Impact Insights

Three Reasons Why Operations Must Drive IT Transformation during an M&A

DJ Skalsky

Mergers and Acquisitions

Joining two healthcare organizations is exciting, yet unsettling, as determining how best to merge two disparate IT environments can be a daunting task. As leaders begin to consider what the new organization might look like, IT integration often rises to the top of the “to do” list. From organizational management (e.g., payroll, materials management, compliance) to patient-facing activities (e.g., clinical services, registration & scheduling), IT impacts all aspects of operations and remains one of the most significant challenges associated with any M&A deal.

Many IT leaders view IT integration as an opportunity to implement and improve systems synergy between two organizations. Yet, like most organizational initiatives, IT M&A integration must be driven by Operations rather than IT in order to achieve an optimal future state.

Outcomes Matter

Though IT will be an integral part of the success of any M&A deal, the intended business outcomes (which are typically the original intention for the transaction) remain the key metrics for measuring the success of M&A. Therefore, having Operations drive the transformation makes the most sense. While not downplaying IT’s role – every aspect of running a healthcare organization relies on IT – technology teams must prioritize and support the outcomes as defined by operational stakeholders. Having IT drive change often results in outcomes that might meet the needs of IT, yet fall short in meeting the operational needs of the newly merged organization. Simply put, outcomes matter – and it is operational outcomes that count.

Operational Decisions Define IT Requirements

The true purpose of IT systems is to enable organizations to be successful at their core business. When converging two organizations, the consolidated “new rules of business” (e.g., HR, finance, patient care & associated workflows, organizational structure & governance, etc.) become the determinants of how consolidated IT systems would best serve the new organizational entity (and its users) moving forward.

The thing is, IT doesn’t have the super power to predict what Operations will need. Operational owners are the most desirable drivers and guardians of the IT integration process to ensure all the operational requirements are properly articulated and incorporated into the M&A IT integration efforts.

Organizational Change Dictates Success

Organizational change, and how that change is managed and manifested, is perhaps the most critical component of any successful M&A integration. Defining a shared vision, focused on the blending of cultures, crafting a well-defined integration plan, and performing a careful execution all contribute to a successful change management effort.

A merger or acquisition will touch every corner of both organizations (with IT integration being just a part of the overall change). Cultural blending, with stakeholders and employees accepting and adopting change, remains the most challenging component of M&A. IT, in this case, will not have the level of capacity or influence to drive the cultural synthesization of the two organizations. A culture transformation process driven by IT will never get to the “near and dear” place in staff’s heart, compared to having the leader of the staff leading the process.

Summary

Certainly, IT has a critical role in shepherding transformation, yet IT should be the enabler of operational transformation, rather than its determinant. Alignment with operational stakeholders helps foster relationships and overall M&A integration success by forging common goals and understanding, with Operations becoming the impellent owners for organizational change. IT can act as a facilitator for change, yet organizational transformation and adoption must primarily focus on business needs, and must rely on business owners to sponsor and truly drive that change.

(Co-authored by Shuting Shao)

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