Integration Management: Build on what you know
How can I channel my skills and experiences in Project Management to work within an Integration Management Office?
By
, andMerging two acquired organizations is an adventure that’s not for cowards. Most mergers fail to achieve their anticipated benefits, and opportunity for missteps and miscalculations are high. An Integration Management Office (IMO) is one way to bring it under control and achieve the synergies the merger is targeting.
Think Project Management and PMOs — with a twist
If you’re not familiar with IMOs, the concept is very similar to project and program management constructs already commonly in use. If you are familiar with the concept of a Program Management Office (PMO), you are on your way to understanding an IMO.
An IMO is a short-term, integration focused PMO. Typically, Project Managers are responsible for delivering specific objectives for that project’s mandate or statement of work. Their focus is on the scope, cost, resources, risks, and quality of the project. This is exactly what a Project Manager on an integration project does.
Project and program managers usually report up through a Program Management Office (PMO). A PMO is a management structure that standardizes the project-related governance and reporting processes and facilitates the sharing of resources, methodologies, tools, and techniques. The IMO does the same for all projects related to the integration. Where a PMO lasts longer than any one program or project, an IMO is specific to the length of the integration.
Enterprise Projects
A typical project can be small and contained within one department, or it could be cross-functional and enterprise level. With integration management, while some subprojects may be small, the overall effort is not. An integration effort is cross-department and cross-enterprises. Because of this, the risks, dependencies, cultural issues, and communication needs are magnified.
Leadership involvement in integration decision making is frequently higher than a typical project. M&A should be a strategic goal, usually with a very high level of resource investment at all levels. As such, it will have an increased leadership focus and an overall emphasis on strong and consistent communications.
Methodologies and Deliverables
If an organization has a PMO, the IMO should follow the methodologies the PMO has already established. Tracking key information through management dashboards, integrated workplans, and risk logs are just some of the ways an IMO and PMO leverage consistent project management tools. For an integration project, there may be the additional deliverable of an M&A playbook to document the work in case there are future acquisitions.
While these tools, templates, and resources remain consistent across an IMO and PMO, the added challenge with managing these deliverables within an IMO is ensuring proper attention to both merging organizations. It is not uncommon for the acquiring company to not adequately understand and represent the acquired company’s point of view. The IMO should put in extra effort to ensure participation of both organizations in important meetings and decisions and to truly understand the differences in how they both operate.
Communications and Change Management
One deliverable difference between integration and standard project management is the communications strategy and plan.
First, for a merger, there will be time-sensitive information that legally cannot be communicated before the deal goes through. Second, once the deal goes through, there is usually an almost minute-by-minute communication schedule for the day the merger is announced — which is not the case with most other types of project. Third, being involved in a merger generates much more emotion than most projects.
Change can be difficult under any circumstances, but particularly in M&A scenarios. Companies typically experience more disengaged employees after an integration. There will be a temporary loss of productivity. Many will actively look to leave the company. People are very concerned about potential job changes and loss. For all of these reasons, proper messaging and transparency from leadership combined with strong change management becomes extraordinarily important during this time of transition.
Benefits and Synergies
With typical projects, the goal is talked about in terms of ROI — return on investment — and project benefits. With mergers and acquisitions, it is usually called “synergies.” Synergies are the potential long-term benefits that you receive from a merger or acquisition and there can be revenue and cost synergies realized if tracked properly. Examples of synergies could be entering new markets and/or increasing margins, cost reductions, and getting a better deal from banks as a larger borrower, amongst others.
To illustrate the value of these potential synergies, let’s consider a recent merger one of us was involved in: A large commodity supplier recently bought a creative, niche player to expand in the higher-margin niche market and offer broader, more comprehensive solutions to their clients.
Typically in M&A, companies target those with similar cultures. In this case, however, a targeted benefit for both parties was cultural change. They wanted to absorb cultural components from the other. The larger, commodity supplier thought that the acquisition could help change their culture to become more innovative. The creative company was looking for less chaos and more consistent, higher quality processes.
Another example of desired synergies in this scenario was in balancing manufacturing capacity across both companies. The smaller company’s creative and chaotic ways were reflected in how they ran their manufacturing plant. They didn’t schedule or optimize production or machines, and they were operating over capacity. This resulted in delays, employee stress and customer dissatisfaction. On the other side, the large commodity provider was on the brink of closing one of their under-utilized manufacturing plants. Load balancing was a key benefit of the merger. The balancing included people as well as machines. Machinists from the large company helped fine tune and optimize the manufacturing equipment of the smaller one, and improve plant safety.
Another big benefit was found in IT. The larger firm was able to overhaul and improve security, standardize systems, and backfill the smaller company’s lean technology staff. This improved productivity and reduced risk significantly.
Conclusion
Integration management is a competency to build for the future. The volume and size of deals are increasing. 2018 saw $3.4 trillion in total M&A deal value and 2019 volume is up. Corporations and private equity firms have large cash reserves and are making moves in the market, which makes now the perfect time to prepare yourself for these opportunities and accelerate your skills in IMO/PMO.
Merging two organizations is high risk and difficult work. By leveraging your existing PMO, project management, and strong change management skills, you are taking a strong first step toward understanding how to build and run an IMO.
