The Fifth Case – Key Success factors of IT and operations merger integration in CIMB NIAGA

Preface

Talk about merger is talk about integration. Over the past several years, mergers have increased steadily in value and complexity how to integrating two business. In fact, two companies together are more valuable than two separate companies and it will gain a greater market share or to achieve greater efficiency.

Many companies conducting merger to find a balance between synergy realization and customer retention. Beside that, speed is an important factor for merger integration running smoothly, if a company takes too long or there is a delay in capturing the value, it can destroy the business case justifying the merger. In essence, balance between integration speed and profitable customer retention is essential.

Merger integrations are always challenging. Today’s IT and operations merger integration is one of the most important aspects in merger process. The IT & Operations integration will also drive the timeline for most other activities.

Accenture as a global management consulting, technology services and outsourcing company have a reputation to help manage the merger of the two companies operations. Accenture’s industry insights and experience in business integration as well as its proven experience in helping clients seamlessly transition to a post-merger activities in the future.

CaseStudy 2

CIMB Group of Malaysia — the fifth largest financial services provider in Southeast Asia acquired two banks in Indonesia: Bank Niaga and Lippobank. In term of assets, Bank Niaga was the sixth largest bank in Indonesia whereas Lippobank was the tenth. To comply with the Indonesia Central Bank’s “single presence policy”, CIMB embarked on a plan to merge these two banks. The merger would create the fifth largest bank (CIMB Niaga Bank) by total assets of more than USD 10 billion and also among the top five in terms of distribution network in Indonesia.

Due to the IT-intensive nature of the banking business, one of the most important aspects of a bank merger is the IT and operations merger integration. The speed of completing the merger depends on the speed of the IT & Operations integration, whereas true “one-bank” service happens only upon completion of the IT & operations integration. The IT & Operations integration timeline will also drive the timeline for most other activities

How Accenture Helped

Accenture was requested to provide integration services in the execution of the merger of the two banks. Accenture partnered with CIMB Niaga to provide the overall Merger Program Management Office.

Since Accenture’s scope covered mainly IT, it leveraged its proven “Merger Integration Framework and Methodology” to plan and execute the merger in two phases:

• In the Planning Phase, Accenture worked with CIMB Niaga in defining the ‘To-Be’ Target Operating Model for IT, Operations and selected business areas of the merged entity. The IT & Operations integration plan provides a clear roadmap with the best options on how the integration would be achieved within the timeline required by CIMB Niaga

• In the Implementation Phase, Accenture worked with CIMB Niaga to manage the execution of the merger integration activities to achieve Legal Day 1 and Operational Day 1, in line with the Target Operating Model and target schedule defined

Question:
What would be the key success factors in the planning phase that would make an impact in the implementation phase?

Based on case study, Accenture partnered with CIMB Niaga to provide the overall Merger Program Management Office. There are two phases that must be passed to successfully the program, which is Planning Phase and Implementation.

Planning Phase is a milestone that Accenture built for CIMB Niaga especially target Operating Model for IT, Operations and selected business areas of the merged entity. This programs include scope of planning, prepares work plans, cost estimates, and also schedule that required by CIMB Niaga.

In the Implementation Phase, Accenture worked with CIMB Niaga to manage the execution of the merger integration activities to achieve Legal Day 1 and Operational Day 1, in line with the Target Operating Model and target schedule defined

There are several key success factors in the planning phase that would make an impact in the implementation phase:

• Strategic planning
Every company must have purpose behind the business strategy with clear and achievable deliverables especially for IT environments and operations. Selecting target must determine because this is critical issue when the company consider the integration process. Targets valued based on the implementation of a company’s own best practices, processes and systems

• Due Diligence
A key activity in any merger, is due diligence. The benefit of a thorough due diligence effort is vital in helping companies understand what they are buying and in creating the right strategies especially conducting strategic operational and IT to obtain the desired value from a merger.

• Conduct Integration Planning
Integration process needs to run smoothly for the merger to take place and to reap the benefit from the synergy. Thus prior planning should be made even before the completion of the merger with clear timelines and milestone to ensure the successful implementation of the deal. For IT operational, this aspect must be prepared before implementation, so the system can running well to a post-merger activities in the future.

• Execute Integration Plan
This phase would involve the implementation of the plan developed in the previous phase. Decisions have to be made fast to speed the integration process and to prevent any distraction within the workspace in implementing the integration. A communication strategy needs to be developed to address the rumors and question that arise within the post merger integration.

• Evaluation
Planning and Implementation in IT and operations merger integration must be evaluated to reviewing the performance of the new entity to ensure that a successful integration has been completed and the objective of the merger have been achieved.

As a conclusion, a successful post-merger integration must include a robust IT and operation merger integration program. The merger program management office begin with Planning and Implementation phases, which is have a goal to gain a greater market share, reduced cost and to achieve greater efficiency.

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