within IT.

Align HR programs and organizational policies to support flexible work

Organizational policies

Determine which organizational policies will be impacted as a result of the new flexible work options. For example, the introduction of flex time off can result in existing vacation policies needing to be updated.

Plan to re-evaluate the program and make improvements

Collect data

Info-Tech Insight

Negative performance of a flexible work option does not necessarily mean failure. Take the time to evaluate whether the option simply needs to be tweaked or whether it truly isn't working for the organization.

Insight summary

Overarching insight: IT excels at hybrid location work and is more effective as a business function when location, time, and time-off flexibility are an option for its employees.

Introduction

• Flexible work options are not a concession to lower productivity. Properly implemented, flex work enables employees to be more productive at reaching business goals.
• Employees' lived experiences and needs determine if people use flexible work programs – a flex program that has limited use or excludes people will not benefit the organization.
• Flexible work benefits everyone. IT employees experience greater engagement, motivation, and company loyalty. IT organizations realize benefits such as better service coverage, reduced facilities costs, and increased productivity.

Step 1 insight

• Hybrid work is a start. A comprehensive flex work program extends beyond flexible location to flexible time and time off. Organizations must understand the needs of unique employee groups to uncover the options that will attract and retain talent. Provide greater inclusivity to employees by broadening the scope to include flex location, flex time, and flex time off.
• No two employee segments are the same. To be effective, flexible work options must align with the expectations and working processes of each segment.

Step 2 insight

• Every role is eligible for hybrid location work. If onsite work duties prevent an employee group from participating, see if processes can be digitized or automated. Flexible work is an opportunity to go beyond current needs to future proofing your organization.
• Flexible work options must balance organizational and employee needs. If an option is beneficial to employees but there is little or no benefit to the organization, or if the cost of the option is too high, it will not support the long-term success of the organization.
• Prioritize flexible work options that employees want. Providing too many options often leads to information overload and results in employees not understanding what is available, lowering adoption of the flexible work program.

Step 3 insight

• Leaders' collective support of the flexible program determines the program's successful adoption. Don't sweep cultural barriers under the rug; acknowledge and address them to overcome them.
• Negative performance of a flexible work option does not necessarily mean failure. Take the time to evaluate whether the option simply needs to be tweaked or whether it truly isn't working for the organization.
• A set of formal guidelines for IT ensures flexible work is:
  1. Administered fairly across all IT employees.
  2. Defensible and clear.
  3. Scalable to the rest of the organization.

Research Contributors and Experts

Quinn Ross
CEO
The Ross Firm Professional Corporation

Margaret Yap
HR Professor
Ryerson University

Heather Payne
CEO
Juno College

Lee Nguyen
HR Specialist
City of Austin

Stacey Spruell
Division HR Director
Travis County

Don MacLeod
Chief Administrative Officer
Zorra Township

Stephen Childs
CHRO
Panasonic North America

Shawn Gibson
Sr. Director
Info Tech Research Group

Mari Ryan
CEO/Founder
Advancing Wellness

Sophie Wade
Founder
Flexcel Networks

Kim Velluso
VP Human Resources
Siemens Canada

Lilian De Menezes
Professor of Decision Sciences
Cass Business School, University of London

Judi Casey
WorkLife Consultant and former Director, Work and Family Researchers Network
Boston College

Chris Frame
Partner – Operations
LiveCA

Rose M. Stanley, CCP, CBP, WLCP, CEBS
People Services Manager
Sunstate Equipment Co., LLC

Shari Lava
Director, Vendor Research
Info-Tech Research Group

Carol Cochran
Director of People & Culture
FlexJobs

Kidde Kelly
OD Practitioner

Dr. David Chalmers
Adjunct Professor
Ted Rogers School of Management, Ryerson University

Kashmira Nagarwala
Change Manager
Siemens Canada

Dr. Isik U. Zeytinoglu
Professor of Management and Industrial Relations McMaster University, DeGroote School of Business

Claire McCartney
Diversity & Inclusion Advisor
CIPD

Teresa Hopke
SVP of Client Relations
Life Meets Work – www.lifemeetswork.com

Mark Tippey
IT Leader and Experienced Teleworker

Dr. Kenneth Matos
Senior Director of Research
Families and Work Institute

1 anonymous contributor

Appendix I: Sample focus group questions

See Info-Tech's Focus Group Guidefor guidance on setting up and delivering focus groups. Customize the guide with questions specific to flexible work (see sample questions below) to gain deeper insight into employee preferences for the feasibility assessment in Step 2 of this blueprint.

Document themes in the Targeted Flexible Work Program Workbook.

• What do you need to balance/integrate your work with your personal life?
• What challenges do you face in achieving work-life balance/integration?
• What about your job is preventing you from achieving work-life balance/integration?
• How would [flexible work option] help you achieve work-life balance/integration?
• How well would this option work with the workflow of your team or department? What would need to change?
• What challenges do you see in adopting [flexible work option]?
• What else would be helpful for you to achieve work-life balance/integration?
• How could we customize [flexible work option] to ensure it meets your needs?
• If this program were to fail, what do you think would be the top reasons and why?

Appendix II: Communication key messaging

Works Cited

Baziuk, Jennifer, and Duncan Meadows. "Global Employee Survey - Key findings and implications for ICMIF." EY, June 2021. Accessed May 2022.
"Businesses suffering 'commitment issues' on flexible working," EY, 21 Sep. 2021. Accessed May 2022.
"IT Talent Trends 2022". Info-Tech Research Group, 2022.
"Jabra Hybrid Ways of Working: 2021 Global Report." Jabra, Aug. 2021. Accessed May 2022.
LinkedIn Talent Solutions. "2022 Global Talent Trends." LinkedIn, 2022. Accessed May 2022.
Lobosco, Mark. "The Future of Work is Flexible: 71% of Leaders Feel Pressure to Change Working Models." LinkedIn, 9 Sep. 2021. Accessed May 2022.
Ohm, Joy, et al. "Covid-19: Women, Equity, and Inclusion in the Future of Work." Catalyst, 28 May 2020. Accessed May 2022.
Pelta, Rachel. "Many Workers Have Quit or Plan to After Employers Revoke Remote Work." FlexJobs, 2021. Accessed May 2022.
Slack Future Forum. "Inflexible return-to-office policies are hammering employee experience scores." Slack, 19 April 2022. Accessed May 2022.
"State of Hybrid Work in IT: A Trend Report". Info-Tech Research Group, 2023.
Threlkeld, Kristy. "Employee Burnout Report: COVID-19's Impact and 3 Strategies to Curb It." Indeed, 11 March 2021. Accessed March 2022.

Service Management Integration With Agile Practices

Understand how Agile transformation affects service management

Analyst Perspective

Don't forget about operations

Many organizations believe that once they have implemented Agile that they no longer need any service management framework, like ITIL. They see service management as "old" and a roadblock to deliver products and services quickly. The culture clash is obvious, and it is the most common challenge people face when trying to integrate Agile and service management. However, it is not the only challenge. Agile methodologies are focused on optimized delivery. However, what happens after delivery is often overlooked. Operations may not receive proper communication or documentation, and processes are cumbersome or non-existent. This is a huge paradox if an organization is trying to become nimbler. You need to find ways to integrate your Agile practices with your existing Service Management processes.

Renata Lopes
Senior Research Analyst
Organizational Transformation Practice
Info-Tech Research Group

Executive Summary

Your Challenge

• Work efficiently and in harmony with Agile and service management to deliver business value.
• Optimize the value stream of services and products.
• Leverage the benefits of each practice.
• Create a culture of collaboration to support a rapidly changing business.

Common Obstacles

• Culture clashes.
• Inefficient or inexistent processes.
• Lack of understanding of what Agile and service management mean.
• Leadership doesn't understand the integration points of practices.
• Development overlooks the operations requirement.

Info-Tech's Approach

• When integrating Agile and service management practices start by understanding the key integration points:
• Processes
• People and resources
• Governance and org structure

Info-Tech Insight

Agile and Service Management are not necessarily at odds Find the integration points to solve specific problems.

Your challenge

Deliver seamless business value by integrating service management and Agile development.

• Understand how Agile development impacts service management.
• Identify bottlenecks and inefficiencies when integrating with service management.
• Connect teams across the organization to collaborate toward the organizational goals.
• Ensure operational requirements are considered while developing products in an Agile way.
• Stay in alignment when designing and delivering services.

The most significant Agile adoption barriers

46% of respondents identified inconsistent processes and practices across teams as a challenge.
Source: Digital.ai, 2021

43% of respondents identified Culture clashes as a challenge.
Source: Digital.ai, 2021

What is Agile?

Agile development is an umbrella term for several iterative and incremental development methodologies to develop products.

In order to achieve Agile development, organizations will adopt frameworks and methodologies like Scaled Agile Framework (SAFe), Scrum, Large Scaled Scrum (LeSS), DevOps, Spotify Way of Working (WoW), etc.

• DevOps
• WoW
• SAFe
• Scrum
• LeSS

Mergers & Acquisitions: The Sell Blueprint

For IT leaders who want to have a role in the transaction process when their business is engaging in an M&A sale or divestiture.

EXECUTIVE BRIEF

Analyst Perspective

Don’t wait to be invited to the M&A table, make it.

Brittany Lutes
Research Analyst,
CIO Practice
Info-Tech Research Group

Ibrahim Abdel-Kader
Research Analyst,
CIO Practice
Info-Tech Research Group

IT has always been an afterthought in the M&A process, often brought in last minute once the deal is nearly, if not completely, solidified. This is a mistake. When IT is brought into the process late, the business misses opportunities to generate value related to the transaction and has less awareness of critical risks or inaccuracies.

To prevent this mistake, IT leadership needs to develop strong business relationships and gain respect for their innovative suggestions. In fact, when it comes to modern M&A activity, IT should be the ones suggesting potential transactions to meet business needs, specifically when it comes to modernizing the business or adopting digital capabilities.

IT needs to stop waiting to be invited to the acquisition or divestiture table. IT needs to suggest that the table be constructed and actively work toward achieving the strategic objectives of the business.

Executive Summary

Your Challenge

There are four key scenarios or entry points for IT as the selling/divesting organization in M&As:

• IT can suggest a divestiture to meet the business objectives of the organization.
• IT is brought in to strategy plan the sale/divestiture from both the business’ and IT’s perspectives.
• IT participates in due diligence activities and complies with the purchasing organization’s asks.
• IT needs to reactively prepare its environment to enable the separation.

Consider the ideal scenario for your IT organization.

Common Obstacles

Some of the obstacles IT faces include:

• IT is often told about the transaction once the deal has already been solidified and is now forced to meet unrealistic business demands.
• The business does not trust IT and therefore does not approach IT to define value or reduce risks to the transaction process.
• The people and culture element is forgotten or not given adequate priority.

These obstacles often arise when IT waits to be invited into the transaction process and misses critical opportunities.

Info-Tech's Approach

Prepare for a sale/divestiture transaction by:

• Recognizing the trend for organizations to engage in M&A activity and the increased likelihood that, as an IT leader, you will be involved in a transaction in your career.
• Creating a standard strategy that will enable strong program management.
• Properly considering all the critical components of the transaction and integration by prioritizing tasks that will reduce risk, deliver value, and meet stakeholder expectations.

Info-Tech Insight

As the number of merger, acquisition, and divestiture transactions continues to increase, so too does IT’s opportunity to leverage the growing digital nature of these transactions and get involved at the onset.

The changing M&A landscape

Businesses will embrace more digital M&A transactions in the post-pandemic world

• When the pandemic occurred, businesses reacted by either pausing (61%) or completely cancelling (46%) deals that were in the mid-transaction state (Deloitte, 2020). The uncertainty made many organizations consider whether the risks would be worth the potential benefits.
• However, many organizations quickly realized the pandemic is not a hindrance to M&A transactions but an opportunity. Over 16,000 American companies were involved in M&A transactions in the first six months of 2021 (The Economist). For reference, this had been averaging around 10,000 per six months from 2016 to 2020.
• In addition to this transaction growth, organizations have increasingly been embracing digital. These trends increase the likelihood that, as an IT leader, you will engage in an M&A transaction. However, it is up to you when you get involved in the transactions.

The total value of transactions in the year after the pandemic started was $1.3 billion – a 93% increase in value compared to before the pandemic. (Nasdaq)

71% of technology companies anticipate that divestitures will take place as a result of the COVID-19 pandemic. (EY, 2020)

Your challenge

IT is often not involved in the M&A transaction process. When it is, it’s often too late.

• The most important driver of an acquisition is the ability to access new technology (DLA Piper), and yet 50% of the time, IT isn’t involved in the M&A transaction at all (IMAA Institute, 2017).
• Additionally, IT’s lack of involvement in the process negatively impacts the business:
  • Most organizations (60%) do not have a standardized approach to integration (Steeves and Associates), let alone separation.
  • Two-thirds of the time, the divesting organization and acquiring organization will either fail together or succeed together (McKinsey, 2015).
  • Less than half (47%) of organizations actually experience the positive results sought by the M&A transaction (Steeves and Associates).
• Organizations pursuing M&A and not involving IT are setting themselves up for failure.

Only half of M&A deals involve IT (Source: IMAA Institute, 2017)

Common Obstacles

These barriers make this challenge difficult to address for many organizations:

• IT is rarely afforded the opportunity to participate in the transaction deal. When IT is invited, this often happens later in the process where separation will be critical to business continuity.
• IT has not had the opportunity to demonstrate that it is a valuable business partner in other business initiatives.
• One of the most critical elements that IT often doesn’t take the time or doesn’t have the time to focus on is the people and leadership component.
• IT waits to be invited to the process rather then actively involving themselves and suggesting how value can be added to the process.

In hindsight, it’s clear to see: Involving IT is just good business.

47% of senior leaders wish they would have spent more time on IT due diligence to prevent value erosion. (Source: IMAA Institute, 2017)

“Solutions exist that can save well above 50 percent on divestiture costs, while ensuring on-time delivery.” (Source: SNP)

Info-Tech's approach

Acquisitions & Divestitures Framework

Acquisitions and divestitures are inevitable in modern business, and IT’s involvement in the process should be too. This progression is inspired by:

1. The growing trend for organizations to increase, decrease, or evolve through these types of transactions.
2. Transactions that are driven by digital motivations, requiring IT’s expertise.
3. A maturing business perspective of IT, preventing the difficulty that IT is faced with when invited into the transaction process late.
4. There never being such a thing as a true merger, making the majority of M&A activity either acquisitions or divestitures.

The business’ view of IT will impact how soon IT can get involved

There are four key entry points for IT

1. Innovator: IT suggests a sale or divestiture to meet the business objectives of the organization.
2. Business Partner: IT is brought in to strategy plan the sale/divestiture from both the business’ and IT’s perspective.
3. Trusted Operator: IT participates in due diligence activities and complies with the purchasing organization’s asks.
4. Firefighter: IT needs to reactively prepare its environment in order to enable the separation.

Merger, acquisition, and divestiture defined

Merger

A merger looks at the equal combination of two entities or organizations. Mergers are rare in the M&A space, as the organizations will combine assets and services in a completely equal 50/50 split. Two organizations may also choose to divest business entities and merge as a new company.

Acquisition

The most common transaction in the M&A space, where an organization will acquire or purchase another organization or entities of another organization. This type of transaction has a clear owner who will be able to make legal decisions regarding the acquired organization.

Divestiture

An organization may decide to sell partial elements of a business to an acquiring organization. They will separate this business entity from the rest of the organization and continue to operate the other components of the business.

Info-Tech Insight

A true merger does not exist, as there is always someone initiating the discussion. As a result, most M&A activity falls into acquisition or divestiture categories.

Selling vs. buying

The M&A process approach differs depending on whether you are the selling or buying organization

This blueprint is only focused on the sell side:

• Examples of sell-related scenarios include:
  • Your organization is selling to another organization with the intent of keeping its regular staff, operations, and location. This could mean minimal separation is required.
  • Your organization is selling to another organization with the intent of separating to be a part of the purchasing organization.
  • Your organization is engaging in a divestiture with the intent of:
    • Separating components to be part of the purchasing organization permanently.
    • Separating components to be part of a spinoff and establish a unit as a standalone new company.
• As the selling organization, you could proactively seek out suitors to purchase all or components of your organization, or you could be approached by an organization.

The buy side is focused on:

• More than two organizations could be involved in a transaction.
• Examples of buy-related scenarios include:
  • Your organization is buying another organization with the intent of having the purchased organization keep its regular staff, operations, and location. This could mean minimal integration is required.
  • Your organization is buying another organization in its entirety with the intent of integrating it into your original company.
  • Your organization is buying components of another organization with the intent of integrating them into your original company.
• As the purchasing organization, you will probably be initiating the purchase and thus will be valuating the selling organization during due diligence and leading the execution plan.

For more information on acquisitions or purchases, check out Info-Tech’s Mergers & Acquisitions: The Buy Blueprint.

Core business timeline

For IT to be valuable in M&As, you need to align your deliverables and your support to the key activities the business and investors are working on.

Info-Tech’s methodology for Selling Organizations in Mergers, Acquisitions, or Divestitures

Metrics for each phase

IT's role in the selling transaction

And IT leaders have a greater likelihood than ever of needing to support a merger, acquisition, or divestiture.

1. Reduced Risk

   IT can identify risks that may go unnoticed when IT is not involved.

2. Increased Accuracy

   The business can make accurate predictions around the costs, timelines, and needs of IT.

3. Faster Integration

   Faster integration means faster value realization for the business.

4. Informed Decision Making

   IT leaders hold critical information that can support the business in moving the transaction forward.

5. Innovation

   IT can suggest new opportunities to generate revenue, optimize processes, or reduce inefficiencies.

The IT executive’s critical role is demonstrated by:

• Reduced Risk

  47% of senior leaders wish they would have spent more time on IT due diligence to prevent value erosion (IMAA Institute, 2017).

• Increased Accuracy

  Sellers often only provide 15 to 30 days for the acquiring organization to decide (Forbes, 2018), increasing the necessity of accurate pricing.

• Faster Integration

  36% of CIOs have visibility into only business unit data, making the divestment a challenge (EY, 2021).

• Informed Decision Making

  Only 38% of corporate and 22% of private equity firms include IT as a significant aspect in their transaction approach (IMAA Institute, 2017).

• Innovation

  Successful CIOs involved in M&As can spend 70% of their time on aspects outside of IT and 30% of their time on technology and delivery (CIO).

Playbook benefits

IT Benefits

• IT will be seen as an innovative partner to the business, and its suggestions and involvement in the organization will lead to benefits, not hindrances.
• Develop a streamlined method to prepare the IT environment for potential carve-out and separations, ensuring risk management concerns are brought to the business’ attention immediately.
• Create a comprehensive list of items that IT needs to do during the separation that can be prioritized and actioned.

Business Benefits

• The business will get accurate and relevant information about its IT environment in order to sell or divest the company to the highest bidder for a true price.
• Fewer business interruptions will happen, because IT can accurately plan for and execute the high-priority separation tasks.
• The business can obtain a high-value offer for the components of IT being sold and can measure the ongoing value the sale will bring.

Insight summary

Overarching Insight

IT controls if and when it gets invited to support the business through a purchasing growth transaction. Take control of the process, demonstrate the value of IT, and ensure that separation of IT environments does not lead to unnecessary and costly decisions.

Proactive Insight

CIOs on the forefront of digital transformation need to actively look for and suggest opportunities to acquire or partner on new digital capabilities to respond to rapidly changing business needs.

Discovery & Strategy Insight

IT organizations that have an effective M&A program plan are more prepared for the transaction, enabling a successful outcome. A structured strategy is particularly necessary for organizations expected to deliver M&As rapidly and frequently.

Due Diligence & Preparation Insight

IT often faces unnecessary separation challenges because of a lack of preparation. Secure the IT environment and establish how IT will retain employees early in the transaction process.

Execution & Value Realization Insight

IT needs to demonstrate value and cost savings within 100 days of the transaction. The most successful transactions are when IT continuously realizes synergies a year after the transaction and beyond.

Blueprint deliverables

Key Deliverable: M&A Sell Playbook

The M&A Sell Playbook should be a reusable document that enables your IT organization to successfully deliver on any divestiture transaction.

M&A Sell One-Pager

See a one-page overview of each phase of the transaction.

M&A Sell Case Studies

Read a one-page case study for each phase of the transaction.

M&A Separation Project Management Tool (SharePoint)

Manage the separation process of the divestiture/sale using this SharePoint template.

M&A Separation Project Management Tool (Excel)

Manage the separation process of the divestiture/sale using this Excel tool if you can’t or don’t want to use SharePoint.

Info-Tech offers various levels of support to best suit your needs

Diagnostics and consistent frameworks used throughout all four options

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.

A typical GI is between 6 to 10 calls over the course of 2 to 4 months.

Proactive Phase

• Call #1: Scope requirements, objectives, and your specific challenges.

Discovery & Strategy Phase

• Call #2: Determine stakeholders and business perspectives on IT.
• Call #3: Identify how M&A could support business strategy and how to communicate.

Due Diligence & Preparation Phase

• Call #4: Establish a transaction team and divestiture/sale strategic direction.
• Call #5: Create program metrics and identify a standard separation strategy.
• Call #6: Prepare to carve out the IT environment.
• Call #7: Identify the separation program plan.

Execution & Value Realization Phase

• Call #8: Establish employee transitions to retain key staff.
• Call #9: Assess IT’s ability to deliver on the divestiture/sale transaction.

The Sell Blueprint

Phase 1

Proactive

This phase will walk you through the following activities:

• Conduct the CEO-CIO Alignment diagnostic
• Conduct the CIO Business Vision diagnostic
• Visualize relationships among stakeholders to identify key influencers
• Group stakeholders into categories
• Prioritize your stakeholders
• Plan to communicate
• Valuate IT
• Assess the IT/digital strategy
• Determine pain points and opportunities
• Align goals to opportunities
• Recommend reduction opportunities

This phase involves the following participants:

• IT and business leadership

What is the Proactive phase?

Embracing the digital drivers

As the number of merger, acquisition, or divestiture transactions driven by digital means continues to increase, IT has an opportunity to not just be involved in a transaction but actively seek out potential deals.

In the Proactive phase, the business is not currently considering a transaction. However, the business could consider one to reach its strategic goals. IT organizations that have developed respected relationships with the business leaders can suggest these potential transactions.

Understand the business’ perspective of IT, determine who the critical M&A stakeholders are, valuate the IT environment, and examine how it supports the business goals in order to suggest an M&A transaction.

In doing so, IT isn’t waiting to be invited to the transaction table – it’s creating it.

Goal: To support the organization in reaching its strategic goals by suggesting M&A activities that will enable the organization to reach its objectives faster and with greater-value outcomes.

Proactive Prerequisite Checklist

Before coming into the Proactive phase, you should have addressed the following:

• Understand what mergers, acquisitions, and divestitures are.
• Understand what mergers, acquisitions, and divestitures mean for the business.
• Understand what mergers, acquisitions, and divestitures mean for IT.

Review the Executive Brief for more information on mergers, acquisitions, and divestitures for selling organizations.

Proactive

Step 1.1

Identify M&A Stakeholders and Their Perspective of IT

Activities

• 1.1.1 Conduct the CEO-CIO Alignment diagnostic
• 1.1.2 Conduct the CIO Business Vision diagnostic
• 1.1.3 Visualize relationships among stakeholders to identify key influencers
• 1.1.4 Group stakeholders into categories
• 1.1.5 Prioritize your stakeholders
• 1.16 Plan to communicate

This step involves the following participants:

• IT executive leader
• IT leadership
• Critical M&A stakeholders

Outcomes of Step

Understand how the business perceives IT and establish strong relationships with critical M&A stakeholders.

Business executives' perspectives of IT

Leverage diagnostics and gain alignment on IT’s role in the organization

• To suggest or get involved with a merger, acquisition, or divestiture, the IT executive leader needs to be well respected by other members of the executive leadership team and the business.
• Specifically, the Proactive phase relies on the IT organization being viewed as an Innovator within the business.
• Identify how the CEO/business executive currently views IT and where they would like IT to move within the Maturity Ladder.
• Additionally, understand how other critical department leaders view IT and how they view the partnership with IT.

Misalignment in target state requires further communication between the CIO and CEO to ensure IT is striving toward an agreed-upon direction.

Info-Tech’s CIO Business Vision (CIO BV) diagnostic measures a variety of high-value metrics to provide a well-rounded understanding of stakeholder satisfaction with IT.

Business Satisfaction and Importance for Core Services

The core services of IT are important when determining what IT should focus on. The most important services with the lowest satisfaction offer the largest area of improvement for IT to drive business value.

1.1.1 Conduct the CEO-CIO Alignment diagnostic

Input: IT organization expertise and the CEO-CIO Alignment diagnostic

Output: An understanding of an executive business stakeholder’s perception of IT

Materials: M&A Sell Playbook, CEO-CIO Alignment diagnostic

Participants: IT executive/CIO, Business executive/CEO

1. The CEO-CIO Alignment diagnostic can be a powerful input. Speak with your Info-Tech account representative to conduct the diagnostic. Use the results to inform current IT capabilities.
2. You may choose to debrief the results of your diagnostic with an Info-Tech analyst. We recommend this to help your team understand how to interpret and draw conclusions from the results.
3. Examine the results of the survey and note where there might be specific capabilities that could be improved.
4. Determine whether there are any areas of significant disagreement between the you and the CEO. Mark down those areas for further conversations. Additionally, take note of areas that could be leveraged to support transactions or support your rationale in recommending transactions.

Download the sample report.

Record the results in the M&A Sell Playbook.

1.1.2 Conduct the CIO Business Vision diagnostic

2 weeks

Input: IT organization expertise, CIO BV diagnostic

Output: An understanding of business stakeholder perception of certain IT capabilities and services

Materials: M&A Buy Playbook, CIO Business Vision diagnostic

Participants: IT executive/CIO, Senior business leaders

1. The CIO Business Vision (CIO BV) diagnostic can be a powerful tool for identifying IT capability focus areas. Speak with your account representative to conduct the CIO BV diagnostic. Use the results to inform current IT capabilities.
2. You may choose to debrief the results of your diagnostic with an Info-Tech analyst. We recommend this to help your team understand how to interpret the results and draw conclusions from the diagnostic.
3. Examine the results of the survey and take note of any IT services that have low scores.
4. Read through the diagnostic comments and note any common themes. Especially note which stakeholders identified they have a favorable relationship with IT and which stakeholders identified they have an unfavorable relationship. For those who have an unfavorable relationship, identify if they will have a critical role in a growth transaction.

Download the sample report.

Record the results in the M&A Sell Playbook.

Create a stakeholder network map for M&A transactions

Follow the trail of breadcrumbs from your direct stakeholders to their influencers to uncover hidden stakeholders.

Example:

Legend
• Black arrows indicate the direction of professional influence
• Dashed green arrows indicate bidirectional, informal influence relationships

Info-Tech Insight

Your stakeholder map defines the influence landscape that the M&A transaction will occur within. This will identify who holds various levels of accountability and decision-making authority when a transaction does take place.

Use connectors to determine who may be influencing your direct stakeholders. They may not have any formal authority within the organization, but they may have informal yet substantial relationships with your stakeholders.

1.1.3 Visualize relationships among stakeholders to identify key influencers

1-3 hours

Input: List of M&A stakeholders

Output: Relationships among M&A stakeholders and influencers

Materials: Flip charts, Markers, Sticky notes, M&A Sell Playbook

Participants: IT executive leadership

1. The purpose of this activity is to list all the stakeholders within your organization that will have a direct or indirect impact on the M&A transaction.
2. Determine the critical stakeholders, and then determine the stakeholders of your stakeholders and consider adding each of them to the stakeholder list.
3. Assess who has either formal or informal influence over your stakeholders; add these influencers to your stakeholder list.
4. Construct a diagram linking stakeholders and their influencers together.
   • Use black arrows to indicate the direction of professional influence.
   • Use dashed green arrows to indicate bidirectional, informal influence relationships.

Record the results in the M&A Sell Playbook.

Categorize your stakeholders with a prioritization map

A stakeholder prioritization map helps IT leaders categorize their stakeholders by their level of influence and ownership in the merger, acquisition, or divestiture process.

There are four areas in the map, and the stakeholders within each area should be treated differently.

Players – players have a high interest in the initiative and the influence to effect change over the initiative. Their support is critical, and a lack of support can cause significant impediment to the objectives.

Mediators – mediators have a low interest but significant influence over the initiative. They can help to provide balance and objective opinions to issues that arise.

Noisemakers – noisemakers have low influence but high interest. They tend to be very vocal and engaged, either positively or negatively, but have little ability to enact their wishes.

Spectators – generally, spectators are apathetic and have little influence over or interest in the initiative.

1.1.4 Group stakeholders into categories

30 minutes

Input: Stakeholder map, Stakeholder list

Output: Categorization of stakeholders and influencers

Materials: Flip charts, Markers, Sticky notes, M&A Sell Playbook

Participants: IT executive leadership, Stakeholders

1. Identify your stakeholders’ interest in and influence on the M&A process as high, medium, or low by rating the attributes below.
2. Map your results to the model to the right to determine each stakeholder’s category.

Level of Influence

• Power: Ability of a stakeholder to effect change.
• Urgency: Degree of immediacy demanded.
• Legitimacy: Perceived validity of stakeholder’s claim.
• Volume: How loud their “voice” is or could become.
• Contribution: What they have that is of value to you.

Level of Interest

How much are the stakeholder’s individual performance and goals directly tied to the success or failure of the product?

Record the results in the M&A Sell Playbook.

Prioritize your stakeholders

There may be too many stakeholders to be able to manage them all. Focus your attention on the stakeholders that matter most.

Consider the three dimensions for stakeholder prioritization: influence, interest, and support. Support can be determined by answering the following question: How significant is that stakeholder to the M&A or divestiture process?

These parameters are used to prioritize which stakeholders are most important and should receive your focused attention.

1.1.5 Prioritize your stakeholders

30 minutes

Input: Stakeholder matrix

Output: Stakeholder and influencer prioritization

Materials: Flip charts, Markers, Sticky notes, M&A Sell Playbook

Participants: IT executive leadership, M&A/divestiture stakeholders

1. Identify the level of support of each stakeholder by answering the following question: How significant is that stakeholder to the M&A transaction process?
2. Prioritize your stakeholders using the prioritization scheme on the previous slide.

Record the results in the M&A Sell Playbook.

Define strategies for engaging stakeholders by type

Info-Tech Insight

Each group of stakeholders draws attention and resources away from critical tasks. By properly identifying stakeholder groups, the IT executive leader can develop corresponding actions to manage stakeholders in each group. This can dramatically reduce wasted effort trying to satisfy Spectators and Noisemakers while ensuring the needs of Mediators and Players are met.

1.1.6 Plan to communicate

30 minutes

Input: Stakeholder priority, Stakeholder categorization, Stakeholder influence

Output: Stakeholder communication plan

Materials: Flip charts, Markers, Sticky notes, M&A Sell Playbook

Participants: IT executive leadership, M&A/divestiture stakeholders

The purpose of this activity is to make a communication plan for each of the stakeholders identified in the previous activities, especially those who will have a critical role in the M&A transaction process.

1. In the M&A Sell Playbook, input the type of influence each stakeholder has on IT, how they would be categorized in the M&A process, and their level of priority. Use this information to create a communication plan.
2. Determine the methods and frequency of communication to keep the necessary stakeholder satisfied and maintain or enhance IT’s profile within the organization.

Record the results in the M&A Sell Playbook.

Proactive

Step 1.2

Assess IT’s Current Value and Method to Achieve a Future State

Activities

• 1.2.1 Valuate IT
• 1.2.2 Assess the IT/digital strategy

This step involves the following participants:

• IT executive leader
• IT leadership
• Critical stakeholders to M&A

Outcomes of Step

Identify critical opportunities to optimize IT and meet strategic business goals through a merger, acquisition, or divestiture.

How to valuate your IT environment

And why it matters so much

• Valuating your current organization’s IT environment is a critical step that all IT organizations should take, whether involved in an M&A or not, to fully understand what it might be worth.
• The business investments in IT can be directly translated into a value amount. For every $1 invested in IT, the business might be gaining $100 in value back or possibly even loosing $100.
• Determining, documenting, and communicating this information ensures that the business takes IT’s suggestions seriously and recognizes why investing in IT is so critical.
• There are three ways a business or asset can be valuated:
  • Cost Approach: Look at the costs associated with building, purchasing, replacing, and maintaining a given aspect of the business.
  • Market Approach: Look at the relative value of a particular aspect of the business. Relative value can fluctuate and depends on what the markets and consequently society believe that particular element is worth.
  • Discounted Cash Flow Approach: Focus on what the potential value of the business could be or the intrinsic value anticipated due to future profitability.
(Source: “Valuation Methods,” Corporate Finance Institute)

Four ways to create value through digital

1. Reduced costs
2. Improved customer experience
3. New revenue sources
4. Better decision making
(Source: McKinsey & Company)

1.2.1 Valuate IT

1 day

Input: Valuation of data, Valuation of applications, Valuation of infrastructure and operations, Valuation of security and risk

Output: Valuation of IT

Materials: Relevant templates/tools listed on the following slides, Capital budget, Operating budget, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership

The purpose of this activity is to demonstrate that IT is not simply an operational functional area that diminishes business resources. Rather, IT contributes significant value to the business.

1. Review each of the following slides to valuate IT’s data, applications, infrastructure and operations, and security and risk. These valuations consider several tangible and intangible factors and result in a final dollar amount.
2. Input the financial amounts identified for each critical area into a summary slide. Use this information to determine where IT is delivering value to the organization.

Info-Tech Insight

Consistency is key when valuating your IT organization as well as other IT organizations throughout the transaction process.

Record the results in the M&A Sell Playbook.

Data valuation

Data valuation identifies how you monetize the information that your organization owns.

Create a data value chain for your organization

When valuating the information and data that exists in an organization, there are many things to consider.

Info-Tech has two tools that can support this process:

1. Information Asset Audit Tool: Use this tool first to take inventory of the different information assets that exist in your organization.
2. Data Valuation Tool: Once information assets have been accounted for, valuate the data that exists within those information assets.

Instructions

1. Using the Data Valuation Tool, start gathering information based on the eight steps above to understand your organization’s journey from data to value.
2. Identify the data value spectrum. (For example: customer sales service, citizen licensing service, etc.)
3. Fill out the columns for data sources, data collection, and data first.
4. Capture data analysis and related information.
5. Then capture the value in data.
6. Add value dimensions such as usage, quality, and economic dimensions.
   • Remember that economic value is not the only dimension, and usage/quality has a significant impact on economic value.
7. Collect evidence to justify your data valuation calculator (market research, internal metrics, etc.).
8. Finally, calculate the value that has a direct correlation with underlying value metrics.

Application valuation

Calculate the value of your IT applications

When valuating the applications and their users in an organization, consider using a business process map. This shows how business is transacted in the company by identifying which IT applications support these processes and which business groups have access to them. Info-Tech has a business process mapping tool that can support this process:

• Enterprise Integration Process Mapping Tool: Complete this tool first to map the different business processes to the supporting applications in your organization.

Instructions

1. Start by calculating user costs. This is the multiplication of: (# of users) × (% of time spent using IT) × (fully burdened salary).
2. Identify the revenue per employee and divide that by the average cost per employee to calculate the derived productivity ratio (DPR).
3. Once you have calculated the user costs and DPR, multiply those total values together to get the application value.

User Costs			Total User Costs	Derived Productivity Ratio (DPR)		Total DPR	Application Value
# of users	% time spent using IT	Fully burdened salary	Multiply values from the 3 user costs columns	Revenue per employee	Average cost per employee	(Revenue P.E) ÷ (Average cost P.E)	(User costs) X (DPR)



4. Once the total application value is established, calculate the combined IT and business costs of delivering that value. IT and business costs include inflexibility (application maintenance), unavailability (downtime costs, including disaster exposure), IT costs (common costs statistically allocated to applications), and fully loaded cost of active (full-time equivalent [FTE]) users.
5. Calculate the net value of applications by subtracting the total IT and business costs from the total application value calculated in step 3.

IT and Business Costs				Total IT and Business Costs	Net Value of Applications
Application maintenance	Downtime costs (include disaster exposure)	Common costs allocated to applications	Fully loaded costs of active (FTE) users	Sum of values from the four IT and business costs columns	(Application value) – (IT and business costs)

(Source: CSO)

Infrastructure valuation

Assess the foundational elements of the business’ information technology

The purpose of this exercise is to provide a high-level infrastructure valuation that will contribute to valuating your IT environment.

Calculating the value of the infrastructure will require different methods depending on the environment. For example, a fully cloud-hosted organization will have different costs than a fully on-premises IT environment.

Instructions:

1. Start by listing all of the infrastructure-related items that are relevant to your organization.
2. Once you have finalized your items column, identify the total costs/value of each item.
   • For example, total software costs would include servers and storage.
3. Calculate the total cost/value of your IT infrastructure by adding all of values in the right column.

For additional support, download the M&A Runbook for Infrastructure and Operations.

Risk and security

Assess risk responses and calculate residual risk

The purpose of this exercise is to provide a high-level risk assessment that will contribute to valuating your IT environment. For a more in-depth risk assessment, please refer to the Info-Tech tools below:

1. Risk Register Tool
2. Security M&A Due Diligence Tool

Instructions

1. Review the probability and impact scales below and ensure you have the appropriate criteria that align to your organization before you conduct a risk assessment.
2. Identify the probability of occurrence and estimated financial impact for each risk category detail and fill out the table on the right. Customize the table as needed so it aligns to your organization.

Probability of Risk Occurrence	Occurrence Criteria (Classification; Probability of Risk Event Within One Year)
Negligible	Very Unlikely; ‹20%
Very Low	Unlikely; 20 to 40%
Low	Possible; 40 to 60%
Moderately Low	Likely; 60 to 80%
Moderate	Almost Certain; ›80%

Note: If needed, you can customize this scale with the severity designations that you prefer. However, make sure you are always consistent with it when conducting a risk assessment.

1.2.2 Assess the IT/digital strategy

4 hours

Input: IT strategy, Digital strategy, Business strategy

Output: An understanding of an executive business stakeholder’s perception of IT, Alignment of IT/digital strategy and overall organization strategy

Materials: Computer, Whiteboard and markers, M&A Sell Playbook

Participants: IT executive/CIO, Business executive/CEO

The purpose of this activity is to review the business and IT strategies that exist to determine if there are critical capabilities that are not being supported.

Ideally, the IT and digital strategies would have been created following development of the business strategy. However, sometimes the business strategy does not directly call out the capabilities it requires IT to support.

1. On the left half of the corresponding slide in the M&A Sell Playbook, document the business goals, initiatives, and capabilities. Input this information from the business or digital strategies. (If more space for goals, initiatives, or capabilities is needed, duplicate the slide).
2. On the other half of the slide, document the IT goals, initiatives, and capabilities. Input this information from the IT strategy and digital strategy.

For additional support, see Build a Business-Aligned IT Strategy.

Record the results in the M&A Sell Playbook.

Proactive

Step 1.3

Drive Innovation and Suggest Growth Opportunities

Activities

• 1.3.1 Determine pain points and opportunities
• 1.3.2 Align goals with opportunities
• 1.3.3 Recommend reduction opportunities

This step involves the following participants:

• IT executive leader
• IT leadership
• Critical M&A stakeholders

Outcomes of Step

Establish strong relationships with critical M&A stakeholders and position IT as an innovative business partner that can suggest reduction opportunities.

1.3.1 Determine pain points and opportunities

1-2 hours

Input: CEO-CIO Alignment diagnostic, CIO Business Vision diagnostic, Valuation of IT environment, IT-business goals cascade

Output: List of pain points or opportunities that IT can address

Materials: Computer, Whiteboard and markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Business stakeholders

The purpose of this activity is to determine the pain points and opportunities that exist for the organization. These can be external or internal to the organization.

1. Identify what opportunities exist for your organization. Opportunities are the potential positives that the organization would want to leverage.
2. Next, identify pain points, which are the potential negatives that the organization would want to alleviate.
3. Spend time considering all the options that might exist, and keep in mind what has been identified previously.

Opportunities and pain points can be trends, other departments’ initiatives, business perspectives of IT, etc.

Record the results in the M&A Sell Playbook.

1.3.2 Align goals with opportunities

1-2 hours

Input: CEO-CIO Alignment diagnostic, CIO Business Vision diagnostic, Valuation of IT environment, IT-business goals cascade, List of pain points and opportunities

Output: An understanding of an executive business stakeholder’s perception of IT, Foundations for reduction strategy

Materials: Computer, Whiteboard and markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Business stakeholders

The purpose of this activity is to determine whether a growth or separation strategy might be a good suggestion to the business in order to meet its business objectives.

1. For the top three to five business goals, consider:
   1. Underlying drivers
   2. Digital opportunities
   3. Whether a growth or reduction strategy is the solution
2. Just because a growth or reduction strategy is a solution for a business goal does not necessarily indicate M&A is the way to go. However, it is important to consider before you pursue suggesting M&A.

Record the results in the M&A Sell Playbook.

1.3.3 Recommend reduction opportunities

1-2 hours

Input: Growth or separation strategy opportunities to support business goals, Stakeholder communication plan, Rationale for the suggestion

Output: M&A transaction opportunities suggested

Materials: M&A Sell Playbook

Participants: IT executive/CIO, Business executive/CEO

The purpose of this activity is to recommend a merger, acquisition, or divestiture to the business.

1. Identify which of the business goals the transaction would help solve and why IT is the one to suggest such a goal.
2. Leverage the stakeholder communication plan identified previously to give insight into stakeholders who would have a significant level of interest, influence, or support in the process.

Info-Tech Insight

With technology and digital driving many transactions, leverage your organizations’ IT environment as an asset and reason why the divestiture or sale should happen, suggesting the opportunity yourself.

Record the results in the M&A Sell Playbook.

By the end of this Proactive phase, you should:

Be prepared to suggest M&A opportunities to support your company’s goals through sale or divestiture transactions

Key outcome from the Proactive phase

Develop progressive relationships and strong communication with key stakeholders to suggest or be aware of transformational opportunities that can be achieved through sale or divestiture strategies.

Key deliverables from the Proactive phase

• Business perspective of IT examined
• Key stakeholders identified and relationship to the M&A process outlined
• Ability to valuate the IT environment and communicate IT’s value to the business
• Assessment of the business, digital, and IT strategies and how M&As could support those strategies
• Pain points and opportunities that could be alleviated or supported through an M&A transaction
• Sale or divestiture recommendations

The Sell Blueprint

Phase 2

Discovery & Strategy

This phase will walk you through the following activities:

• Create the mission and vision
• Identify the guiding principles
• Create the future-state operating model
• Determine the transition team
• Document the M&A governance
• Create program metrics
• Establish the separation strategy
• Conduct a RACI
• Create the communication plan
• Assess the potential organization(s)

This phase involves the following participants:

• IT executive/CIO
• IT senior leadership
• Company M&A team

Workshop Overview

Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889

What is the Discovery & Strategy phase?

Pre-transaction state

The Discovery & Strategy phase during a sale or divestiture is a unique opportunity for many IT organizations. IT organizations that can participate in the transaction at this stage are likely considered a strategic partner of the business.

For one-off sales/divestitures, IT being invited during this stage of the process is rare. However, for organizations that are preparing to engage in many divestitures over the coming years, this type of strategy will greatly benefit from IT involvement. Again, the likelihood of participating in an M&A transaction is increasing, making it a smart IT leadership decision to, at the very least, loosely prepare a program plan that can act as a strategic pillar throughout the transaction.

During this phase of the pre-transaction state, IT may be asked to participate in ensuring that the IT environment is able to quickly and easily carve out components/business lines and deliver on service-level agreements (SLAs).

Goal: To identify a repeatable program plan that IT can leverage when selling or divesting all or parts of the current IT environment, ensuring customer satisfaction and business continuity

Discovery & Strategy Prerequisite Checklist

Before coming into the Discovery & Strategy phase, you should have addressed the following:

• Understand the business perspective of IT.
• Know the key stakeholders and have outlined their relationship to the M&A process.
• Be able to valuate the IT environment and communicate IT's value to the business.
• Understand the rationale for the company's decision to pursue a sale or divestiture and the opportunities or pain points the sale should address.

Discovery & Strategy

Step 2.1

Establish the M&A Program Plan

Activities

• 2.1.1 Create the mission and vision
• 2.1.2 Identify the guiding principles
• 2.1.3 Create the future-state operating model
• 2.1.4 Determine the transition team
• 2.1.5 Document the M&A governance
• 2.1.6 Create program metrics

This step involves the following participants:

• IT executive/CIO
• IT senior leadership
• Company M&A team

Outcomes of Step

Establish an M&A program plan that can be repeated across sales/divestitures.

The vision and mission statements clearly articulate IT’s aspirations and purpose

The IT vision statement communicates a desired future state of the IT organization, whereas the IT mission statement portrays the organization’s reason for being. While each serves its own purpose, they should both be derived from the business context implications for IT.

2.1.1 Create the mission and vision statements

2 hours

Input: Business objectives, IT capabilities, Rationale for the transaction

Output: IT’s mission and vision statements for reduction strategies tied to mergers, acquisitions, and divestitures

Materials: Flip charts/whiteboard, Markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to create mission and vision statements that reflect IT’s intent and method to support the organization as it pursues a reduction strategy.

1. Review the definitions and characteristics of mission and vision statements.
2. Brainstorm different versions of the mission and vision statements.
3. Edit the statements until you get to a single version of each that accurately reflects IT’s role in the reduction process.

Record the results in the M&A Sell Playbook.

Guiding principles provide a sense of direction

IT guiding principles are shared, long-lasting beliefs that guide the use of IT in constructing, transforming, and operating the enterprise by informing and restricting IT investment portfolio management, solution development, and procurement decisions.

IT principles must be carefully constructed to make sure they are adhered to and relevant

Info-Tech has identified a set of characteristics that IT principles should possess. These characteristics ensure the IT principles are relevant and followed in the organization.

Approach focused. IT principles should be focused on the approach – how the organization is built, transformed, and operated – as opposed to what needs to be built, which is defined by both functional and non-functional requirements.

Business relevant. Create IT principles that are specific to the organization. Tie IT principles to the organization’s priorities and strategic aspirations.

Long lasting. Build IT principles that will withstand the test of time.

Prescriptive. Inform and direct decision making with actionable IT principles. Avoid truisms, general statements, and observations.

Verifiable. If compliance can’t be verified, people are less likely to follow the principle.

Easily Digestible. IT principles must be clearly understood by everyone in IT and by business stakeholders. IT principles aren’t a secret manuscript of the IT team. IT principles should be succinct; wordy principles are hard to understand and remember.

Followed. Successful IT principles represent a collection of beliefs shared among enterprise stakeholders. IT principles must be continuously communicated to all stakeholders to achieve and maintain buy-in.

In organizations where formal policy enforcement works well, IT principles should be enforced through appropriate governance processes.

Consider the example principles below

2.1.2 Identify the guiding principles

2 hours

Input: Business objectives, IT capabilities, Rationale for the transaction, Mission and vision statements

Output: IT’s guiding principles for reduction strategies tied to mergers, acquisitions, and divestitures

Materials: Flip charts/whiteboard, Markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to create the guiding principles that will direct the IT organization throughout the reduction strategy process.

1. Review the role of guiding principles and the examples of guiding principles that organizations have used.
2. Brainstorm different versions of the guiding principles. Each guiding principle should start with the phrase “We will…”
3. Edit and consolidate the statements until you have a list of approximately eight to ten statements that accurately reflect IT’s role in the reduction process.
4. Review the guiding principles every six months to ensure they continue to support the delivery of the business’ reduction strategy goals.

Record the results in the M&A Sell Playbook.

Create two IT teams to support the transaction

IT M&A Transaction Team

• The IT M&A Transaction Team should consist of the strongest members of the IT team who can be expected to deliver on unusual or additional tasks not asked of them in normal day-to-day operations.
• The roles selected for this team will have very specific skills sets or deliver on critical separation capabilities, making their involvement in the combination of two or more IT environments paramount.
• These individuals need to have a history of proving themselves very trustworthy, as they will likely be required to sign an NDA as well.
• Expect to have to certain duplicate capabilities or roles across the M&A Team and Operational Team.

IT Operational Team

• This group is responsible for ensuring the business operations continue.
• These employees might be those who are newer to the organization but can be counted on to deliver consistent IT services and products.
• The roles of this team should ensure that end users or external customers remain satisfied.

Key capabilities to support M&A

Consider the following capabilities when looking at who should be a part of the IT Transaction Team.

Employees who have a significant role in ensuring that these capabilities are being delivered will be a top priority.

Infrastructure & Operations

• System Separation
• Data Management
• Helpdesk/Desktop Support
• Cloud/Server Management

Business Focus

• Service-Level Management
• Enterprise Architecture
• Stakeholder Management
• Project Management

Risk & Security

• Privacy Management
• Security Management
• Risk & Compliance Management

Build a lasting and scalable operating model

An operating model is an abstract visualization, used like an architect’s blueprint, that depicts how structures and resources are aligned and integrated to deliver on the organization’s strategy.

It ensures consistency of all elements in the organizational structure through a clear and coherent blueprint before embarking on detailed organizational design.

The visual should highlight which capabilities are critical to attaining strategic goals and clearly show the flow of work so that key stakeholders can understand where inputs flow in and outputs flow out of the IT organization.

As you assess the current operating model, consider the following:

• Does the operating model contain all the necessary capabilities your IT organization requires to be successful?
• What capabilities should be duplicated?
• Are there individuals with the skill set to support those roles? If not, is there a plan to acquire or develop those skills?
• A dedicated project team strictly focused on M&A is great. However, is it feasible for your organization? If not, what blockers exist?

Info-Tech Insight

Investing time up-front getting the operating model right is critical. This will give you a framework to rationalize future organizational changes, allowing you to be more iterative and allowing your model to change as the business changes.

2.1.3 Create the future-state operating model

4 hours

Input: Current operating model, IT strategy, IT capabilities, M&A-specific IT capabilities, Business objectives, Rationale for the transaction, Mission and vision statements

Output: Future-state operating model for divesting organizations

Materials: Operating model, Capability overlay, Flip charts/whiteboard, Markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to establish what the future-state operating model will be if your organization needs to adjust to support a divestiture transaction. If your organization plans to sell in its entirety, you may choose to skip this activity.

1. Ensuring that all the IT capabilities are identified by the business and IT strategy, document your organization’s current operating model.
2. Identify what core capabilities would be critical to the divesting transaction process and separation. Highlight and make copies of those capabilities in the M&A Sell Playbook. As a result of divesting, there may also be capabilities that will become irrelevant in your future state.
3. Ensure the capabilities that will be decentralized are clearly identified. Decentralized capabilities do not exist within the central IT organization but rather in specific lines of businesses, products, or locations to better understand needs and deliver on the capability.

An example operating model is included in the M&A Sell Playbook. This process benefits from strong reference architecture and capability mapping ahead of time.

Record the results in the M&A Sell Playbook.

2.1.4 Determine the transition team

Input: IT capabilities, Future-state operating model, M&A-specific IT capabilities, Business objectives, Rationale for the transaction, Mission and vision statements

Output: Transition team

Materials: Reference architecture, Organizational structure, Flip charts/whiteboard, Markers

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to create a team that will support your IT organization throughout the transaction. Determining which capabilities and therefore which roles will be required ensures that the business will continue to get the operational support it needs.

1. Based on the outcome of activity 2.1.3, review the capabilities that your organization will require on the transition team. Group capabilities into functional groups containing capabilities that are aligned well with one another because they have similar responsibilities and functionalities.
2. Replace the capabilities with roles. For example, stakeholder management, requirements gathering, and project management might be one functional group. Project management and stakeholder management might combine to create a project manager role.
3. Review the examples in the M&A Sell Playbook and identify which roles will be a part of the transition team.

For more information, see Redesign Your Organizational Structure

What is governance?

And why does it matter so much to IT and the M&A process?

• Governance is the method in which decisions get made, specifically as they impact various resources (time, money, and people).
• Because M&A is such a highly governed transaction, it is important to document the governance bodies that exist in your organization.
• This will give insight into what types of governing bodies there are, what decisions they make, and how that will impact IT.
• For example, funds to support separation need to be discussed, approved, and supplied to IT from a governing body overseeing the acquisition.
• A highly mature IT organization will have automated governance, while a seemingly non-existent governance process will be considered ad hoc.

2.1.5 Document M&A governance

1-2 hours

Input: List of governing bodies, Governing body committee profiles, Governance structure

Output: Documented method on how decisions are made as it relates to the M&A transaction

Materials: Flip charts/whiteboard, Markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to determine the method in which decisions are made throughout the M&A transaction as it relates to IT. This will require understanding both governing bodies internal to IT and those external to IT.

1. First, determine the other governance structures within the organization that will impact the decisions made about M&A. List out these bodies or committees.
2. Create a profile for each committee that looks at the membership, purpose of the committee, decision areas (authority), and the process of inputs and outputs. Ensure IT committees that will have a role in this process are also documented. Consider the benefits realized, risks, and resources required for each.
3. Organize the committees into a structure, identifying the committees that have a role in defining the strategy, designing and building, and running.

Record the results in the M&A Sell Playbook.

Current-state structure map – definitions of tiers

Strategy: These groups will focus on decisions that directly connect to the strategic direction of the organization.

Design & Build: The second tier of groups will oversee prioritization of a certain area of governance as well as design and build decisions that feed into strategic decisions.

Run: The lowest level of governance will be oversight of more-specific initiatives and capabilities within IT.

Expect tier overlap. Some committees will operate in areas that cover two or three of these governance tiers.

Measure the IT program’s success in terms of its ability to support the business’ M&A goals

Upper management will measure IT’s success based on your ability to support the underlying reasons for the M&A. Using business metrics will help assure business stakeholders that IT understands their needs and is working with the business to achieve them.

Business-Specific Metrics

• Revenue Growth: Increase in the top line as seen by market expansion, product expansion, etc. by percentage/time.
• Synergy Extraction: Reduction in costs as determined by the ability to identify and eliminate redundancies over time.
• Profit Margin Growth: Increase in the bottom line as a result of increased revenue growth and/or decreased costs over time.

IT-Specific Metrics

• IT operational savings and cost reductions due to synergies: Operating expenses, capital expenditures, licenses, contracts, applications, infrastructure over time.
• Reduction in IT staff expense and headcount: Decreased budget allocated to IT staff, and ability to identify and remove redundancies in staff.
• Meeting or improving on IT budget estimates: Delivering successful IT separation on a budget that is the same or lower than the budget estimated during due diligence.
• Meeting or improving on IT time-to-separation estimates: Delivering successful IT carve-out on a timeline that is the same or shorter than the timeline estimated during due diligence.
• Business capability support: Delivering the end state of IT that supports the expected business capabilities and growth.

Establish your own metrics to gauge the success of IT

Establish SMART M&A Success Metrics

• What should IT consider when looking to identify potential additions, deletions, or modifications that will either add value to the organization or reduce costs/risks?
• Provide a definition of synergies.
• IT operational savings and cost reductions due to synergies: Operating expenses, capital expenditures, licenses, contracts, applications, infrastructure.
• Reduction in IT staff expense and headcount: Decreased budget allocated to IT staff, and ability to identify and remove redundancies in staff.
• Meeting or improving on IT budget estimates: Delivering successful IT separation on a budget that is the same or lower than the budget estimated during due diligence.
• Meeting or improving on IT time-to-separation estimates: Delivering successful IT carve-out on a timeline that is the same or shorter than the timeline estimated during due diligence.
• Revenue growth: Increase in the top line as a result, as seen by market expansion, product expansion, etc., as a result of divesting lines of the business and selling service-level agreements to the purchasing organization.
• Synergy extraction: Reduction in costs, as determined by the ability to identify and eliminate redundancies.
• Profit margin growth: Increase in the bottom line as a result of increased revenue growth and/or decreased costs.

Metrics for each phase

2.1.6 Create program metrics

1-2 hours

Input: IT capabilities, Mission, vision, and guiding principles, Rationale for the acquisition

Output: Program metrics to support IT throughout the M&A process

Materials: Flip charts/whiteboard, Markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to determine how IT’s success throughout a growth transaction will be measured and determined.

1. Document a list of appropriate metrics on the whiteboard. Remember to include metrics that demonstrate the business impact. You can use the sample metrics listed on the previous slide as a starting point.
2. Set a target and deadline for each metric. This will help the group determine when it is time to evaluate progression.
3. Establish a baseline for each metric based on information collected within your organization.
4. Assign an owner for tracking each metric as well as someone to be accountable for performance.

Record the results in the M&A Sell Playbook.

Discovery & Strategy

Step 2.2

Prepare IT to Engage in the Separation or Sale

Activities

• 2.2.1 Establish the separation strategy
• 2.2.2 Conduct a RACI
• 2.2.3 Create the communication plan
• 2.2.4 Assess the potential organization(s)

This step involves the following participants:

• IT executive/CIO
• IT senior leadership
• Company M&A team

Outcomes of Step

Identify IT’s plan of action when it comes to the separation/sale and align IT’s separation/sale strategy with the business’ M&A strategy.

Separation strategies

There are several IT separation strategies that will let you achieve your target technology environment.

IT Separation Strategies

• Divest. Carve out elements of the IT organization and sell them to a purchasing organization with or without a service-level agreement.
• Sell. Sell the entire IT environment to a purchasing organization. The purchasing organization takes full responsibility in delivering and running the IT environment.
• Spin-Off Joint Venture. Carve out elements of the IT organization and combine them with elements of a new or purchasing organization to create a new entity.

The approach IT takes will depend on the business objectives for the M&A.

• Generally speaking, the separation strategy is well understood and influenced by the frequency of and rationale for selling.
• Based on the initiatives generated by each business process owner, you need to determine the IT separation strategy that will best support the desired target technology environment, especially if you are still operating or servicing elements of that IT environment.

Key considerations when choosing an IT separation strategy include:

• What are the main business objectives of the M&A?
• What are the key synergies expected from the transaction?
• What IT separation strategy best helps obtain these benefits?
• What opportunities exist to position the business for sustainable and long-term growth?

Separation strategies in detail

Review highlights and drawbacks of different separation strategies

Divest

Highlights
• Recommended for businesses striving to reduce costs and potentially even generate revenue for the business through the delivery of SLAs.
• Opportunity to reduce or scale back on lines of business or products that are not driving profits.

Drawbacks
• May be forced to give up critical staff that have been known to deliver high value.
• The IT department is left to deliver services to the purchasing organization with little support or consideration from the business.
• There can be increased risk and security concerns that need to be addressed.

Sell

Highlights
• Recommended for businesses looking to gain capital to exit the market profitably or to enter a new market with a large sum of capital.
• The business will no longer exist, and as a result all operational costs, including IT, will become redundant.

Drawbacks
• IT is no longer needed as an operating or capital service for the organization.
• Lost resources, including highly trained and critical staff.
• May require packaging employees off and using the profit or capital generated to cover any closing costs.

Spin-Off or Joint Venture

Highlights
• Recommended for businesses looking to expand their market presence or acquire new products. Essentially aligning the two organizations in the same market.
• Each side has a unique offering but complementing capabilities.

Drawbacks
• As much as the organization is going through a separation from the original company, it will be going through an integration with the new company.
• There could be differences in culture.
• This could require a large amount of investment without a guarantee of profit or success.

2.2.1 Establish the separation strategy

1-2 hours

Input: Business separation strategy, Guiding principles, M&A governance

Output: IT’s separation strategy

Materials: Flip charts/whiteboard, Markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to determine IT’s approach to separating or selling. This approach might differ slightly from transaction to transaction. However, the businesses approach to transactions should give insight into the general separation strategy IT should adopt.

1. Make sure you have clearly articulated the business objectives for the M&A, the technology end state for IT, and the magnitude of the overall separation.
2. Review and discuss the highlights and drawbacks of each type of separation.
3. Use Info-Tech’s Separation Posture Selection Framework on the next slide to select the separation posture that will appropriately enable the business. Consider these questions during your discussion:
   1. What are the main business objectives of the M&A? What key IT capabilities will need to support business objectives?
   2. What key synergies are expected from the transaction? What opportunities exist to position the business for sustainable growth?
   3. What IT separation best helps obtain these benefits?

Record the results in the M&A Sell Playbook.

Separation Posture Selection Framework

M&A separation strategy

You may need a hybrid separation posture to achieve the technology end state.

M&A objectives may not affect all IT domains and business functions in the same way. Therefore, the separation requirements for each business function may differ. Organizations will often choose to select and implement a hybrid separation posture to realize the technology end state.

Each business division may have specific IT domain and capability needs that require an alternative separation strategy.

• Example: Even when conducting a joint venture by forming a new organization, some partners might view themselves as the dominant partner and want to influence the IT environment to a greater degree.
• Example: Some purchasing organizations will expect service-level agreements to be available for a significant period of time following the divestiture, while others will be immediately independent.

2.2.2 Conduct a RACI

1-2 hours

Input: IT capabilities, Transition team, Separation strategy

Output: Completed RACI for Transition team

Materials: Reference architecture, Organizational structure, Flip charts/whiteboard, Markers, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to identify the core accountabilities and responsibilities for the roles identified as critical to your transition team. While there might be slight variation from transaction to transaction, ideally each role should be performing certain tasks.

1. First, identify a list of critical tasks that need to be completed to support the sale or separation. For example:
   • Communicate with the company M&A team.
   • Identify the key IT solutions that can and cannot be carved out.
   • Gather data room artifacts and provide them to acquiring organization.
2. Next, identify at the activity level which role is accountable or responsible for each activity. Enter an A for accountable, R for responsible, or A/R for both.

Record the results in the M&A Sell Playbook.

Communication and change

Prepare key stakeholders for the potential changes

• Anytime you are starting a project or program that will depend on users and stakeholders to give up their old way of doing things, change will force people to become novices again, leading to lost productivity and added stress.
• Change management can improve outcomes for any project where you need people to adopt new tools and procedures, comply with new policies, learn new skills and behaviors, or understand and support new processes.
• M&As move very quickly, and it can be very difficult to keep track of which stakeholders you need to be communicating with and what you should be communicating.
• Not all organizations embrace or resist change in the same ways. Base your change communications on your organization’s cultural appetite for change in general.
  • Organizations with a low appetite for change will require more direct, assertive communications.
  • Organizations with a high appetite for change are more suited to more open, participatory approaches.

Three key dimensions determine the appetite for cultural change:

• Power Distance. Refers to the acceptance that power is distributed unequally throughout the organization.
  In organizations with a high power distance, the unequal power distribution is accepted by the less powerful employees.
• Individualism. Organizations that score high in individualism have employees who are more independent. Those who score low in individualism fall into the collectivism side, where employees are strongly tied to one another or their groups.
• Uncertainty Avoidance. Describes the level of acceptance that an organization has toward uncertainty. Those who score high in this area find that their employees do not favor uncertain situations, while those that score low in this area find that their employees are comfortable with change and uncertainty.

2.2.3 Create the communication plan

1-2 hours

Input: IT’s M&A mission, vision, and guiding principles, M&A transition team, IT separation strategy, RACI

Output: IT’s M&A communication plan

Materials: Flip charts/whiteboard, Markers, RACI, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to create a communication plan that IT can leverage throughout the initiative.

1. Create a structured communication plan that allows for continuous communication with the integration management office, senior management, and the business functional heads.
2. Outline key topics of communication, with stakeholders, inputs, and outputs for each topic.
3. Review Info-Tech’s example communication plan in the M&A Sell Playbook and update it with relevant information.
4. Does this communication plan make sense for your organization? What doesn’t make sense? Adjust the communication guide to suit your organization.

Record the results in the M&A Sell Playbook.

Assessing potential organizations

As soon as you have identified organizations to consider, it’s imperative to assess critical risks. Most IT leaders can attest that they will receive little to no notice when the business is pursuing a sale and IT has to assess the IT organization. As a result, having a standardized template to quickly assess the potential acquiring organization is important.

Ways to Assess

1. News: Assess what sort of news has been announced in relation to the organization. Have they had any risk incidents? Has a critical vendor announced working with them?
2. LinkedIn: Scan through the LinkedIn profiles of employees. This will give you a sense of what platforms they have based on employees. It will also give insight into positive or negative employee experiences that could impact retention.
3. Trends: Some industries will have specific solutions that are relevant and popular. Assess what the key players are (if you don’t already know) to determine the solution.
4. Business Architecture: While this assessment won’t perfect, try to understand the business’ value streams and the critical business and IT capabilities that would be needed to support them. Will your organization or employee skills be required to support these long term?

Info-Tech Insight

Assessing potential organizations is not just for the purchaser. The seller should also know what the purchasing organization’s history with M&As is and what potential risks could occur if remaining connected through ongoing SLAs.

2.2.4 Assess the potential organization(s)

Input: Publicized historical risk events, Solutions and vendor contracts likely in the works, Trends

Output: IT’s valuation of the potential organization(s) for selling or divesting

Materials: M&A Sell Playbook

Participants: IT executive/CIO

The purpose of this activity is to assess the organization(s) that your organization is considering selling or divesting to.

1. Complete the Historical Valuation Worksheet in the M&A Sell Playbook to understand the type of IT organization that your company may support.
   • The business likely isn’t looking for in-depth details at this time. However, as the IT leader, it is your responsibility to ensure critical risks are identified and communicated to the business.
2. Use the information identified to help the business narrow down which organizations could be the right organizations to sell or divest to.

Record the results in the M&A Sell Playbook.

By the end of this pre-transaction phase you should:

Have a program plan for M&As and a repeatable M&A strategy for IT when engaging in reduction transactions

Key outcomes from the Discovery & Strategy phase

• Prepare the IT environment to support the potential sale or divestiture by identifying critical program plan elements and establishing a separation or carve-out strategy that will enable the business to reach its goals.
• Create a M&A strategy that accounts for all the necessary elements of a transaction and ensures sufficient governance, capabilities, and metrics exist.

Key deliverables from the Discovery & Strategy phase

• Create vision and mission statements
• Establish guiding principles
• Create a future-state operating model
• Identify the key roles for the transaction team
• Identify and communicate the M&A governance
• Determine target metrics
• Identify the M&A operating model
• Select the separation strategy framework
• Conduct a RACI for key transaction tasks for the transaction team
• Document the communication plan

M&A Sell Blueprint

Phase 3

Due Diligence & Preparation

This phase will walk you through the following activities:

• Drive value with a due diligence charter
• Gather data room artifacts
• Measure staff engagement
• Assess culture
• Create a carve-out roadmap
• Prioritize separation tasks
• Establish the separation roadmap
• Identify the buyer’s IT expectations
• Create a service/transaction agreement
• Estimate separation costs
• Create an employee transition plan
• Create functional workplans for employees
• Align project metrics with identified tasks

This phase involves the following participants:

• IT executive/CIO
• IT senior leadership
• Company M&A team
• Business leaders
• Purchasing organization
• Transition team

Workshop Overview

Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889

What is the Due Diligence & Preparation phase?

Mid-transaction state

The Due Diligence & Preparation phase during a sale or divestiture is a critical time for IT. If IT fails to proactively participate in this phase, IT will have to merely react to separation expectations set by the business.

If your organization is being sold in its entirety, staff will have major concerns about their future in the new organization. Making this transition as smooth as possible and being transparent could go a long way in ensuring their success in the new organization.

In a divestiture, this is the time to determine where it’s possible for the organization to divide or separate from itself. A lack of IT involvement in these conversations could lead to an overcommitment by the business and under-delivery by IT.

Goal: To ensure that, as the selling or divesting organization, you comply with regulations, prepare staff for potential changes, and identify a separation strategy if necessary

Due Diligence Prerequisite Checklist

Before coming into the Due Diligence & Preparation phase, you must have addressed the following:

• Understand the rationale for the company's decision to pursue a sale or divestiture and what opportunities or pain points the sale should alleviate.
• Identify the key roles for the transaction team.
• Identify the M&A governance.
• Determine target metrics.
• Select a separation strategy framework.
• Conduct a RACI for key transaction tasks for the transaction team.

Before coming into the Due Diligence & Preparation phase, we recommend addressing the following:

• Create vision and mission statements.
• Establish guiding principles.
• Create a future-state operating model.
• Identify the M&A operating model.
• Document the communication plan.
• Examine the business perspective of IT.
• Identify key stakeholders and outline their relationship to the M&A process.
• Be able to valuate the IT environment and communicate IT’s value to the business.

The Technology Value Trinity

Delivery of Business Value & Strategic Needs

• Digital & Technology Strategy

  The identification of objectives and initiatives necessary to achieve business goals.

• IT Operating Model

  The model for how IT is organized to deliver on business needs and strategies.

• Information & Technology Governance

  The governance to ensure the organization and its customers get maximum value from the use of information and technology.

All three elements of the Technology Value Trinity work in harmony to deliver business value and achieve strategic needs. As one changes, the others need to change as well.

• Digital and IT Strategy tells you what you need to achieve to be successful.
• IT Operating Model and Organizational Design is the alignment of resources to deliver on your strategy and priorities.
• Information & Technology Governance is the confirmation of IT’s goals and strategy, which ensures the alignment of IT and business strategy. It’s the mechanism by which you continuously prioritize work to ensure that what is delivered is in line with the strategy. This oversight evaluates, directs, and monitors the delivery of outcomes to ensure that the use of resources results in the achieving the organization’s goals.

Too often strategy, operating model and organizational design, and governance are considered separate practices. As a result, “strategic documents” end up being wish lists, and projects continue to be prioritized based on who shouts the loudest – not based on what is in the best interest of the organization.

Due Diligence & Preparation

Step 3.1

Engage in Due Diligence and Prepare Staff

Activities

• 3.1.1 Drive value with a due diligence charter
• 3.1.2 Gather data room artifacts
• 3.1.3 Measure staff engagement
• 3.1.4 Assess culture

This step involves the following participants:

• IT executive/CIO
• IT senior leadership
• Company M&A team
• Business leaders
• Prospective IT organization
• Transition team

Outcomes of Step

This step of the process is when IT should prepare and support the business in due diligence and gather the necessary information about staff changes.

3.1.1 Drive value with a due diligence charter

1-2 hours

Input: Key roles for the transaction team, M&A governance, Target metrics, Selected separation strategy framework, RACI of key transaction tasks for the transaction team

Output: IT Due Diligence Charter

Materials: M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to create a charter leveraging the items completed in the previous phase, as listed on the Due Diligence Prerequisite Checklist slide, to gain executive sign-off.

1. In the IT Due Diligence Charter in the M&A Sell Playbook, complete the aspects of the charter that are relevant for you and your organization.
2. We recommend including these items in the charter:
   • Communication plan
   • Transition team roles
   • Goals and metrics for the transaction
   • Separation strategy
   • Sale/divestiture RACI
3. Once the charter has been completed, ensure that business executives agree to the charter and sign off on the plan of action.

Record the results in the M&A Sell Playbook.

3.1.2 Gather data room artifacts

4 hours

Input: Future-state operating model, M&A governance, Target metrics, Selected separation strategy framework, RACI of key transaction tasks for the transaction team

Output: List of items to acquire and verify can be provided to the purchasing organization while in the data room

Materials: Critical domain lists on following slides, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team, Transition team, Legal team, Compliance/privacy officers

The purpose of this activity is to create a list of the key artifacts that you could be asked for during the due diligence process.

1. Review the lists on the following pages as a starting point. Identify which domains, stakeholders, artifacts, and information should be requested for the data room.
2. IT leadership may or may not be asked to enter the data room directly. The short notice for having to find these artifacts for the purchasing organization can leave your IT organization scrambling. Identify the critical items worth obtaining ahead of time.
3. Once you have identified the artifacts, provide the list to the legal team or compliance/privacy officers and ensure they also agree those items can be provided. If changes to the documents need to be made, take the time to do so.
4. Store all items in a safe and secure file or provide to the M&A team ahead of due diligence.

**Note that if your organization is not leading/initiating the data room, then you can ignore this activity.

Record the results in the M&A Sell Playbook.

Critical domains

Understand the key stakeholders and outputs for each domain

Critical domains (continued)

Understand the key stakeholders and outputs for each domain

Retain top talent throughout the transition

Focus on retention and engagement

• People are such a critical component of this process, especially in the selling organization.
• Retaining employees, especially the critical employees who hold specific skills or knowledge, will ensure the success and longevity of the divesting organization, purchasing organization, or the new company.
• Giving employees a role in the organization and ensuring they do not see their capabilities as redundant will be critical to the process.
• It is okay if employees need to change what they were doing temporarily or even long-term. However, being transparent about these changes and highlighting their value to the process and organization(s) will help.
• The first step to moving forward with retention is to look at the baseline engagement and culture of employees and the organization. This will help determine where to focus and allow you to identify changes in engagement that resulted from the transaction.

• Job engagement drivers are levers that influence the engagement of employees in their day-to-day roles.
• Organizational engagement drivers are levers that influence an employee’s engagement with the broader organization.
• Retention drivers are employment needs. They don’t necessarily drive engagement, but they must be met for engagement to be possible.

3.1.3 Measure staff engagement

3-4 hours

Input: Engagement survey

Output: Baseline engagement scores

Materials: Build an IT Employee Engagement Program

Participants: IT executive/CIO, IT senior leadership, IT employees of current organization

The purpose of this activity is to measure current staff engagement to have a baseline to measure against in the future state. This is a good activity to complete if you will be divesting or selling in entirety.

The results from the survey should act as a baseline to determine what the organization is doing well in terms of employee engagement and what drivers could be improved upon.

1. Review Info-Tech’s Build an IT Employee Engagement Program research and select a survey that will best meet your needs.
2. Conduct the survey and note which drivers employees are currently satisfied with. Likewise, note where there are opportunities.
3. Document actions that should be taken to mitigate the negative engagement drivers throughout the transaction and enhance or maintain the positive engagement drivers.

Record the results in the M&A Sell Playbook.

Assess culture as a part of engagement

Culture should not be overlooked, especially as it relates to the separation of IT environments

• There are three types of culture that need to be considered.
• Most importantly, this transition is an opportunity to change the culture that might exist in your organization’s IT environment.
• Make a decision on which type of culture you’d like IT to have post transition.

Target Organization's Culture. The culture that the target organization is currently embracing. Their established and undefined governance practices will lend insight into this.

Your Organization’s Culture. The culture that your organization is currently embracing. Examine people’s attitudes and behaviors within IT toward their jobs and the organization.

Ideal Culture. What will the future culture of the IT organization be once separation is complete? Are there aspects that your current organization and the target organization embrace that are worth considering?

Culture categories

Map the results of the IT Culture Diagnostic to an existing framework

Culture Considerations

• What culture category was dominant for each IT organization?
• Do you share the same dominant category?
• Is your current dominant culture category the most ideal to have post-separation?

3.1.4 Assess Culture

3-4 hours

Input: Cultural assessments for current IT organization, Cultural assessment for target IT organization

Output: Goal for IT culture

Materials: IT Culture Diagnostic

Participants: IT executive/CIO, IT senior leadership, IT employees of current organization, IT employees of target organization, Company M&A team

The purpose of this activity is to assess the different cultures that might exist within the IT environments of the organizations involved. By understanding the culture that exists in the purchasing organization, you can identify the fit and prepare impacted staff for potential changes.

1. Complete this activity by leveraging the blueprint Fix Your IT Culture, specifically the IT Culture Diagnostic.
2. Fill out the diagnostic for the IT department in your organization:
   1. Answer the 16 questions in tab 2, Diagnostic.
   2. Find out your dominant culture and review recommendations in tab 3, Results.
3. Document the results from tab 3, Results, in the M&A Sell Playbook if you are trying to record all artifacts related to the transaction in one place.
4. Repeat the activity for the purchasing organization.
5. Leverage the information to determine what the goal for the culture of IT will be post-separation if it will differ from the current culture.

Record the results in the M&A Sell Playbook.

Due Diligence & Preparation

Step 3.2

Prepare to Separate

Activities

• 3.2.1 Create a carve-out roadmap
• 3.2.2 Prioritize separation tasks
• 3.2.3 Establish the separation roadmap
• 3.2.4 Identify the buyer’s IT expectations
• 3.2.5 Create a service/transaction agreement
• 3.2.6 Estimate separation costs
• 3.2.7 Create an employee transition plan
• 3.2.8 Create functional workplans for employees
• 3.2.9 Align project metrics with identified tasks

This step involves the following participants:

• IT executive/CIO
• IT senior leadership
• Transition team
• Company M&A team
• Purchasing organization

Outcomes of Step

Have an established plan of action toward separation across all domains and a strategy toward resources.

Don’t underestimate the importance of separation preparation

Separation involves taking the IT organization and dividing it into two or more separate entities.

Testing the carve capabilities of the IT organization often takes 3 months. (Source: Cognizant, 2014)

Daimler-Benz lost nearly $19 billion following its purchase of Chrysler by failing to recognize the cultural differences that existed between the two car companies. (Source: Deal Room)

Info-Tech Insight

Separating the IT organization requires more time and effort than business leaders will know. Frequently communicate challenges and lost opportunities when carving the IT environment out.

Separation needs

Identify the business objectives of the sale to determine the IT strategy

Set up a meeting with your IT due diligence team to:

• Ensure there will be no gaps in the delivery of products and services in the future state.
• Discuss the people and processes necessary to achieve the target technology environment and support M&A business objectives.

Use this opportunity to:

• Identify data and application complexities between the involved organizations.
• Identify the IT people and process gaps, initiatives, and levels of support expected.
• Determine your infrastructure needs to ensure effectiveness and delivery of services:
  • Does IT have the infrastructure to support the applications and business capabilities?
  • Identify any gaps between the current infrastructure in both organizations and the infrastructure required.
  • Identify any redundancies/gaps.
  • Determine the appropriate IT separation strategies.
• Document your gaps, redundancies, initiatives, and assumptions to help you track and justify the initiatives that must be undertaken and help estimate the cost of separation.

Separation strategies

There are several IT separation strategies that will let you achieve your target technology environment.

IT Separation Strategies

• Divest. Carve out elements of the IT organization and sell them to a purchasing organization with or without a service-level agreement.
• Sell. Sell the entire IT environment to a purchasing organization. The purchasing organization takes full responsibility in delivering and running the IT environment.
• Spin-Off Joint Venture. Carve out elements of the IT organization and combine them with elements of a new or purchasing organization to create a new entity.

The approach IT takes will depend on the business objectives for the M&A.

• Generally speaking, the separation strategy is well understood and influenced by the frequency of and rationale for selling.
• Based on the initiatives generated by each business process owner, you need to determine the IT separation strategy that will best support the desired target technology environment, especially if you are still operating or servicing elements of that IT environment.

Key considerations when choosing an IT separation strategy include:

• What are the main business objectives of the M&A?
• What are the key synergies expected from the transaction?
• What IT separation strategy best helps obtain these benefits?
• What opportunities exist to position the business for sustainable and long-term growth?

Separation strategies in detail

Review highlights and drawbacks of different separation strategies

Divest

Highlights
• Recommended for businesses striving to reduce costs and potentially even generate revenue for the business through the delivery of SLAs.
• Opportunity to reduce or scale back on lines of business or products that are not driving profits.

Drawbacks
• May be forced to give up critical staff that have been known to deliver high value.
• The IT department is left to deliver services to the purchasing organization with little support or consideration from the business.
• There can be increased risk and security concerns that need to be addressed.

Sell

Highlights
• Recommended for businesses looking to gain capital to exit the market profitably or to enter a new market with a large sum of capital.
• The business will no longer exist, and as a result all operational costs, including IT, will become redundant.

Drawbacks
• IT is no longer needed as an operating or capital service for the organization.
• Lost resources, including highly trained and critical staff.
• May require packaging employees off and using the profit or capital generated to cover any closing costs.

Spin-Off or Joint Venture

Highlights
• Recommended for businesses looking to expand their market presence or acquire new products. Essentially aligning the two organizations in the same market.
• Each side has a unique offering but complementing capabilities.

Drawbacks
• As much as the organization is going through a separation from the original company, it will be going through an integration with the new company.
• There could be differences in culture.
• This could require a large amount of investment without a guarantee of profit or success.

Preparing the carve-out roadmap

And why it matters so much

• When carving out the IT environment in preparation for a divestiture, it’s important to understand the infrastructure, application, and data connections that might exist.
• Much to the business’ surprise, carving out the IT environment is not easy, especially when considering the services and products that might depend on access to certain applications or data sets.
• Once the business has indicated which elements they anticipate divesting, be prepared for testing the functionality and ability of this carve-out, either through automation or manually. There are benefits and drawbacks to both methods:
  • Automated requires a solution and a developer to code the tests.
  • Manual requires time to find the errors, possibly more time than automated testing.
• Identify if there are dependencies that will make the carve-out difficult.
  • For example, the business is trying to divest Product X, but that product is integrated with Product Y, which is not being sold.
  • Consider all the processes and products that specific data might support as well.
  • Moreover, the data migration tool will need to enter the ERP system and identify not just the data but all supporting and historical elements that underlie the data.

Critical components to consider:

• Selecting manual or automated testing
• Determining data dependencies
• Data migration capabilities
• Auditing approval
• People and skills that support specific elements being carved out

3.2.1 Create a carve-out roadmap

6 hours

Input: Items included in the carve-out, Dependencies, Whether testing is completed, If the carve-out will pass audit, If the carve-out item is prepared to be separated

Output: Carve-out roadmap

Materials: Business’ divestiture plan, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Business leaders, Transition team

The purpose of this activity is to prepare the IT environment by identifying a carve-out roadmap, specifically looking at data, infrastructure, and applications. Feel free to expand the roadmap to include other categories as your organization sees fit.

1. In the Carve-Out Roadmap in the M&A Sell Playbook, identify the key elements of the carve-out in the first column.
2. Note any dependencies the items might have. For example:
   • The business is selling Product X, which is linked to Data X and Data Y. The organization does not want to sell Data Y. Data X would be considered dependent on Data Y.
3. Once the dependencies have been confirmed, begin automated or manual testing to examine the possibility of separating the data sets (or other dependencies) from one another.
4. After identifying an acceptable method of separation, inform the auditing individual or body and confirm that there would be no repercussions for the planned process.

Record the results in the M&A Sell Playbook.

3.2.2 Prioritize separation tasks

2 hours

Input: Separation tasks, Transition team, M&A RACI

Output: Prioritized separation list

Materials: Separation task checklist, Separation roadmap

Participants: IT executive/CIO, IT senior leadership, Company M&A team

The purpose of this activity is to prioritize the different separation tasks that your organization has identified as necessary to this transaction. Some tasks might not be relevant for this particular transaction, and others might be critical.

1. Begin by downloading the SharePoint or Excel version of the M&A Separation Project Management Tool.
2. Identify which separation tasks you want to have as part of your project plan. Alter or remove any tasks that are irrelevant to your organization. Add in tasks you think are missing.
3. When deciding criticality of the task, consider the effect on stakeholders, those who are impacted or influenced in the process of the task, and dependencies (e.g. data strategy needs to be addressed first before you can tackle its dependencies, like data quality).
4. Feel free to edit the way you measure criticality. The standard tool leverages a three-point scale. At the end, you should have a list of tasks in priority order based on criticality.

Record the updates in the M&A Separation Project Management Tool (SharePoint).

Record the updates in the M&A Separation Project Management Tool (Excel).

Separation checklists

Prerequisite Checklist

• Build the project plan for separation and prioritize activities
  • Plan first day
  • Plan first 30/100 days
  • Plan first year
• Create an organization-aligned IT strategy
• Identify critical stakeholders
• Create a communication strategy
• Understand the rationale for the sale or divestiture
• Develop IT's sale/divestiture strategy
  • Determine goal opportunities
  • Create the mission and vision statements
  • Create the guiding principles
  • Create program metrics
• Consolidate reports from due diligence/data room
• Conduct culture assessment
• Create a transaction team
• Establish a service/technical transaction agreement
• Plan and communicate culture changes
• Create an employee transition plan
• Assess baseline engagement

Business

• Design an enterprise architecture
• Document your business architecture
• Meet compliance and regulatory standards
• Identify and assess all of IT's risks

Applications

• Prioritize and address critical applications
  • CRM
  • HRIS
  • Financial
  • Sales
  • Risk
  • Security
  • ERP
  • Email
• Develop method of separating applications
• Model critical applications that have dependencies on one another
• Identify the infrastructure capacity required to support critical applications
• Prioritize and address critical applications

Leadership/IT Executive

• Build an IT budget
• Structure operating budget
• Structure capital budget
• Identify the workforce demand vs. capacity
• Establish and monitor key metrics
• Communicate value realized/cost savings

Data

• Confirm data strategy
• Confirm data governance
• Build a data architecture roadmap
• Analyze data sources and domains
• Evaluate data storage (on-premises vs. cloud)
• Develop an enterprise content management strategy and roadmap
• Ensure cleanliness/usability of data sets
• Identify data sets that can remain operational if reduced/separated
• Develop reporting and analytics capabilities
• Confirm data strategy

Operations

• Manage sales access to customer data
• Determine locations and hours of operation
• Separate/terminate phone lists and extensions
• Split email address books
• Communicate helpdesk/service desk information

Separation checklists (continued)

Infrastructure

• Manage organization domains
• Consolidate data centers
• Compile inventory of vendors, versions, switches, and routers
• Review hardware lease or purchase agreements
• Review outsourcing/service provider agreements
• Review service-level agreements
• Assess connectivity linkages between locations
• Plan to migrate to a single email system if necessary
• Determine network access concerns

Vendors

• Establish a sustainable vendor management office
• Review vendor landscape
• Identify warranty options
• Identify the licensing grant
• Rationalize vendor services and solutions

People

• Design an IT operating model
• Design your future IT organizational structure
• Conduct a RACI for prioritized activities
• Conduct a culture assessment and identify goal IT culture
• Build an IT employee engagement program
• Determine critical roles and systems/process/products they support
• Define new job descriptions with meaningful roles and responsibilities
• Create employee transition plans
• Create functional workplans

Projects

• Identify projects to be on hold
• Communicate project intake process
• Reprioritize projects

Products & Services

• Redefine service catalog
• Ensure customer interaction requirements are met
• Select a solution for product lifecycle management
• Plan service-level agreements

Security

• Conduct a security assessment
• Develop accessibility prioritization and schedule
• Establish an information security strategy
• Develop a security awareness and training program
• Develop and manage security governance, risk, and compliance
• Identify security budget
• Build a data privacy and classification program

IT Processes

• Evaluate current process models
• Determine productivity/capacity levels of processes
• Identify processes to be changed/terminated
• Establish a communication plan
• Develop a change management process
• Establish/review IT policies
• Evaluate current process models

3.2.2 Establish the separation roadmap

Input: Prioritized separation tasks, Carve-out roadmap, Employee transition plan, Separation RACI, Costs for activities, Activity owners

Output: Separation roadmap

Materials: M&A Separation Project Plan Tool (SharePoint), M&A Separation Project Plan Tool (Excel), SharePoint Template: Step-by-Step Deployment Guide

Participants: IT executive/CIO, IT senior leadership, Transition team, Company M&A team

The purpose of this activity is to create a roadmap to support IT throughout the separation process. Using the information gathered in previous activities, you can create a roadmap that will ensure a smooth separation.

1. Use our Separation Project Management Tool to help track critical elements in relation to the separation project. There are a few options available:
   1. Follow the instructions on the next slide if you are looking to upload our SharePoint project template. Additional instructions are available in the SharePoint Template Step-by-Step Deployment Guide.
   2. If you cannot or do not want to use SharePoint as your project management solution, download our Excel version of the tool.
      **Remember that this your tool, so customize to your liking.
2. Identify who will own or be accountable for each of the separation tasks and establish the time frame for when each project should begin and end. This will confirm which tasks should be prioritized.

Record the updates in the M&A Separation Project Management Tool (SharePoint).

Record the updates in the M&A Separation Project Management Tool (Excel).

Separation Project Management Tool (SharePoint Template)

Follow these instructions to upload our template to your SharePoint environment

1. Create or use an existing SP site.
2. Download the M&A Separation Project Management Tool (SharePoint) .wsp file from the Mergers & Acquisitions: The Sell Blueprint landing page.
3. To import a template into your SharePoint environment, do the following:
   1. Open PowerShell.
   2. Connect-SPO Service (need to install PowerShell module).
   3. Enter in your tenant admin URL.
   4. Enter in your admin credentials.
   5. Set-SPO Site https://YourDomain.sharepoint.com/sites/YourSiteHe... -DenyAddAndCustomizePages 0
   OR
   1. Turn on both custom script features to allow users to run custom

4. Enable the SharePoint Server feature.
5. Upload the .wsp file in Solutions Gallery.
6. Deploy by creating a subsite and select from custom options.
   • Allow or prevent custom script
   • Security considerations of allowing custom script
   • Save, download, and upload a SharePoint site as a template
Refer to Microsoft documentation to understand security considerations and what is and isn’t supported:

For more information, check out the SharePoint Template: Step-by-Step Deployment Guide.

Supporting the transition and establishing service-level agreements

The purpose of this part of the transition is to ensure both buyer and seller have a full understanding of expectations for after the transaction.

• Once the organizations have decided to move forward with a deal, all parties need a clear level of agreement.
• IT, since it is often seen as an operational division of an organization, is often expected to deliver certain services or products once the transaction has officially closed.
• The purchasing organization or the new company might depend on IT to deliver these services until they are able to provide those services on their own.
• Having a clear understanding of what the buyer’s expectations are and what your company, as the selling organization, can provide is important.
• Have a conversation with the buyer and document those expectations in a signed service agreement.

3.2.4 Identify the buyer's IT expectations

Input: Carve-out roadmap, Separation roadmap, Up-to-date version of the agreement

Output: Buyer’s IT expectations

Materials: Questions for meeting

Participants: IT executive/CIO, IT senior leadership, Company M&A team, Purchasing company M&A team, Purchasing company IT leadership

The purpose of this activity is to determine if the buyer has specific service expectations for your IT organization. By identifying, documenting, and agreeing on what services your IT organization will be responsible for, you can obtain a final agreement to protect you as the selling organization.

1. Buyers should not assume certain services will be provided. Organize a meeting with IT leaders and the company M&A teams to determine what services will be provided.
2. The next slide has a series of questions that you can start from. Ensure you get detailed information about each of the services.
3. Once you fully understand the buyer’s IT expectations, create an SLA in the next activity and obtain sign-off from both organizations.

Questions to ask the buyer

1. What services would you like my IT organization to provide?
2. How long do you anticipate those services will be provided to you?
3. How do you expect your staff/employees to communicate requests or questions to my staff/employees?
4. Are there certain days or times that you expect these services to be delivered?
5. How many staff do you expect should be available to support you?
6. What should be the acceptable response time on given service requests?
7. When it comes to the services you require, what level of support should we provide?
8. If a service requires escalation to Level 2 or Level 3 support, are we still expected to support this service? Or are we only Level 1 support?
9. What preventative security methods does your organization have to protect our environment during this agreement period?

3.2.5 Create a service/ transaction agreement

6 hours

Input: Buyer's expectations, Separation roadmap

Output: SLA for the purchasing organization

Materials: Service Catalog Internal Service Level Agreement Template, M&A Separation Project Plan Tool (SharePoint), M&A Separation Project Plan Tool (Excel)

Participants: IT executive/CIO, IT senior leadership, Company M&A team, Purchasing company M&A team, Purchasing company IT leadership

The purpose of this activity is to determine if the buyer has specific service expectations for your IT organization post-transaction that your IT organization is agreeing to provide.

1. Document the expected services and the related details in a service-level agreement.
2. Provide the SLA to the purchasing organization.
3. Obtain sign-off from both organizations on the level of service that is expected of IT.
4. Update the M&A Separation Project Management Tool Excel or SharePoint document to reflect any additional items that the purchasing organization identified.

*For organizations being purchased in their entirety, this activity may not be relevant.

Modify the Service Catalog Internal Service Level Agreement with the agreed-upon terms of the SLA.

Importance of estimating separation costs

Change is the key driver of separation costs

Separation costs are dependent on the following:

• Meeting synergy targets – whether that be cost saving or growth related.
  • Employee-related costs, licensing, and reconfiguration fees play a huge part in meeting synergy targets.
• Adjustments related to compliance or regulations – especially if there are changes to legal entities, reporting requirements, or risk mitigation standards.
• Governance or third party–related support required to ensure timelines are met and the separation is a success.

Separation costs vary by industry type.

• Certain industries may have separation costs made up of mostly one type, differing from other industries, due to the complexity and demands of the transaction. For example:
  • Healthcare separation costs are mostly driven by regulatory, safety, and quality standards, as well as consolidation of the research and development function.
  • Energy and Utilities tend to have the lowest separation costs due to most transactions occurring within the same sector rather than as cross-sector investments. For example, oil and gas transactions tend to be for oil fields and rigs (strategic fixed assets), which can easily be added to the buyer’s portfolio.

Separation costs are more related to the degree of change required than the size of the transaction.

3.2.6 Estimate separation costs

3-4 hours

Input: Separation tasks, Transition team, Valuation of current IT environment, Valuation of target IT environment, Outputs from data room, Technical debt, Employees

Output: List of anticipated costs required to support IT separation

Materials: Separation task checklist, Separation roadmap, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company M&A team, Transition team

The purpose of this activity is to estimate the costs that will be associated with the separation. Identify and communicate a realistic figure to the larger M&A team within your company as early in the process as possible. This ensures that the funding required for the transaction is secured and budgeted for in the overarching transaction.

1. On the associated slide in the M&A Sell Playbook, input:
   • Task
   • Domain
   • Cost type
   • Total cost amount
   • Level of certainty around the cost
2. Provide a copy of the estimated costs to the company’s M&A team. Also provide any additional information identified earlier to help them understand the importance of those costs.

Record the results in the M&A Sell Playbook.

Employee transition planning

Considering employee impact will be a huge component to ensure successful separation

• Meet With Leadership
• Plan Individual and Department Redeployment
• Plan Individual and Department Layoffs
• Monitor and Manage Departmental Effectiveness

• For employees, the transition could mean:
  • Changing from their current role to a new role to meet requirements and expectations throughout the transition.
  • Being laid off because the role they are currently occupying has been made redundant.
• It is important to plan for what the M&A separation needs will be and what the IT operational needs will be.
• A lack of foresight into this long-term plan could lead to undue costs and headaches trying to retain critical staff, rehiring positions that were already let go, and keeping redundant employees longer then necessary.

Info-Tech Insight

Being transparent throughout the process is critical. Do not hesitate to tell employees the likelihood that their job may be made redundant. This will ensure a high level of trust and credibility for those who remain with the organization after the transaction.

3.2.7 Create an employee transition plan

3-4 hours

Input: IT strategy, IT organizational design

Output: Employee transition plans

Materials: M&A Sell Playbook, Whiteboard, Sticky notes, Markers

Participants: IT executive/CIO, IT senior leadership, Company M&A team, Transition team

The purpose of this activity is to create a transition plan for employees.

1. Transition planning can be done at specific individual levels or more broadly to reflect a single role. Consider these four items in the transition plan:
   • Understand the direction of the employee transitions.
   • Identify employees that will be involved in the transition (moved or laid off).
   • Prepare to meet with employees.
   • Meet with employees.
2. For each employee that will be facing some sort of change in their regular role, permanent or temporary, create a transition plan.
3. For additional information on transitioning employees, review the blueprint Streamline Your Workforce During a Pandemic.

**Note that if someone’s future role is a layoff, then there is no need to record anything for skills needed or method for skill development.

Record the results in the M&A Sell Playbook.

3.2.8 Create functional workplans for employees

3-4 hours

Input: Prioritized separation tasks, Employee transition plan, Separation RACI, Costs for activities, Activity owners

Output: Employee functional workplans

Materials: M&A Sell Playbook, Learning and development tools

Participants: IT executive/CIO, IT senior leadership, IT management team, Company M&A team, Transition team

The purpose of this activity is to create a functional workplan for the different employees so that they know what their key role and responsibilities are once the transaction occurs.

1. First complete the transition plan from the previous activity (3.2.7) and the separation roadmap. Have these documents ready to review throughout this process.
2. Identify the employees who will be transitioning to a new role permanently or temporarily. Creating a functional workplan is especially important for these employees.
3. Identify the skills these employees need to have to support the separation. Record this in the corresponding slide in the M&A Sell Playbook.
4. For each employee, identify someone who will be a point of contact for them throughout the transition.

It is recommended that each employee have a functional workplan. Leverage the IT managers to support this task.

Record the results in the M&A Sell Playbook.

Metrics for separation

Valuation & Due Diligence

• % Defects discovered in production
• $ Cost per user for enterprise applications
• % In-house-built applications vs. enterprise applications
• % Owners identified for all data domains
• # IT staff asked to participate in due diligence
• Change to due diligence
• IT budget variance
• Synergy target

Execution & Value Realization

• % Satisfaction with the effectiveness of IT capabilities
• % Overall end-customer satisfaction
• $ Impact of vendor SLA breaches
• $ Savings through cost-optimization efforts
• $ Savings through application rationalization and technology standardization
• # Key positions empty
• % Frequency of staff turnover
• % Emergency changes
• # Hours of unplanned downtime
• % Releases that cause downtime
• % Incidents with identified problem record
• % Problems with identified root cause
• # Days from problem identification to root cause fix
• % Projects that consider IT risk
• % Incidents due to issues not addressed in the security plan
• # Average vulnerability remediation time
• % Application budget spent on new build/buy vs. maintenance (deferred feature implementation, enhancements, bug fixes)
• # Time (days) to value realization
• % Projects that realized planned benefits
• $ IT operational savings and cost reductions that are related to synergies/divestitures
• % IT staff–related expenses/redundancies
• # Days spent on IT separation
• $ Accurate IT budget estimates
• % Revenue growth directly tied to IT delivery
• % Profit margin growth

3.2.9 Align project metrics with identified tasks

3-4 hours

Input: Prioritized separation tasks, Employee transition plan, Separation RACI, Costs for activities, Activity owners, M&A goals

Output: Separation-specific metrics to measure success

Materials: Separation roadmap, M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Transition team

The purpose of this activity is to understand how to measure the success of the separation project by aligning metrics to each identified task.

1. Review the M&A goals identified by the business. Your metrics will need to tie back to those business goals.
2. Identify metrics that align to identified tasks and measure achievement of those goals. For each metric you consider, ask the following questions:
   • What is the main goal or objective that this metric is trying to solve?
   • What does success look like?
   • Does the metric promote the right behavior?
   • Is the metric actionable? What is the story you are trying to tell with this metric?
   • How often will this get measured?
   • Are there any metrics it supports or is supported by?

Record the results in the M&A Sell Playbook.

By the end of this mid-transaction phase you should:

Have successfully evaluated your IT people, processes, and technology to determine a roadmap forward for separating or selling.

Key outcomes from the Due Diligence & Preparation phase

• Participate in due diligence activities to comply with regulatory and auditing standards and prepare employees for the transition.
• Create a separation roadmap that considers the tasks that will need to be completed and the resources required to support separation.

Key deliverables from the Due Diligence & Preparation phase

• Drive value with a due diligence charter
• Gather data room artifacts
• Measure staff engagement
• Assess culture
• Create a carve-out roadmap
• Prioritize separation tasks
• Establish the separation roadmap
• Identify the buyer’s IT expectations
• Create a service/transaction agreement
• Estimate separation costs
• Create an employee transition plan
• Create functional workplans for employees
• Align project metrics with identified tasks

M&A Sell Blueprint

Phase 4

Execution & Value Realization

This phase will walk you through the following activities:

• Monitor service agreements
• Continually update the project plan
• Confirm separation costs
• Review IT’s transaction value
• Conduct a transaction and separation SWOT
• Review the playbook and prepare for future transactions

This phase involves the following participants:

• IT executive/CIO
• IT senior leadership
• Vendor management team
• IT transaction team
• Company M&A team

Workshop Overview

Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889

What is the Execution & Value Realization phase?

Post-transaction state

Once the transaction comes to a close, it’s time for IT to deliver on the critical separation tasks. As the selling organization in this transaction, you need to ensure you have a roadmap that properly enables the ongoing delivery of your IT environment while simultaneously delivering the necessary services to the purchasing organization.

Throughout the separation transaction, some of the most common obstacles IT should prepare for include difficulty separating the IT environment, loss of key personnel, disengaged employees, and security/compliance issues.

Post-transaction, the business needs to understands the value they received by engaging in the transaction and the ongoing revenue they might obtain as a result of the sale. You also need to ensure that the IT environment is functioning and mitigating any high-risk outcomes.

Goal: To carry out the planned separation activities and deliver the intended value to the business.

Execution Prerequisite Checklist

Before coming into the Execution & Value Realization phase, you must have addressed the following:

• Understand the rationale for the company's decisions to pursue a sale or divestiture and what opportunities or pain points the sale should alleviate.
• Identify the key roles for the transaction team.
• Identify the M&A governance.
• Determine target metrics.
• Select a separation strategy framework.
• Conduct a RACI for key transaction tasks for the transaction team.
• Create a carve-out roadmap.
• Prioritize separation tasks.
• Establish the separation roadmap.
• Create employee transition plans.

Before coming into the Execution & Value Realization phase, we recommend addressing the following:

• Create vision and mission statements.
• Establish guiding principles.
• Create a future-state operating model.
• Identify the M&A operating model.
• Document the communication plan.
• Examine the business perspective of IT.
• Identify key stakeholders and outline their relationship to the M&A process.
• Establish a due diligence charter.
• Be able to valuate the IT environment and communicate IT’s value to the business.
• Gather and present due diligence data room artifacts.
• Measure staff engagement.
• Assess and plan for culture.
• Estimate separation costs.
• Create functional workplans for employees.
• Identify the buyer’s IT expectations.
• Create a service/ transaction agreement.

Separation checklists

Prerequisite Checklist

• Build the project plan for separation and prioritize activities
  • Plan first day
  • Plan first 30/100 days
  • Plan first year
• Create an organization-aligned IT strategy
• Identify critical stakeholders
• Create a communication strategy
• Understand the rationale for the sale or divestiture
• Develop IT's sale/divestiture strategy
  • Determine goal opportunities
  • Create the mission and vision statements
  • Create the guiding principles
  • Create program metrics
• Consolidate reports from due diligence/data room
• Conduct culture assessment
• Create a transaction team
• Establish a service/technical transaction agreement
• Plan and communicate culture changes
• Create an employee transition plan
• Assess baseline engagement

Business

• Design an enterprise architecture
• Document your business architecture
• Meet compliance and regulatory standards
• Identify and assess all of IT's risks

Applications

• Prioritize and address critical applications
  • CRM
  • HRIS
  • Financial
  • Sales
  • Risk
  • Security
  • ERP
  • Email
• Develop method of separating applications
• Model critical applications that have dependencies on one another
• Identify the infrastructure capacity required to support critical applications
• Prioritize and address critical applications

Leadership/IT Executive

• Build an IT budget
• Structure operating budget
• Structure capital budget
• Identify the workforce demand vs. capacity
• Establish and monitor key metrics
• Communicate value realized/cost savings

Data

• Confirm data strategy
• Confirm data governance
• Build a data architecture roadmap
• Analyze data sources and domains
• Evaluate data storage (on-premises vs. cloud)
• Develop an enterprise content management strategy and roadmap
• Ensure cleanliness/usability of data sets
• Identify data sets that can remain operational if reduced/separated
• Develop reporting and analytics capabilities
• Confirm data strategy

Operations

• Manage sales access to customer data
• Determine locations and hours of operation
• Separate/terminate phone lists and extensions
• Split email address books
• Communicate helpdesk/service desk information

Separation checklists (continued)

Infrastructure

• Manage organization domains
• Consolidate data centers
• Compile inventory of vendors, versions, switches, and routers
• Review hardware lease or purchase agreements
• Review outsourcing/service provider agreements
• Review service-level agreements
• Assess connectivity linkages between locations
• Plan to migrate to a single email system if necessary
• Determine network access concerns

Vendors

• Establish a sustainable vendor management office
• Review vendor landscape
• Identify warranty options
• Identify the licensing grant
• Rationalize vendor services and solutions

People

• Design an IT operating model
• Design your future IT organizational structure
• Conduct a RACI for prioritized activities
• Conduct a culture assessment and identify goal IT culture
• Build an IT employee engagement program
• Determine critical roles and systems/process/products they support
• Define new job descriptions with meaningful roles and responsibilities
• Create employee transition plans
• Create functional workplans

Projects

• Identify projects to be on hold
• Communicate project intake process
• Reprioritize projects

Products & Services

• Redefine service catalog
• Ensure customer interaction requirements are met
• Select a solution for product lifecycle management
• Plan service-level agreements

Security

• Conduct a security assessment
• Develop accessibility prioritization and schedule
• Establish an information security strategy
• Develop a security awareness and training program
• Develop and manage security governance, risk, and compliance
• Identify security budget
• Build a data privacy and classification program

IT Processes

• Evaluate current process models
• Determine productivity/capacity levels of processes
• Identify processes to be changed/terminated
• Establish a communication plan
• Develop a change management process
• Establish/review IT policies
• Evaluate current process models

Execution & Value Realization

Step 4.1

Execute the Transaction

Activities

• 4.1.1 Monitor service agreements
• 4.1.2 Continually update the project plan

This step will walk you through the following activities:

• Monitor service agreements
• Continually update the project plan

This step involves the following participants:

• IT executive/CIO
• IT senior leadership
• Vendor management team
• IT transaction team
• Company M&A team

Outcomes of Step

Successfully execute the separation of the IT environments and update the project plan, strategizing against any roadblocks as they come.

Key concerns to monitor during separation

If you are entering the transaction at this point, consider and monitor the following three items above all else.

Your IT environment, reputation as an IT leader, and impact on key staff will depend on monitoring these aspects.

• Risk & Security. Make sure that the channels of communication between the purchasing organization and your IT environment are properly determined and protected. This might include updating or removing employees’ access to certain programs.
• Retaining Employees. Employees who do not see a path forward in the organization or who feel that their skills are being underused will be quick to move on. Make sure they are engaged before, during, and after the transaction to avoid losing employees.
• IT Environment Dependencies. Testing the IT environment several times and obtaining sign-off from auditors that this has been completed correctly should be completed well before the transaction occurs. Have a strong architecture outlining technical dependencies.

For more information, review:

• Reduce and Manage Your Organization’s Insider Threat Risk
• Map Technical Skills for a Changing Infrastructure Operations Organization
• Build a Data Architecture Roadmap

4.1.1 Monitor service agreements

Input: Original service agreement, Risk register

Output: Service agreement confirmed

Materials: Original service agreement

Participants: IT executive/CIO, IT senior leadership, External organization IT senior leadership

The purpose of this activity is to monitor the established service agreements on an ongoing basis. Your organization is most at risk during the initial months following the transaction.

1. Ensure the right controls exist to prevent the organization from unnecessarily opening itself up to risks.
2. Meet with the purchasing organization/subsidiary three months after the transaction to ensure that everyone is satisfied with the level of services provided.
3. This is not a quick and completed activity, but one that requires ongoing monitoring. Repeatedly identify potential risks worth mitigating.

For additional information and support for this activity, see the blueprint Build an IT Risk Management Program.

4.1.2 Continually update the project plan

Input: Prioritized separation tasks, Separation RACI, Activity owners

Output: Updated separation project plan

Materials: M&A Separation Project Plan Tool (SharePoint), M&A Separation Project Plan Tool (Excel)

Participants: IT executive/CIO, IT senior leadership, IT transaction team, Company M&A team

The purpose of this activity is to ensure that the project plan is continuously updated as your transaction team continues to execute on the various components outlined in the project plan.

1. Set a regular cadence for the transaction team to meet, update the project plan, review the status of the various separation task items, and strategize how to overcome any roadblocks.
2. Employ governance best practices in these meetings to ensure decisions can be made effectively and resources allocated strategically.

Record the updates in the M&A Separation Project Management Tool (SharePoint).

Record the updates in the M&A Separation Project Management Tool (Excel).

Execution & Value Realization

Step 4.2

Reflection and Value Realization

Activities

• 4.2.1 Confirm separation costs
• 4.2.2 Review IT’s transaction value
• 4.2.3 Conduct a transaction and separation SWOT
• 4.2.4 Review the playbook and prepare for future transactions

This step involves the following participants:

• IT executive/CIO
• IT senior leadership
• Transition team
• Company M&A team

Outcomes of Step

Review the value that IT was able to generate around the transaction and strategize about how to improve future selling or separating transactions.

4.2.1 Confirm separation costs

3-4 hours

Input: Separation tasks, Carve-out roadmap, Transition team, Previous RACI, Estimated separation costs

Output: Actual separation costs

Materials: M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Transaction team, Company M&A team

The purpose of this activity is to confirm the associated costs around separation. While the separation costs would have been estimated previously, it’s important to confirm the costs that were associated with the separation in order to provide an accurate and up-to-date report to the company’s M&A team.

1. Taking all the original items identified previously in activity 3.2.6, identify if there were changes in the estimated costs. This can be an increase or a decrease.
2. Ensure that each cost has a justification for why the cost changed from the original estimation.

Record the results in the M&A Sell Playbook.

Track cost savings and revenue generation

Throughout the transaction, the business would have communicated its goals, rationales, and expectations for the transaction. Sometimes this is done explicitly, and other times the information is implicit. Either way, IT needs to ensure that metrics have been defined and are measuring the intended value that the business expects. Ensure that the benefits realized to the organization are being communicated regularly and frequently.

1. Define Metrics: Select metrics to track synergies through the separation.
   1. You can track value by looking at percentages of improvement in process-level metrics depending on the savings or revenue being pursued.
   2. For example, if the value being pursued is decreasing costs, metrics could range from capacity to output, highlighting that the output remains high despite smaller IT environments.
2. Prioritize Value-Driving Initiatives: Estimate the cost and benefit of each initiative's implementation to compare the amount of business value to the cost. The benefits and costs should be illustrated at a high level. Estimating the exact dollar value of fulfilling a synergy can be difficult and misleading.
   Steps
   • Determine the benefits that each initiative is expected to deliver.
   • Determine the high-level costs of implementation (capacity, time, resources, effort).
3. Track Cost Savings and Revenue Generation: Develop a detailed workplan to resource the roadmap and track where costs are saved and revenue is generated as the initiatives are undertaken.

4.2.2 Review IT’s transaction value

3-4 hours

Input: Prioritized separation tasks, Separation RACI, Activity owners, M&A company goals

Output: Transaction value

Materials: M&A Sell Playbook

Participants: IT executive/CIO, IT senior leadership, Company's M&A team

The purpose of this activity is to track how your IT organization performed against the originally identified metrics.

1. If your organization did not have the opportunity to identify metrics, determine from the company M&A what those metrics might be. Review activity 3.2.9 for more information on metrics.
2. Identify whether the metric (which should support a goal) was at, below, or above the original target metric. This is a very critical task for IT to complete because it allows IT to confirm that they were successful in the transaction and that the business can count on them in future transactions.
3. Be sure to record accurate and relevant information on why the outcomes (good or bad) are supporting the M&A goals set out by the business.

Record the results in the M&A Sell Playbook.

4.2.3 Conduct a transaction and separation SWOT

2 hours

Input: Separation costs, Retention rates, Value that IT contributed to the transaction

Output: Strengths, weaknesses, opportunities, and threats

Materials: Flip charts, Markers, Sticky notes

Participants: IT executive/CIO, IT senior leadership, Business transaction team

The purpose of this activity is to assess the positive and negative elements of the transaction.

1. Consider the internal and external elements that could have impacted the outcome of the transaction.
   • Strengths. Internal characteristics that are favorable as they relate to your development environment.
   • Weaknesses Internal characteristics that are unfavorable or need improvement.
   • Opportunities External characteristics that you may use to your advantage.
   • Threats External characteristics that may be potential sources of failure or risk.

Record the results in the M&A Sell Playbook.

M&A Sell Playbook review

With an acquisition complete, your IT organization is now more prepared then ever to support the business through future M&As

• Now that the transaction is more than 80% complete, take the opportunity to review the key elements that worked well and the opportunities for improvement.
• Critically examine the M&A Sell Playbook your IT organization created and identify what worked well to help the transaction and where your organization could adjust to do better in future transactions.
• If your organization were to engage in another sale or divestiture under your IT leadership, how would you go about the transaction to make sure the company meets its goals?

4.2.4 Review the playbook and prepare for future transactions

4 hours

Input: Transaction and separation SWOT

Output: Refined M&A playbook

Materials: M&A Sell Playbook

Participants: IT executive/CIO

The purpose of this activity is to revise the playbook and ensure it is ready to go for future transactions.

1. Using the outputs from the previous activity, 4.2.3, determine what strengths and opportunities there were that should be leveraged in the next transaction.
2. Likewise, determine which threats and weaknesses could be avoided in the future transactions.
   Remember, this is your M&A Sell Playbook, and it should reflect the most successful outcome for you in your organization.

Record the results in the M&A Sell Playbook.

By the end of this post-transaction phase you should:

Have completed the separation post-transaction and be fluidly delivering the critical value that the business expected of IT.

Key outcomes from the Execution & Value Realization phase

• Ensure the separation tasks are being completed and that any blockers related to the transaction are being removed.
• Determine where IT was able to realize value for the business and demonstrate IT’s involvement in meeting target goals.

Key deliverables from the Execution & Value Realization phase

• Monitor service agreements
• Continually update the project plan
• Confirm separation costs
• Review IT’s transaction value
• Conduct a transaction and separation SWOT
• Review the playbook and prepare for future transactions

Summary of Accomplishment

Problem Solved

Congratulations, you have completed the M&A Sell Blueprint!

Rather than reacting to a transaction, you have been proactive in tackling this initiative. You now have a process to fall back on in which you can be an innovative IT leader by suggesting how and why the business should engage in a separation or sale transaction. You have:

• Created a standardized approach for how your IT organization should address divestitures or sales.
• Retained critical staff and complied with any regulations throughout the transaction.
• Delivered on the separation project plan successfully and communicated IT’s transaction value to the business.

Now that you have done all of this, reflect on what went well and what can be improved if you were to engage in a similar divestiture or sale again.

If you would like additional support, have our analysts guide you through other phases as part of an Info-Tech workshop.

Contact your account representative for more information
workshops@infotech.com 1-888-670-8899

Research Contributors and Experts

Research Contributors and Experts

Research Contributors and Experts

Bibliography

“5 Ways for CIOs to Accelerate Value During Mergers and Acquisitions.” Okta, n.d. Web.

Altintepe, Hakan. “Mergers and acquisitions speed up digital transformation.” CIO.com, 27 July 2018. Web.

“America’s elite law firms are booming.” The Economist, 15 July 2021. Web.

Barbaglia, Pamela, and Joshua Franklin. “Global M&A sets Q1 record as dealmakers shape post-COVID world.” Nasdaq, 1 April 2021. Web.

Boyce, Paul. “Mergers and Acquisitions Definition: Types, Advantages, and Disadvantages.” BoyceWire, 8 Oct. 2020. Web.

Bradt, George. “83% Of Mergers Fail -- Leverage A 100-Day Action Plan For Success Instead.” Forbes, 27 Jan. 2015. Web.

Capgemini. “Mergers and Acquisitions: Get CIOs, IT Leaders Involved Early.” Channel e2e, 19 June 2020. Web.

Chandra, Sumit, et al. “Make Or Break: The Critical Role Of IT In Post-Merger Integration.” IMAA Institute, 2016. Web.

Deloitte. “How to Calculate Technical Debt.” The Wall Street Journal, 21 Jan. 2015. Web.

Ernst & Young. “IT As A Driver Of M&A Success.” IMAA Institute, 2017. Web.

Fernandes, Nuno. “M&As In 2021: How To Improve The Odds Of A Successful Deal.” Forbes, 23 March 2021. Web.

“Five steps to a better 'technology fit' in mergers and acquisitions.” BCS, 7 Nov. 2019. Web.

Fricke, Pierre. “The Biggest Opportunity You’re Missing During an M&Aamp; IT Integration.” Rackspace, 4 Nov. 2020. Web.

Garrison, David W. “Most Mergers Fail Because People Aren't Boxes.” Forbes, 24 June 2019. Web.

Harroch, Richard. “What You Need To Know About Mergers & Acquisitions: 12 Key Considerations When Selling Your Company.” Forbes, 27 Aug. 2018. Web.

Hope, Michele. “M&A Integration: New Ways To Contain The IT Cost Of Mergers, Acquisitions And Migrations.” Iron Mountain, n.d. Web.

“How Agile Project Management Principles Can Modernize M&A.” Business.com, 13 April 2020. Web.

Hull, Patrick. “Answer 4 Questions to Get a Great Mission Statement.” Forbes, 10 Jan. 2013. Web.

Kanter, Rosabeth Moss. “What We Can Learn About Unity from Hostile Takeovers.” Harvard Business Review, 12 Nov. 2020. Web.

Koller, Tim, et al. “Valuation: Measuring and Managing the Value of Companies, 7th edition.” McKinsey & Company, 2020. Web.

Labate, John. “M&A Alternatives Take Center Stage: Survey.” The Wall Street Journal, 30 Oct. 2020. Web.

Lerner, Maya Ber. “How to Calculate ROI on Infrastructure Automation.” DevOps.com, 1 July 2020. Web.

Loten, Angus. “Companies Without a Tech Plan in M&A Deals Face Higher IT Costs.” The Wall Street Journal, 18 June 2019. Web.

Low, Jia Jen. “Tackling the tech integration challenge of mergers today” Tech HQ, 6 Jan. 2020. Web.

Lucas, Suzanne. “5 Reasons Turnover Should Scare You.” Inc. 22 March 2013. Web.

“M&A Trends Survey: The future of M&A. Deal trends in a changing world.” Deloitte, Oct. 2020. Web.

Maheshwari, Adi, and Manish Dabas. “Six strategies tech companies are using for successful divesting.” EY, 1 Aug. 2020. Web.

Majaski, Christina. “Mergers and Acquisitions: What's the Difference?” Investopedia, 30 Apr. 2021.

“Mergers & Acquisitions: Top 5 Technology Considerations.” Teksetra, 21 Jul. 2020. Web.

“Mergers Acquisitions M&A Process.” Corporate Finance Institute, n.d. Web.

“Mergers and acquisitions: A means to gain technology and expertise.” DLA Piper, 2020. Web.

Nash, Kim S. “CIOs Take Larger Role in Pre-IPO Prep Work.” The Wall Street Journal, 5 March 2015. Web.

O'Connell, Sean, et al. “Divestitures: How to Invest for Success.” McKinsey, 1 Aug. 2015. Web

Paszti, Laila. “Canada: Emerging Trends In Information Technology (IT) Mergers And Acquisitions.” Mondaq, 24 Oct. 2019. Web.

Patel, Kiison. “The 8 Biggest M&A Failures of All Time” Deal Room, 9 Sept. 2021. Web.

Peek, Sean, and Paula Fernandes. “What Is a Vision Statement?” Business News Daily, 7 May 2020. Web.

Ravid, Barak. “How divestments can re-energize the technology growth story.” EY, 14 July 2021. Web.

Ravid, Barak. “Tech execs focus on growth amid increasingly competitive M&A market.” EY, 28 April 2021. Web.

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“SAP Divestiture Projects: Options, Approach and Challenges.” Cognizant, May, 2014. Web.

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“The CIO Playbook. Nine Steps CIOs Must Take For Successful Divestitures.” SNP, 2016. Web.

“The Role of IT in Supporting Mergers and Acquisitions.” Cognizant, Feb. 2015. Web.

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Weller, Joe. “The Ultimate Guide to the M&A Process for Buyers and Sellers.” Smartsheet, 16 May 2019. Web.

Improve Email Security

Follow the latest best practices for email security to mitigate evolving threats.

Analyst Perspective

Protecting your organization’s digital assets begins with securing your email communication.

As organizations increasingly rely on email communication for day-to-day business operations, threat actors are exploiting the increased traction to develop and implement more sophisticated email-based attacks. Furthermore, the lack of investment in measures, tools, and technologies for an organization’s email security exacerbates the vulnerabilities at hand.

Effective use of security procedures and techniques can mitigate and minimize email-based threats have been shown to reduce the ability of these attacks to infiltrate the email inbox. These guidelines and best practices will help your organization conduct due diligence to protect the contents of the email, its transit, and its arrival to the authorized recipient.

Ahmad Jowhar
Research Specialist, Security & Privacy
Info-Tech Research Group

Executive Summary

Info-Tech Insight
Email has changed. Your email security must evolve to ensure the safety of your organization’s communication.

Your Challenge

As a security leader, you need to modernize your email security services so you can protect business communications and prevent security incidents.

• Various factors must be considered when deciding how best to safeguard your organization’s communication chain. This includes the frequency of email traffic and the contents of emails.
• The increased number of email-based cyberattacks reveals the sophistication of threat actors in leveraging an organization’s lack of email security to infiltrate their business.
• As organizations continue to rely heavily on email communication, email-based threats will become increasingly prevalent.

75% of organizations have experienced an increase in email-based threats.

97% of security breaches are due to phishing attacks.

82% of companies reported a higher volume of email in 2022.

Source: Mimecast, 2023.

Modern email security controls framework for security leaders

Email has changed. Your email security must evolve to ensure the safety of your organization’s communication.

Understand the best practices in securing your organization’s emails

Email encryption

Deploy an added layer of defense by preventing the contents of your email from being intercepted.

• Protecting your organization’s emails begins by ensuring only the appropriate recipients can receive and read the email’s contents.
• This process includes encrypting the email’s contents to protect sensitive information from being read by unauthorized recipients.
• This protects the contents even if the email is intercepted by anyone besides the intended recipient.
• Other benefits of email encryption include:
• Reducing any risks associated with regulatory violations.
• Enabling business to confidently communicate sensitive information via email.
• Ensuring protective measures taken to prevent data loss and corporate policy violations.

Along with the increased use of emails, organizations are seeing an increase in the number of attacks orchestrating from emails. This has resulted in 74% of organizations seeing an increase in email-based threats.

Source: Mimecast, 2023.

Info-Tech Insight
Encrypting your email communication will provide an additional layer of protection which only allows authorized users to read the email.

Implementing email encryption

Leverage these protocols and tools to help encrypt your email.

• The most common email encryption protocols and tools include:
• Transport Layer Security (TLS): A cryptographic protocol designed to securely deliver data via the internet, which prevents third parties from intercepting and accessing the data.
• Secure/Multipurpose Internet Mail Extension (S/MIME): A protocol for sending digitally signed and encrypted messages by leveraging public key encryption to provide at-rest and in-transit data protection.
• Secure Email Gateway: An email security solution that inspects emails for malicious content prior to it reaching the corporate system. The solution is positioned between the public internet and corporate email servers. An email gateway solution would be provided by a third-party vendor and can be implemented on-premises, through the cloud, or hybrid.
• Email encryption policies can also be implemented to ensure processes are in place when sending sensitive information through emails.
• Email encryption ensures end-to-end privacy for your email and is especially important when the email requires strict content privacy.

Email authentication

Three authentication controls your organization should leverage to stay secure.

• Along with content encryption, it’s important to authenticate both the sender and recipient of an email to ensure that only legitimate users are able to send and receive it.
• Implementing email authentication techniques prevents unsolicited email (e.g. spam) from entering your mailbox.
• This also prevents unauthorized users from sending email on your organization’s behalf.
• Having these standards in place would safeguard your organization from spam, spoofing, and phishing attacks.
• The three authentication controls include:
• Sender Policy Framework (SPF): Email validation control that verifies that the incoming email is from an authorized list of IP addresses provided by the sender’s domain administrator.
• DomainKeys Identified Mail (DKIM): Enables recipients to verify that an email from a specific domain was authorized by the domain’s owner. This is conducted through cryptographic authentication by adding a digital signature to the message headers of outbound emails.
• Domain Message Authentication Reporting & Conformance (DMARC): Provides domain-level protection of email channel by publishing DMARC records in the organization’s domain name system (DNS) and creates policies which prompts actions to take if an email fails authentication.

Although these authentication controls are available for organizations to leverage, the adoption rate remains low. 73% of survey respondents indicated they didn’t deploy email authentication controls within their organization.

Source: Mimecast, 2023.

Email authentication controls

All three authentication controls should be implemented to effectively secure your organization’s email. They ensure the emails you send and receive are securely authorized and legitimate.

For more information:

• Microsoft 365
• Google Workspace

Data classification

Ensure sensitive data is securely processed, analyzed, and stored.

• Besides authenticating the legitimacy of an email and its traffic to the recipient, it’s important to have procedures in place to protect the contents of an email.
• Data classification is found not only in databases and spreadsheets, but also in the email messages being communicated. Examples of data most commonly included in emails:
• Personal identifiable information (PII): social security number, financial account number, passcodes/passwords
• Applying data classification to your email can help identify the sensitivity of the information it contains. This ensures any critical data within an email message is securely processed and protected against unauthorized use, theft, and loss.
• Emails can be classified based on various sensitivity levels. such as:
• Top secret, public, confidential, internal

Discover and Classify Your Data

Leverage this Info-Tech blueprint for guidelines on implementing a data classification program for your organization.

Info-Tech Insight
Having tools and technologies in place to ensure that data is classified and backed up will enable better storage, analysis, and processing of the email.

Data loss prevention (DLP)

Protect your data from being lost/stolen.

• Protecting an email’s contents through data classification is only one approach for improving email security. Having a data loss prevention solution would further increase security by minimizing the threat of sensitive information leaving your organization’s email network.
• Examples of tools embedded in DLP solutions that help monitor an organization's email communication:
• Monitoring data sent and received from emails: This ensures the data within an email communication is protected with the necessary encryption based on its sensitivity.
• Detecting suspicious email activity: This includes analyzing users’ email behavior regarding email attachments and identifying irregular behaviors.
• Flagging or blocking email activities which may lead to data loss: This prevents highly sensitive data from being communicated via email and reduces the risk of information being intercepted.
• The types of DLP technologies that can be leveraged include:
• Rule-based: Data that has been tagged by admins as sensitive can be blocklisted, which would flag and/or block data from being sent via email.
• Machine learning: Data on users’ email behavior is collected, processed, and trained to understand the employee’s normal email behavior and detect/flag suspicious activities.
• Implementing DLP solutions would complement your data classification techniques by ensuring proper measures are in place to secure your organization’s assets through policies, technology, and tools.

48% of employees have accidently attached the wrong file to an email.

39% of respondents have accidently sent emails that contained security information such as passwords and passcodes.

Source: Tessian, 2021.

User awareness & training

A strong security awareness & training program is an important element of strengthening your email security.

• Having all these tools and techniques in place to improve your email security will not be effective unless you also improve your employees’ awareness.
• Employees should participate in email security training, especially since the majority utilize this channel of communication for day-to-day operations.
• User awareness and training should go beyond phishing campaigns and should highlight the various types of email-based threats, the characteristics of these threats, and what procedures they can follow to minimize these threats.
• 95% of data breaches are caused by human error. It can take nine months to discover and contain them, and they are expected to cost $8 trillion this year (Mimecast, 2023).
• Investments in employee awareness and training would mitigate these risks by ensuring employees recognize and report suspicious emails, remain mindful of what type of data to share via email, and improve their overall understanding of the importance of email security.

Develop a Security Awareness and Training Program That Empowers End Users

Leverage this Info-Tech blueprint for assistance on creating various user training materials and empower your employees to become a main line of defense for your organization.

64% of organizations conduct formal training sessions (in-person or computer-based).

74% of organizations only focus on providing phishing-based training.

Source: Proofpoint, 2021.

Examples of email-based threats

Phishing
Email sent by threat actors designed to manipulate end user into providing sensitive information by posing as a trustworthy source

Business Email Compromise
Attackers trick a user into sending money or providing confidential information

Spam
Users receive unsolicited email, usually in bulk, some of which contains malware

Spear Phishing
A type of phishing attack where the email is sent to specific and targeted emails within the organization

Whaling
A type of phishing attack similar to spear phishing, but targeting senior executives within the organization

Password/Email Exposure
Employees use organizational email accounts and passwords to sign up for social media, leaving them susceptible to email and/or password exposure in a social media breach

Email policies

Having policies in place will enable these controls to be implemented.

Developing security policies that are reasonable, auditable, enforceable, and measurable ensures proper procedures are followed and necessary measures are implemented to protect the organization. Policies relating to email security can be categorized into two groups:

• User policy: Policies employees must adhere to when using their corporate email. Examples:
• User acceptance of technology: Acknowledgment of legitimate and restrictive actions when using corporate email
• Security awareness and training: Acknowledging completion of email security training
• Administrator-set policy: Policies that are implemented by IT and/or security admins. Examples:
• Email backup: Policy on how long emails should be archived and processes for disposing of them
• Log retention: Policy on how to retain, process, and analyze logs created from email servers
• Throttling: Policies that limit the number of emails sent by a sender and the number of recipients per email and per day depending on the employee’s grouping

Develop and Deploy Security Policies

Leverage this Info-Tech blueprint for assistance on developing and deploying actionable policies and creating an overall policy management lifecycle to keep your policies current, effective, and compliant.

Info-Tech Insight
Policies ensure acceptable standards are in place to protect the organization’s assets, including the creation, attachment, sending, and receiving of emails.

Email security technologies & tools (SoftwareReviews)

SoftwareReviews, a division of Info-Tech Research Group, provides enterprise software reviews to help organizations make more efficient decisions during the software selection process. Reviews are provided by authenticated IT professionals who have leveraged the software and provide unbiased insights on different vendors and their products.

Learn from the collective knowledge of real IT professionals.

• Know the products and features available.
• Explore modules and detailed feature-level data.
• Quickly understand the market.

Evaluate market leaders through vendor rankings and awards.

• Convince stakeholders with professional reports.
• Avoid pitfalls with unfiltered data from real users.
• Choose software with confidence.

Cut through misleading marketing material.

• Negotiate contracts based on data.
• Know what to expect before you sign.
• Effectively manage the vendor.

Email security technologies & tools

Leverage these tools for an enhanced email security solution.

• SoftwareReviews provides vendor and software reviews of various email security solutions. View the details below on the different email security solutions and the top vendors for each solution.
• Cloud Email Security
• Avanan, Perception Point, SpamTitan
• Email Backup
• Dropsuite Email Backup, Mimecast Sync & Recover, BackupAssist
• Secure Email Gateway – Enterprise Software
• Forcepoint Email Security, FortiMail, Cisco Secure Email
• Secure Email Gateway – Midmarket Software
• Avanan, SpamTitan, Spambrella

Email Security Checklist

Follow these guidelines to ensure you are implementing best practices for securing your organization’s emails.

• The Email Security Checklist is a tool to assess the current and future state of your organization’s email security and provides a holistic understanding on monitoring your progress within each category and associated controls.
• The status column allows you to select the feature’s current implementation status, which includes the following options:
• Enabled: The feature is deployed within the organization’s network.
• Implemented: The feature is implemented within the organization’s network, but not yet deployed.
• Not implemented: The feature has not been enabled or implemented.
• Comments can be added for each feature to provide details such as indicating the progress on enabling/implementing a feature and why certain features are not yet implemented.

Download the Email Security Checklist tool

Related Info-Tech Research

Discover and Classify Your Data
Leverage this Info-Tech blueprint for guidelines on implementing a data classification program for your organization.

Develop a Security Awareness and Training Program That Empowers End Users
Leverage this Info-Tech blueprint for assistance on creating various user training materials and empower your employees to become a main line of defense for your organization.

Develop and Deploy Security Policies
Leverage this Info-Tech blueprint for assistance on developing and deploying actionable policies and creating an overall policy management lifecycle to keep your policies current, effective, and compliant.

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Crane, Casey. “6 Email Security Best Practices to Keep Your Business Safe in 2019.” Hashed Out by The SSL Store™, 7 Aug. 2019. Web.

Hateb, Seif. “Basic Email Security Guide.” Twilio Blog, Twilio, 5 Dec. 2022. Web.

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Pal, Suryanarayan. “10 Email Security Best Practices You Should Know in 2023.” Mailmodo, 9 Feb. 2023. Web.

Pitchkites, Max. “Email Security: A Guide to Keeping Your Inbox Safe in 2023.” Cloudwards, 9 Dec. 2022. Web.

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Shea, Sharon, and Peter Loshin. “Top 15 Email Security Best Practices for 2023: TechTarget.” TechTarget, 14 Dec. 2022. Web.

“The Email Security Checklist: Upguard.” UpGuard, 16 Feb. 2022. Web.

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“What Is DMARC? - Record, Verification & More: Proofpoint Us.” Proofpoint, 9 Mar. 2023. Web.

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Wilton, Laird. “How to Secure Email in Your Business with an Email Security Policy.” Carbide, 31 Jan. 2022. Web.