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ORIGINAL ARTICLE

Impact Factor : 0.2105 ISSN No : 2230-7850

Monthly MultidisciplinaryResearch Journal

Indian Streams

Research Journal

Executive Editor

Ashok Yakkaldevi

Editor-in-chief

H.N.Jagtap

Vol 3 Issue 4 May 2013

Mohammad HailatDept. of Mathmatical Sciences, University of South Carolina Aiken, Aiken SC 29801

Abdullah SabbaghEngineering Studies, Sydney

Catalina NeculaiUniversity of Coventry, UK

Ecaterina PatrascuSpiru Haret University, Bucharest

Loredana BoscaSpiru Haret University, Romania

Fabricio Moraes de AlmeidaFederal University of Rondonia, Brazil

George - Calin SERITANPostdoctoral Researcher

Hasan BaktirEnglish Language and Literature Department, Kayseri

Ghayoor Abbas ChotanaDepartment of Chemistry, Lahore University of Management Sciences [ PK ]Anna Maria ConstantinoviciAL. I. Cuza University, Romania

Horia PatrascuSpiru Haret University, Bucharest, Romania

Ilie Pintea,Spiru Haret University, Romania

Xiaohua YangPhD, USANawab Ali KhanCollege of Business Administration

Flávio de São Pedro FilhoFederal University of Rondonia, Brazil

Kamani PereraRegional Centre For Strategic Studies, Sri Lanka

Janaki SinnasamyLibrarian, University of Malaya [ Malaysia ]

Romona MihailaSpiru Haret University, Romania

Delia SerbescuSpiru Haret University, Bucharest, Romania

Anurag MisraDBS College, Kanpur

Titus Pop

Pratap Vyamktrao NaikwadeASP College Devrukh,Ratnagiri,MS India

R. R. PatilHead Geology Department Solapur University, Solapur

Rama BhosalePrin. and Jt. Director Higher Education, Panvel

Salve R. N.Department of Sociology, Shivaji University, Kolhapur

Govind P. ShindeBharati Vidyapeeth School of Distance Education Center, Navi Mumbai

Chakane Sanjay DnyaneshwarArts, Science & Commerce College, Indapur, Pune

Awadhesh Kumar ShirotriyaSecretary, Play India Play (Trust),Meerut

Iresh SwamiEx - VC. Solapur University, Solapur

N.S. DhaygudeEx. Prin. Dayanand College, Solapur

Narendra KaduJt. Director Higher Education, Pune

K. M. BhandarkarPraful Patel College of Education, Gondia

Sonal SinghVikram University, Ujjain

G. P. PatankarS. D. M. Degree College, Honavar, Karnataka

Maj. S. Bakhtiar ChoudharyDirector,Hyderabad AP India.

S.Parvathi DeviPh.D.-University of Allahabad

Sonal Singh

Rajendra ShendgeDirector, B.C.U.D. Solapur University, Solapur

R. R. YalikarDirector Managment Institute, Solapur

Umesh RajderkarHead Humanities & Social Science YCMOU, Nashik

S. R. PandyaHead Education Dept. Mumbai University, Mumbai

Alka Darshan ShrivastavaShaskiya Snatkottar Mahavidyalaya, Dhar

Rahul Shriram SudkeDevi Ahilya Vishwavidyalaya, Indore

S.KANNANPh.D , Annamalai University,TN

Satish Kumar Kalhotra

Editorial Board

International Advisory Board

IMPACT FACTOR : 0.2105

Welcome to ISRJISSN No.2230-7850

Indian Streams Research Journal is a multidisciplinary research journal, published monthly in English, Hindi & Marathi Language. All research papers submitted to the journal will be double - blind peer reviewed referred by members of the editorial Board readers will include investigator in universities, research institutes government and industry with research interest in the general subjects.

RNI MAHMUL/2011/38595

Address:-Ashok Yakkaldevi 258/34, Raviwar Peth, Solapur - 413 005 Maharashtra, IndiaCell : 9595 359 435, Ph No: 02172372010 Email: [email protected] Website: www.isrj.net

Title :Source:Indian Streams Research Journal [2230-7850]

yr:2013 vol:3 iss:4

AN EXPLORATORY STUDY ON SUCCESSFUL MANAGEMENT OF INTERNATIONAL MERGERS AND ACQUISITIONS IN IT INDUSTRY BHUPESH MALHOTRA AND VANDANA SHARMA

Volume 3, Issue. 4, May. 2013Indian Streams Research Journal

KEYWORDS:

Merger & Acquisitions, Mergers in IT Industry, Merger failures, Successful integration, Integration failure

INTRODUCTION:

International mergers and acquisitions are among the key corporate strategies multinational corporations (MNCs) use to expand, diversify, or consolidate their businesses. 2006 was a record year for acquisitions worldwide when, for the first time, the annual value of these transactions exceeded US$ 4 trillion, and cross-border acquisitions alone amounted to a record high of US$ 1.3 trillion (Larsen, 2007). This trend continued in 2007, given that the transaction value of global acquisitions in the first three months of the year reached US$ 1.13 trillion, setting up a record for the busiest first quarter in acquisition history (Saigol and Politi, 2007). Along with this recent upsurge in international acquisition activity, however, is the fact that up to 83 percent of these transactions are unsuccessful (KPMG, 1999; Moeller and

Abstract:

The international acquisitions constitute an unexplained paradox: although academic research and business practice have shown that the majority of these transactions fail to achieve pre-acquisition objectives. Acquisitions across borders continue to be very popular and remain the main vehicle through which MNCs undertake foreign direct investment (The Economist, 2007; UN Conference on Trade and Development, 2000). It therefore becomes important to examine the causes of international acquisition failure, and to develop strategies that may mitigate these problems. This study has used structured interviews of experts of one IT major company which has done more than forty successful mergers & acquisitions in the past, self working experience of the author in the field of IT industry merger and acquisition process and with varied literature available on this topic to: a) Evaluate the previous experience in successful management of the merger and acquisition; b) link between merger failures and associating corresponding reverse pointers as its success measure and c) identification of key areas which lead to successful management of international mergers and acquisitions in IT industry.With the help of project management framework, a successful model in IT industry mergers is being proposed in this paper.

ISSN:-2230-7850

AN EXPLORATORY STUDY ON SUCCESSFUL MANAGEMENT OF INTERNATIONAL MERGERS AND ACQUISITIONS

IN IT INDUSTRY

BHUPESH MALHOTRA AND VANDANA SHARMA

Research Scholar , Department of Management Birla Institute of TechnologyRanchi Mesra – Ext. Centre – Noida .

Associate Professor , Department of Management Birla Institute of TechnologyRanchi Mesra – Ext. Centre – Noida

Available online at www.isrj.net

ORIGINAL ARTICLE

Schlingemann, 2005; Sirower, 1997). As per NASSCOM's 'Strategic Review 2010' report, the global IT products and services related

spending reached US$ 1.5 trillion in 2009 (FY10). This was a decline of 2.9% over 2008. The global hardware market was hit worse than software or service markets as a result of the changing economic outlook, with almost 8% decline during the year. The Indian IT/ITES industry earned revenues of around US$ 73bn during FY10. Out of this, the IT software and services industry accounted for US$ 64bn, with the rest coming for ITES.

The global IT services market is expected to grow by 2.4% in 2010, and 4.2% in 2011 as companies coming out of recession harness the need for IT to create competitive advantage A cautious economic environment and the fact that big IT buyers are leaning toward consolidation of vendors have helped fuel merger and acquisition activity. Merging with or acquiring another company are no easy task and each enterprise will have a myriad of business rationales to justify such a major undertaking.

2.THEORETICAL BACKGROUND

Mergers and Acquisitions

An entrepreneur may grow its business either by internal expansion or by external expansion. In the case of internal expansion, a firm grows gradually over time in the normal course of the business, through acquisition of new assets, replacement of the technologically obsolete equipments and the establishment of new lines of products. But in external expansion, a firm acquires a running business and grows overnight through corporate combinations. These combinations are in the form of mergers, acquisitions, amalgamations and takeovers and have now become important features of corporate restructuring. They have been playing an important role in the external growth of a number of leading companies the world over. They have become popular because of the enhanced competition, breaking of trade barriers, free flow of capital across countries and globalization of businesses. In the wake of economic reforms, Indian industries have also started restructuring their operations around their core business activities through acquisition and takeovers because of their increasing exposure to competition both domestically and internationally.

Mergers and acquisitions are strategic decisions taken for maximization of a company's growth by enhancing its production and marketing operations. They are being used in a wide array of fields such as information technology, telecommunications, and business process outsourcing as well as in traditional businesses in order to gain strength, expand the customer base, cut competition or enter into a new market or product segment.

Distinction between mergers and acquisitions

Although often used synonymously, the terms merger and acquisition mean slightly different things. When one company takes over another and clearly establishes itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded.

In the pure sense of the term, a merger happens when two firms agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals". The firms are often of about the same size. Both companies' stocks are surrendered and new company stock is issued in its place. For example, in the 1999 merger of Glaxo Wellcome and SmithKline Beecham, both firms ceased to exist when they merged, and a new company,

, was created.In practice, however, actual mergers of equals don't happen very often. Usually, one company will

buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it is technically an acquisition. Being bought out often carries negative connotations; therefore, by describing the deal as a merger, deal makers and top managers try to make the takeover more palatable. An example of this would be the takeover of by

in 1999 which was widely referred to as a merger at the time.A purchase deal will also be called a merger when both CEOs agree that joining together is in the

best interest of both of their companies. But when the deal is unfriendly (that is, when the target company does not want to be purchased) it is always regarded as an acquisition.

GlaxoSmithKline

euphemisticallyChrysler Daimler-

Benz

AN EXPLORATORY STUDY ON SUCCESSFUL MANAGEMENT OF INTERNATIONAL.....

2Indian Streams Research Journal • Volume 3 Issue 4 • May 2013

http://en.wikipedia.org/wiki/GlaxoSmithKline

http://en.wikipedia.org/wiki/Euphemism

http://en.wikipedia.org/wiki/Chrysler

http://en.wikipedia.org/wiki/Daimler-Benz

http://en.wikipedia.org/wiki/Cyclonic

3.REASONS OF FAILURE OF MERGER

Comparing the studies done in this area, this paper have tried and identified the distinct issues of merger failure and recommendations to avoid the same. Based on the vast literature review across the globe, the short listing is done and shown below in four data tables:

3.1 Table

Although mergers and acquisitions are being aggressively pursued by companies, recent studies have indicated that 60-80% of all mergers are financial failures when measured by their ability to outperform the stock market or to deliver profit increase.

While it is true that some of these failures can be largely attributed to financial and market factors, many studies are pointing to the neglect of human resources issues as the main reason for M&A failures. A 1997 PricewaterhouseCoopers global study concluded that lack of attention to people and related organizational aspects contribute significantly to disappointing post-merger results.

Lawyers, bankers and accountants are indispensable in the process of a merger or acquisition, but they are not the true determinants of a successful merger. Rather, it is how effectively the people from the two organizations are brought together that will ultimately determine whether the merger will be successful.

In a McKinsey report, Ira Kay and Mike Shelton state: “Plenty of attention is paid to the legal, financial and operational elements of mergers and acquisitions. But executives who have been through the merger process now recognize that in today's economy, the management of the human side of change is the real key to maximizing the value of a deal.”

As it stands, employees do not participate enough in the integration process of a merger. If a merger is to reach its full success potential, they need to be informed and involved more actively throughout all the stages of the merger process. This report focused on identifying the main human resources-related causes of merger failure, and also provided recommendations on how to achieve a successful merger.


Why Do Mergers Fai l? Recommendations for a Successful Mer ger

Lack of Communicat ion Extensive and Regular Communication

Lack of Direct Involvement by Human Resources Effective Planning

Lack of Training Retaining Key People

Loss of Key People and Talented Employees Managing Cultural D ifferences

Loss of Customers Training and Development

Corporate Culture Clash Post-Merger Integration Tea ms

Pow er Poli tics

Inadequate Planning

Source: Why Do Merge rs Fail? What Can Be Done to Improve their Chances of Success? Author: Rita Sala me Key Stra tegy www.ke y-strategy.com January 2006



3.2 Table:

It is critical for the senior / chief executives to be actively involved in the integration process. Chief executives must lead from front, appear approachable to new staff and involve themselves actively in the merged company. For setting the direction, as soon as the merger is announced, the companies should form an integration team which acquires the information from the management of both companies about their expectations.

The most effective way to get support for the change is by maximizing employee involvement in the consultation process. Communication plays a critical role to the success of mergers. Providing clear, consistent, factual, sympathetic and up to date information in several ways will increase the coping abilities of employees, which in turn increases the productivity.

3.3 Table: There are seven key levers that can influence the success or failure of a cultural integration initiative. They are:

Going hand-in-hand with the key integration levers are the three components to a successful integration: integration processes, integration tools, and integration measurement.


Integration fai ls because:

Principles of successful integr ation:

Im proper managing and strategy

Directors m ust get out of the boardroom

Culture d ifferences

Set d irection for new business

Delays in com m unications

Unders tand the em otional , pol itical and rationa l i ssues

Lack of clear v ision

Maxim ize invol vem ent

Focus on com m unica tion

Provide clarity around roles and decis ion lines

Continue to focus on custom er s

Source: [EMERALD: Leadership & organizati onal developm ent journal - The effecti ve m anagem ent of m ergers -

Ha n N guyen, Brian.H.Kleiner]

Integ r atio n tea m s wh ich can b ui ld th e n eces sary rel ation sh ip s b et ween the t wo com p an ies

Spe ed wh ich refers t o th e sen se of ur gen cy (n ot h ast e) th at m us t a cco m pan y t h e in teg ration

L ead ers hip o r bu y-in to th e p rocess fro m key m em b ers of th e man ag em ent tea m

Co mm u nica tio n wh ich m us t be con s isten t b oth in terna lly (ass ociat es, bo ard ) an d extern ally (sh areh old ers, cu sto m ers)

Reten tio n o f v alu abl e em p lo yees wh o can h elp sm oo th th e tran s ition

Cul ture s ec on d in im p ortan ce on ly t o resu lt s

Res ults wh ich are th e u ltim ate g oals of t h e m erg er, an d wh ich sh ou ld g u ide th e p rocess

Sou rce: M erg ers an d Acqu is itio ns : Bes t Practi ces for S ucces sful Int eg ratio n (T o pla y a lea di ng r ole i n t ra ns for min g

or ga n iza tio n s, HR mu st mo ve b eyo nd i ts tra n sa ctio na l r o le to help crea te a p erfo rma n ce cen tric cu ltu re) B y Gerr i

Kn ila ns E mpl oymen t R ela tio ns T od a y: W in ter 2 0 09



3.4 Table:

Balancing the keys

This survey, through its unique method of correlating deal activities against an objective measure of success, has allowed us to identify six particular components of the M&A process that have the most impact in unlocking value from a deal. Three of these relate to the hard mechanics of the transaction process, the other three to softer people matters. The symmetry between the two areas is significant.

But these six areas should be a collective priority; by themselves they are not enough. A balance between the soft and the hard will be essential to successfully deliver shareholder value

4. EXPERT'S OPINION ON MERGERS / ACQUISITONS IN IT INDUSTRY:

Based on the working of three major international integrations working and being part of the technical integration framework,

1.Acquisition of French company of UK based major IT company with about 750 employees spanning over of employee location in 5 different countries2.Acquisition of French company with one major business unit based in India taking over Indian company of around 300 employees3.Internal merger of two business units of India and Switzerland.

To make any merger / acquisition / integration successful, a defined project management framework is used to make sure everything falls in place.

The project vision will typically include some expectations on the following synergies:

a.Consolidation of Business: It is important to look into the merged entity and determine if all the business will be absorbed by the acquirer or there are business elements which will be more aligned to fit as part of other businesses.b.Consolidation of Employees: There may be opportunities to save costs by consolidating or identifying redundant jobs. The HR Stream must work towards identifying redundancies with the other Streams.c.Consolidation of Facilities: Acquisitions in countries/locations where acquirer has a presence already may further help the facilities team to look into the opportunities of consolidation of facilities.d.Consolidation of Vendor/Supplier Contracts: The Procurement team will have the opportunity to evaluate existing suppliers of the merged entity and compare value proposition of each of them. The vendor consolidation approach can be defined based on the value delivered by suppliers as compared to the value provided by existing suppliers.e.Consolidation of Processes/Systems: Each stream will have to work with their counterparts from the merged entity to consolidate their processes and systems. In this process, the opportunities to adopt best practices, common processes and systems from either side should be leveraged.

5.Proposed Project Management Framework: In general, the management of an Integration Project utilizes many of the classic project management best practices of industry standard frameworks such as PMI and Prince, as well as the internal framework. It is expected that the Project Manager has the appropriate experience and expertise to manage the following key areas:


Hard ke ys:

Soft Keys:

Synergy eva luation

Picking management team

Integration project planning

Resolving cul tural i ssues

Due diligence

Communicat ions

Source: MERGERS & ACQ UISITIONS A GLOBAL RESE ARCH REPORT – K PMG – Nov 1999



5.1 Table:

Change Management & Communications (Most important factor)

Change management & communications is paramount and key aspect during integration project. Effective communication, both internally and externally (especially if driven by an acquisition), is crucial to the success of an Integration Project. Internally there is inevitably a lot of uncertainty amongst the integrated entity team members about what impact will have on them. Without effective communication people tend to draw their own conclusions, rumors can spread, and morale issues begin. It is important that there are regular formal and informal communications with the opportunity for open questions.

Externally there are several stakeholder groups all requiring effective change management and communications and management of their expectations. These stakeholder groups include customers,


Topic Description

Project Governance Focuses on monitoring, controlling, steering the project and communicating its status on a regular basis to the various stakeholders.

Planning andFinancial Management

Focuses on producing project schedule and the budgeted costs.

Resource Management

Focuses on activities/tasks that are needed to form the project team throughout the course of the project depending on the project constraints and needs.

Scope andRequirements Management

Focuses on the preparation for Project Deliverable acceptance.

Engagement Change Management

Focuses on activities/tasks that are used whenever a change request is brought to the project.

Risk Management Focuses on defining and documenting how risks will be managed, identifying possible risks at key points within the project.

Issue Management Focuses on preparing for, identifying and capturing project related issues.

Stakeholder Relationship Management

Focuses on establishing and maintaining relationship with the Stakeholders, getting the stakeholders commitment and project start-up approval. Clients of the entity being acquired, and the acquiring entity also need to be communicated and the relationship need to be managed. These stakeholders to be identified separately and a specific Client Relationship Manager to be identified as required.

Supplier andProcurement Management

Focuses on hiring and managing external contributors to the project.

Communication Management

Focuses on establishing and effecting communication on project-related information within the project team and with the Steering Committee.

Infrastructure Management

Focuses on making available the necessary infrastructure for project.

Configuration Management

Focuses on the repository of key documents created and utilized throughout the project.

Quality Management

Focuses on the quality assurance and quality control of the project approach and project deliverables.

Knowledge Management

Focuses on knowledge management aspects of the project, including re-use and contribution of project knowledge and maintenance of the engagement profile.

Quantitative Project Management

Focuses on the quantitative measures to manage the project’s defined process to achieve the project’s established quality and process performance.



suppliers, shareholders, media, competitors, regulators, financiers, to name but a few. All relevant stakeholder groups need to be identified and require a communication plan to be put in place. It is expected that communication team SPOC leads the communication on behalf of integration team. A formal Communication Plan should be developed; identifying the road-shows, open houses, customer meetings, floor updates etc. This Stream typically takes the lead on:

Publishing Newsletters, and coordinating the team who creates individual updates across the Streams.Ensuring that any existing websites of the merged entity displays merger/acquisition information appropriately.Periodic communication/ newsletter to the employees of the merged entity to provide progress update about integration activities.

The proposal is to setup an integration team which follows the project management framework and the three broad phases of a project – initiation, execution and closure to make any M&A successful.

This Project Integration framework consists of 3 macro level phases that occur in the following order:

5.1. Initiation Phase

Towards the end of this phase, OTACE is identified in consultation with the sponsor and stakeholders. Initial set-up of governance also starts which defines execution of the engagement. The following should be in place for the Start-Up phase to begin:

Project Sponsor, Business Leader and the steering committee must be identified during this phase. Project charter should be prepared and approvedApproved Project Charter, from both the entity to be integrated. Approval from Sponsor to proceed with integration.

Project Manager nominated:

The purpose of Start-Up phase is to mobilize the project in a professional and efficient manner by initiating key processes needed to manage and control the project throughout its life. An assessment must be carried out to identify (leverage the M&A Due Diligence if available):

Key processes, policies to be replaced/integrated Key applications to be replaced/integratedKey resources identified and on-boarded. New processes, applications to be introduced.Recommendation for Integration Approach (Full Integration/ Building the Bridges)

One of the key activities within Start-Up phase is for Project Manager to confirm that he/she believes it is feasible to deliver project within the existing schedule and budget and then accept formal responsibility for executing and delivering the project.




5.1.1. Conduct Project Familiarization

Objective of this activity is for the Project Manager to learn about and understand all aspects of project (Transaction and Strategy behind integration) that he/she has been nominated to manage. It is important that all key stakeholders understand the details of Project Charter, the underlying strategy and drivers that led to the businesses coming together, and the sponsor's expectations and perceptions of success. This will ensure that the integration activities are planned and executed in accordance with expected outcomes. Project manager will meet with relevant functions and stakeholders to gather knowledge of project background, objectives and deliverables. He needs to get familiarize and gather support from the function and stakeholders (Listed below and Not limited to)

a.Business units (BU) and Practicesb.People Carec.Finance, Procurement, & Legald.Facilitiese.Information Technology (IT)f.Change Management & Communications

Success of the integration project will depend on extent of coverage and details gathered for each Stream during this step. Project manager must spend time offline with individual Stream Leaders to gather stream specific activity details and then conduct a workshop with all Stream Leaders together to discuss the cross stream impact on Integration Project schedule and deliverables.

Project Familiarization process is an extensive exercise and involves the following steps:

Organize Stream level planning meetings with the stream Leaders. Output of the meeting should be stream level task/schedule and Budget determination.Collate individual stream level plan and prepare the comprehensive project plan.Conduct a workshop with all Stream Leaders to validate the plan and to identify cross functional dependencies.Project Manager must conduct project steering committee meeting to review the Plan, Schedule and Budget and secure approval. Once approved, Project Plan, Schedule and Budget is base line.Plan, Schedule and Budget needs to be communicated to all stakeholders.

5.1.2. Confirm Project Approach

Objective of this activity is for Project manager to confirm either of the two approaches of integration that is “Full Integration” or “Building the Bridges”. Due Diligence outcomes are the key factors in arriving at the above decision. Type of processes to be followed in the to-be integrated entity post integration, will determine the integration approach. In most cases, this will also determine the scope of applications to be integrated or bridged.

5.1.3. Confirm Project Feasibility

Objective of this activity is to ensure that the Project manager has a detailed and clear understanding of scope, objectives and constraints of the project. From this, Project manager confirms whether it is feasible to deliver the project under proposed schedule, budget and estimated costs. Approval by Project manager confirms acceptance of responsibility for the project and demonstrates that project has formally started.

5.1.4. Define Stakeholders (Integrating Entity and Sponsor) Acceptance

Objective of this activity is to define the acceptance requirements, criteria and plan for project. (I.e. UAT sign-off, Migration sign-off, BAU communication etc.)

5.1.5. Initiate Scope and Requirements Management

Purpose of this activity is to confirm the scope of work that Project manager is responsible to deliver. In addition, this activity will produce a set of tailored procedures that will define how the scope and




requirements will be controlled and managed during the life of project.


Function Scope

Business Unit (BU) and Practices

· BU structure definition.

· Practice alignment and structure definition.

· Customer contract novation. · Sales, Accounts and opportunities definition.

· Review MIS Reports for BU and Practices.

· Create employee awareness about applicable BU and Practices Organization processes and IT Applications.

· Decision about historical data retention (offline) based on the legal and statutory requirements.

· Transfer of knowledge management, Patents etc., of the Acquired entity to respective owners under BU, Practices of the Acquiring Entity

· Interaction with other cross functional teams for the task such as Bill Rates, Customer mapping etc.

People Care,Recruitment, Mobility.

· People care, Recruitment, Mobility alignment and structure definition. · Review MIS Reports for People care, Recruitment, Mobility.

· Create employee awareness about applicable People care, Recruitment, Mobility Organization processes and IT Applications.


· Review and Amend employment contracts not limited to key executives from the merged entity

· Review and amendment of benefits (Insurance, Bonus, Holidays (accrued), pension plans, travel, allowances (housing, etc mapping to the Organization standards.

· Review of holiday and Leaves, buyouts and carryover policies and procedures.

· Grade Mapping, practice mapping process. · Identification of supervisor

· Identify Issues with Key employee retention. Arrive to all employee and contractors Retention/ Redundancy decision.

· Identification and availability confirmation of key people from merged entity to support the integration project.

· Ascertain local HR legal dependencies on Customer novation, Legal issues.

· Ascertain local mobility related dependencies for immigration/border agencies of the country, since, at the time of integration there may not be adequate documents to prove that the company is acquired, leading to delay in approval from immigration.

· Ascertain local recruitment related dependencies for hiring.

· Interaction with other cross functional teams for the task such as grade mapping, payroll (benefits), etc.

· Verify impending issues with Benefits and bonus for merging company. · Preparation of Employee handbook and day one pack.

· Segregation of Dedicated Support Services and Client Service employees

· Manage the new Offer letter and on boarding process for employees.



5.1.6. Establish Governance

Objective of this activity is to ensure that Project Governance Plan (PGP) is maintained and enforced throughout the life of the project. Project Manager must work with the Business Leader and Stream Leaders to prepare the project plan, schedule and budget. Success of integration project will depend on the extent of coverage and details gathered for each Stream during planning phase. Project Manager must spend time offline with individual Stream Leaders to gather stream specific activity details and then conduct a workshop with all Stream Leaders together to discuss the cross stream impact.

The Project Manager must update the Project Governance Plan (PGP) with any appropriate information that has become available since previous version of this document was produced. PGP will be reviewed, possibly modified, and then signed-off by the project sponsor, Business Leader and other stream leader.

5.1.7. Acquire and Allocate Team Members: Identify Stream Leaders

Objective of this activity is to a) Identify and select resources that are assigned to the project - Ensure that all administrative details, necessary for successful transition, have been handled. b) Objective of this activity is to assign members of project team to the specific roles. Depending on the location where


Finance, Procurement, & Legal

· Finance, Procurement, Lega l structure definition.

· Ascer tain and implement Intermediate group reporting needs until integration goes live.

· Evaluation of Supplier contracts and decision on Extension, ter mination or novation.

· Establish common Procurement process.

· Establish Expense management process. · Establish Payroll process

· Conduct r eview and audits of financia l books.

· Legal Review of al l customers, supplier exist ing contracts. · Ascer tain loca l country laws on Finance aspects including reporting, tax,

corporate laws, etc.

· Review MIS Reports for Finance, Procurement, Legal and Facil ities.

· Create employees awareness about applicable Finance, Procurement, Legal and Facilities Organization processes and IT Applications

· Interaction with other cross functional teams for the task such as implementation of finance structure etc.


Facilities · Evaluation of facil ities with respect to cost benefit of keeping a facility Vis a Vis terminating the lease contract and leveraging exist ing Organization facil ities.

IT · IT alignment and structure definition.

· Review MIS Reports for IT.

· Create employee awareness about applicable IT Organization processes and Applications.

· Decision to decommission or procurement of new hardware/software to support interim access

· Review Existing IT and telephony infr astructure of the merged entity

· Identify any application changes

· Facilitate historical data retention (offline) based on the lega l and statutory requirements

· Recommend application configuration needs to other cross functional team for creation of new opera ting unit and new structure dependent on operating unit etc.

· IT alignment and structure definition.

· Review MIS Reports for IT. Change Management & Communications

· Create employee awareness about applicable communication Organization processes and Applications.

· Define process and procedures for continuous communication plan

· Newsletter: identify the team who will work on publishing periodic newsletter

· Ensure that existing website of merged entity starts displaying merger/acquisition information



activities and phases of the project are performed, staffing needs are to be met. Project Manager - Assigns tasks to the resources that join project. - Develops training and coaching plans for each member of the team, if required.

5.1.8. Initiate Knowledge Management

Business Leader / Sponsor to ensure that PM framework and other support function specific like People care, Finance and Technology framework is being used by the Project manager and respective stream leads as a reference guide and as part of Integration project and project closure document are updated based on learning's from the current integration project.

5.1.9. Initiate Risk Management

The purpose of this activity is to consolidate all significant risks related to this project into a risk list and establish a tailored set of procedures for risk management, specific for the project. All probable Risk in the integration project are identified & recorded so as to assess their potential impact and to define the risk mitigation actions to contain them.

5.1.10. Initiate Communication Management

The purpose of this activity is to define and establish a set of procedures that describes how communication management will be handled on a project.

5.2. Execution Phase

Overview

This phase describes actual execution and implementation of the requirement. It involves development of schedule, estimation and actual deliverables. All the project governance activities are tracked and monitored which includes reporting and escalations. Revising, re-planning and updating of project governance activities are also done in this phase. The trigger to revision and re-planning can be internal or external. Internal factors could be risks and issues and External could be change in requirements (addition, modification and deletion). Any of the adjustments should lead to changes in original arrangements with the Sponsor. Also other relevant authorities should approve the changes. Final step of this phase is Delivery and Acceptance, which is an overlap of execution and closure phase. It is an exit of execution phase and entry to closure phase. Partial engagement results, products or services are presented to the Sponsor for acceptance. Every separate partial delivery has to be reviewed by the Sponsor. All remarks should be assessed and if necessary adjustments should be made until formal Sponsor acceptance is obtained.

Typically, Execution phase of a project is where the majority of development and delivery work is performed and completed. Normally, the beginning of Execution phase is signaled by the successful completion of following activities and tasks:

Project Plan, Project Cost Budget and Project Governance Plan are approved and baseline. Project environment and infrastructure are in place. Required team members are on board and ready to start delivery work. Organization and Sponsor kick-off meetings have been conducted.

During Execution phase, the Project manager is primarily concerned with the monitoring and control of work, together with the management of project risks, issues, resources, finances and communications. Critical element signaling completion of Execution phase is the Sponsor acceptance of all deliverables defined in the Project Charter.

Execution Phase Steps




5.2.1. Sponsor Acceptance

Objective of this activity is to define Sponsor acceptance procedures, criteria and plan for the project, in line with any acceptance process already defined in the Project Charter.

5.2.2. Manage Project

Purpose of this activity is to collect all project action lists and produce a consolidated set of actions for the project, from which follow-up of outstanding actions can be organized and tracked.

5.2.3. Perform Weekly Project Status Review

Objective of this activity is to ensure that all parties are fully aware of the status of project and agree on the direction that should be taken for all issues and concerns regarding project. Project manager will communicate status of the project to all relevant stakeholders associated with the project in meetings.

5.2.4. Obtain Sponsor Signoff for Deliverables

Objective of this activity is to obtain formal acceptance from Sponsor and the integrating unit stakeholders for completed project deliverables. This may or may not coincide with the end of a phase/iteration. Project manager must prepare acceptance certificates, and then gain physical Sponsor sign-off for the deliverables produced.

5.2.5. Track Project Progress and Financials

Project manager to leverage finance stream lead to manage the project budget. Only the full time people assign to integration projects are included in the people budget. Part time people working from each stream will not be budgeted under the integration project budget. All no people expenses such as travel, procurement of software / hardware, incidental expenses needs to be budgeted under the integration project budget. Objective of this activity is to obtain a clear up-to-date view of project progress. This includes status of all project tasks undertaken to date, effort used and the effort forecast to complete project. From the effort used and effort forecast and also considering other project costs, financial status of the project can be determined.

5.2.6. Manage Requirements

Project manager needs to prepare scope document including roles and responsibility definition and get it approved from the project steering team. Purpose of this activity is to ensure that any new requirements are captured, related to existing requirements and mapped to work packages. In addition this activity ensures that traceability of all project requirements is maintained on completion of a new deliverable or approval of a relevant change request. [Note: Any changes to scope will be managed through standard change management process.]

5.2.7. Manage Changes

Ongoing monitoring and control of project changes involves keeping track of the identified changes through to implementation/rejection, monitoring residual actions, identifying and assessing new changes, ensuring that any action plans for the change are being performed and evaluating their effectiveness in delivering the change.




5.2.8. Manage Risks

Objective of this activity is to manage and control project risks. Ongoing monitoring and control of project risks involves:

Keeping track of the identified risks, Monitoring residual risks, Identifying new risks, Ensure implementation of risk mitigation/containment plans and evaluate effectiveness in managing risk.

5.2.9. Manage Issues

Ongoing monitoring and control of project issues involves keeping track of the identified issues, monitoring residual issues, identifying and assessing new issues, ensuring the implementation of issue resolution plans and evaluating their effectiveness in resolving the issue

5.2.10. Manage Configuration

This activity covers all the day-to-day functions to be carried out by Configuration manager and all other resources involved when adding or modifying configuration items.

5.3. Closure Overview

This phase logically starts in parallel with the closure of previous phase (execution phase). After project has been executed, identification of how the engagement has been executed, what are the best practices followed and what are lessons learned during the engagement execution are being captured.

In final closure, evaluation of the entire engagement and closure takes place. Evaluation process covers the following:

Before prior to closure following acceptance criteria to be met, sample scope appendix format All governance activities are formally closed and formal handover is done to the respective stakeholders.Successful Close-Down of a project is important because it represents last opportunity for the Project manager to maintain a mutually profitable relationship with the Sponsor. Most important aspect of close-Down phase is obtaining final Sponsor acceptance of the project, which is usually main condition for Sponsor to formally close the project. Obtaining this acceptance is therefore one of the major objectives of this phase. To support closure of a project, a formal procedure can be used. It ensures that mandatory set of activities needed to close the project are planned and executed, so that all Project Charter and commercial information is completed and available to others if queries arise. Typically, Close-Down phase will be initiated around four to six weeks from actual end of the project. Prior to execution of the Close-Down phase, Project manager should review the acceptance criteria. It is very important to close down project smoothly, ensuring that transfer of responsibilities is carried out, infrastructure and resources are handed over to the related stakeholders, lessons learned are captured and all team members are released and have had an evaluation.

Closure Steps




5.3.1. Governance Handover and Sponsor Acceptance

Purpose of this activity is to ensure that plans are in place for a smooth transition to the stakeholders responsible for the solution, once the project is finished.

5.3.2. Complete Planning and Financial Management

Objective of this activity is for the Project manager to ensure that project plan and finances truly reflects final position of the project and to capture any possible recommendations to improve the Planning and Financial Management procedures and tools.

5.3.3. Complete Team Member Release

Objective of this activity is to ensure that the release of Team Members from project is carried out in a formal and controlled manner, their performance evaluated, key project knowledge captured and plans adjusted.

5.3.4. Complete Scope and Requirements Management

Purpose of this activity is to ensure that all requirements related documents are up-to-date and that the project approach to Scope and Requirements management has been summarized.

5.3.5. Complete Change Control

Objective of this activity is for the Project Manager to ensure that change log truly reflects the status of changes identified and to capture any possible recommendations in improving the change control procedures and tools used, so that other projects may benefit from the experience gained.

5.3.6. Complete Risk Management: Purpose of this activity is to ensure that:

The risk log is up-to-date

Any outstanding risks are handed over to the appropriate recipient for ongoing management The project approach to risk management has been summarized.

5.3.7. Complete Issue Management

Objective of this activity is for the Project Manager to ensure that issue log truly reflects the status of issues identified and to capture any possible recommendations in improving the issue management procedures and tools used, so that other projects may benefit from the experience gained.

5.3.8. Monitor Sponsor Satisfaction (OTACE)

Objective of this activity is to assess the level of Sponsor's satisfaction with current project, by reviewing the existing Sponsor Satisfaction Criteria, collecting scores and analyzing results, producing the Sponsor Satisfaction (OTACE - On Time at Sponsor Expectation) Reports. Necessary corrective actions are planned / implemented in the areas receiving unsatisfactory scores.

5.3.9. Complete Change Management & Communications

Objective of this activity is for the Project manager to handover any relevant communications to the appropriate stakeholders / stream holders and to summarize how well communication management has been handled on the project, also recommending any areas for improvement that could benefit future projects.

5.3.10. Complete Configuration Management

Objective of this activity is for the Configuration manager (or Project Manager as applicable) to hand over the configuration management system to the appropriate Stakeholders / Stream leaders,




summarize project approach to configuration management and to capture any possible recommendations to improve the configuration management procedures and tools used, so that other projects may benefit from the experience gained.

5.3.11. Complete Quality Management

Objective of this activity is for the Project Manager to produce a consolidated view of how effective Quality Management was implemented and executed on project and to capture the experience gained, so that it can be reused in other projects. Project Manager also issues a final version of the outstanding issue logs (project quality issues and those defects raised during testing activities with the delivery method) which is passed to the Stakeholders / Stream leaders responsible for managing the on-going running of solution produced.

5.3.12. Complete Knowledge Management

Purpose of this activity is to ensure that the Project profile is up-to-date and to summarize how knowledge management has been dealt with on the project by capturing any possible recommendations in improving knowledge management procedures and tools used, so that other projects may benefit from the experience gained.

Lesson Learned: The lessons learned must be communicated in a consistent manner. In addition to the categorization and description of the lesson, it is important to state what the impact was and provide a recommendation for project managers to consider on future projects. Conduct Project lessons learned session to further update the Project management integration / any other framework documents. Use below mentioned template to capture lesson learned.

6.DISCUSSION AND CONCLUSION:

Thus based on the working of people around the globe and the personal experiences of a person into the integration business, to achieve excellence in the area of successful management of mergers it is important to have a defined framework and work towards achieving the same.Past failure reasons should be taken as a lesson and the mistakes of others should not be repeated. An integration framework is the key to make sure that the IT merger and acquisition will be successful and proactively some common errors can be avoided to make it a smooth transition. To summarize the project management model in IT industry, the three basic areas of importance are:

Initiation Phase - The purpose of Start-Up phase is to mobilise the project in a professional and efficient manner by initiating key processes needed to manage and control the project throughout its life.Execution Phase - Execution phase of a project is where the majority of development and delivery work is performed and completedClosure phase - Evaluation of the entire engagement and closure takes placeAll the above steps if followed logically and in sequence in any IT industry merger or acquisition will help and has been tried and tested. It also takes care of all the other relevant support functional area of work.

REFERENCES:

Rottig, Daniel, (2007), “Successfully Managing International Mergers and Acquisitions: A Descriptive Framework”, The journal of the AIB-SE, USA, International Business: Research Teaching and Practice 2007 1(1).Larsen, P.T. (2007) 'Takeovers reach a record high', The Financial Times: Special Report Corporate Finance, January 25: 1.Saigol, L. & Politi, J. (2007) 'M&A volume tops $1,000bn', Financial Times, March 30: 13.Moeller, S.B. & Schlingemann, F.P. (2005) 'Global diversification and bidder gains: A comparison between cross-border and domestic acquisitions', Journal of Banking & Finance, 29: 533-64.Sirower, M.L. (1997) The Synergy Trap: How Companies Lose the Acquisition Game, Free Press: New York.Salame, Rita. (January 2006). “Why Do Mergers Fail? What Can Be Done to Improve their Chances of Success?” Key Strategy www.key-strategy.com, USARaymond Noe, “Mergers and Acquisitions” MHR 860, Ohio State University Fisher College of Business, January 17, 2002




Bob Zukis, Carol McGregor, “Human Resources: A Critical Component to Your M&A Success in Japan”, Success Stories Japan, PwC Unifi Network Japan, November/December 1999Suh-kyung Yoon, “'People Problems' Hinder Post-Merger Success”, Far Eastern Economic Review, November 15, 2001Jarrod McDonald, Max Coulthard, and Paul de Lange (2005), “PLANNING FOR A SUCCESSFUL MERGER OR ACQUISITION: LESSONS FROM AN AUSTRALIAN STUDY”, Journal of Global Business and Technology, Volume 1, Number 2 Alzira Salama, Wayne Holland, Gerald Vinten, (2003),"Challenges and opportunities in mergers and acquisitions: three international case studies - Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo", Journal of European Industrial Training, Vol. 27 Iss: 6 pp. 313 – 321 (Emerald)Communicaid, “Cross-Border Mergers & Acquisitions, Reducing the risk of failure”, www.communicaid.comAllan, Steve (2011), “HR has key role in successful acquisition deals”, THOUGHT LEADERS academic insightsKPMG (November 1999), “Mergers and Acquisitions: Global Research Report 1999”, KPMG, the UK member firm of KPMG InternationalKnilans, Gerri. (2009), “Mergers and Acquisitions: Best Practices for Successful Integration”, the Global consulting partnership, Employment Relations Today: Winter 2009Han Nguyen, Brian H. Kleiner, (2003),"The effective management of mergers", Leadership & Organization Development Journal, Vol. 24 Iss: 8 pp. 447 – 454 (Emerald)Timothy Galpin, Mark Herndon, (2008),"Merger repair: when M& As go wrong", Journal of Business Strategy, Vol. 29 Iss: 1 pp. 4 – 12 (Emerald)Jha, Prabir, (July 2008), “M & A: The art of making it work – Case Studies of successful Mergers and Acquisitions”, NASSCOM: HR Summit, 2008. Caroline Firstbrook, (2007),"Transnational mergers and acquisitions: how to beat the odds of disaster", Journal of Business Strategy, Vol. 28 Iss: 1 pp. 53 – 56 (Emerald)Deloitte (2009), “Taking the lead during a merger how leaders choose to communicate during a merger is key to realizing the value of the deal”

WEBSITES:

http://en.wikipedia.org/wiki/Mergers_and_acquisitions#cite_note-2www.nasscom.com - NASSCOM's 'Strategic Review 2010' report




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