Incorporating Social Networking Systems with Mergers & Acquisition Planning

February 15, 2008 Dennis D. McDonald

In 2003 I published an article titled Mergers & Acquisitions: What Executives Should Know about I.T. It was based on management experiences I had on a multi-year post-merger project that consolidated the data and software of two large public energy utilities.

I’ve been reconsidering some of what I addressed there in light of the increasing importance of social media and social networking in corporate customer relations and customer support functions.

One question is, when you are planning a major corporate merger and the organizations in question already maintain relationships with multiple and potentially overlapping communities via a variety of social networking tools, how do you approach planning for the integration — if any — of these communities and the systems that support them?

In the I.T.-oriented project I discussed in that 2003 paper I experienced the need to balance a highly structured approach to project management involving tens of millions of dollars and hundreds of full- and part-time project staff with the need for short-term quick-response actions. I also saw firsthand how the merging of company cultures impacts both the technology change process and the business processes that must also change from a major corporate merger.

Extending these concerns to incorporate social network technology and processes seems a logical thing to do. But many companies that approach a major operational consolidation don’t always appreciate all the factors that need to be managed in a major post-merger consolidation of staff, operations, and infrastructure. While my own involvement has been primarily from an IT change management perspective, the really significant issues to address have often had less to do with hardware and software integration or replacement than with changes to the operations that the technologies support. When those important “operations” are external to the company and involve complex social and professional relationships, planning becomes more complex — and potentially more participatory.

Such complexities won’t necessarily be news to any manager who has been through a major post-merger corporate consolidation. Things always take longer than you think they will, you need to carefully address the issue of staff retention and experience given that financial justifications for mergers frequently assume a staff reduction, and you need to assure that you have the appropriate management infrastructure in place to adequately manage all the project’s moving parts.

One thing about social network based relationships, though, is that you don’t control them in the same way you control, say, how a customer fills out a web based ordering form. An early planning requirement, I think, is to create an inventory of all the systems, processes, and relationships that are going to be impacted by a post merger consolidation. While that’s a pretty standard approach, the difference now is that the inventory of relationships needs to include not only those you control directly but those which have an impact on the companies and their customers, even though such relationships operate outside the control of the companies.

Just as you need to consider how you relate to these external communities as a normal part of your daily operations, you need now to consider how you will relate to them during a consolidation process that may involve — or even require — changes to the systems or processes that people are accustomed to using.

Your approach to managing a period of community network transition will depend on the state of the relationships each of the organizations has with its customers prior to the merger. Is there good communication already? Do customers communicate with and support each other? Is customer support responsive and efficient? When incoming questions and problems can’t be answered with “scripted” responses, are live humans available to interact with customers?

Similar considerations exist with an organization’s vendors, suppliers, and distribution partners. Are there, for example, opportunities to use blogs, social networks, and other social media during the planning and management of the corporate consolidations to help partners address the numerous issues that arise during periods of great change?

Again, you as a corporate planner don’t necessarily “own” the relationships that your customers or vendors have established among themselves during the course of their relationship with you. This will be especially true if you employ a public system such as Facebook or MySpace as an integral part of your customer relationship strategy.

Let’s say that two companies that share commmon markets are planning a merger of their management, manufacturing, product lines, distribution, and support operations. Company A employs FaceBook as an external system for interacting with customers, and Company B employs MySpace. Each has invested in development of custom applications that help integrate network based transactions with “back office” customer support systems.

In the old days of custom applications that were developed, owned and operated by the companies, it was not uncommon to migrate users from one system to another based on relatively objective analyses based on issues of cost, scalability, reliability, and alignment with overall technical architecture strategies.

Those days are gone. The users of MySpace and Facebook may have many other relationships and groups in those systems besides those associated with Companies A and B, and this fact may add to the complexity of developing an effective unified post merger strategy.

For a follow up to this article read Using Internal Social Media to Address Corporate M&A-Related Stress.