The Charity commission have produced a useful 20 question checklist that trustees might want to ask when considering merging with another organisation as an option to improve service delivery and charity stability.
This paper looks at several of these questions and consider how you, as a trustee or a key executive of a charity will be able to answer the selected questions on behalf of your organisation, in relation to the impact of Information Technology as a factor when a merger might look beneficial.
Question number one of the Charity Commission checklist asks;
“Is a merger in the best interest of our charity and its beneficiaries? Will it improve the quality of service we offer by, for example, delivering cost savings, increasing income or making best use of our resources?”
Taking a merger at face value may appear to be a logical decision. Several examples over recent years have included organisations with similar remits such as The Royal London Society for Blind People and Royal Society for Blind Children who formally merged on 1st January 2017. The organisations had worked closely for several years before the formal merger and complimented each other well in terms of service and community they served. And in another example the merger between Grenfell Housing with the slightly larger partner Evolve Housing will no doubt help to rationalise support services and thereby protect the services of the end user community.
But, leaving the two examples aside, what might be the difficulty and challenges for the trustees and executive teams of other organisations to understand the complexity of both organisations IT infrastructure?
What needs to happen to either merge the two disparate systems or replace one with the other or perhaps replace both with something more fit for purpose for the new organisation?
More often than not, the charity may have nobody available within the team to answer this topic or indeed have access to the other organisations system to answer this specifically.
Another question that appears within the list of 20 posed in the Charity Commissions checklist is;
“Are we taking the appropriate professional advice and in what areas?”
And another on a similar theme;
“Are we carrying out a due diligence exercise, can we do this in-house or do we need professional advice?”
What advice and support might be available to help understand the challenges of integrating two different systems and two separate set of applications that users are familiar with and, how will any identified changes required impact on the deliverable improvements expected and identified within the merger?
Do you have the skills and experience internally to review the various IT assets and environment or will you need to find external assistance?
The pending merger offers an opportunity for a strategic review of both organisations business systems and can help support the inevitable changes that the staff and volunteers will be subject to by identifying business improvement opportunities that may counteract the interference the team might be expecting.
A typical IT review should look at the systems from four perspectives:
- A strategic review.
- Technical Discovery
- User Experience
- Financial discovery and planning.
The strategic review will investigate the aims, aspirations and objectives of the organisation over the coming year or so and ensure that the support systems in place can help deliver the corporate objectives in the most effective and efficient manner.
The technical discovery will help understand what is in place and what can be utilised from the merger. It will highlight areas of compatibility and future spend to integrate the two disparate systems and, probably more importantly, what will be required to make a new environment fit for purpose.
To ensure the recommendations from the IT review is thorough, the review should investigate the user experience and user skills in using technology, to establish any potential training needs and expense as well as user preferences and challenges.
Finally, a clear financial picture emerges that can form the basis of a budget and cost of merging that will deliver the most effective and efficient IT system for the new organisation going forward.
In my experience I have found this exercise can benefit the process by answering the complex questions around merging IT systems and the implication this may have on the overall merger idea.
It can also help support a win/ win situation for the staff and volunteers of both organisations by identifying and including user improvements and as such making the transition pains that are to be expected a little more bearable and worth suffering the effect of, in the knowledge that there are benefits to be delivered by the eventual merger.
Plans based on experience and knowledge can be produced that will help ensure the reason and benefits for the merger are delivered, with all the appropriate IT systems in place to deliver on these.
Another question posed is:
“Have we approached our stakeholders and beneficiaries for their views? If not how and when are we going to do this?”
The general feedback I have received from CEO’s and senior members of the executive teams I have worked with on getting stakeholder and beneficiary input is that such approaches need to be carried out with caution. The last thing an organisation wants to do is disturb existing relationships to the detriment of the charity. The topic of change has a habit of being considered as a negative activity by many that might be involved. Whilst it is important to seek feedback, the process needs to be managed and communicated as an investigation that will help you decide if change is the preference rather than the exercise being undertaken to endorse a decision.
Specifically, with IT there, are several points that are worth considering. Firstly, does your organisation have sufficient experience in-house to ask the right questions? Secondly, the IT investigation should not be limited to the would be partners current IT offering but it should extend to take into consideration all stakeholders opinions including what might make things better from each user’s perspective.
Quite often in a change project, the project lead may need to pre-identify and then prioritise the collection of useful information. Such data can be used later to create a positive spin to help sell the concept of a merger to numerous interested parties. An audit can be used as an opportunity to gain an insight into what challenges and problems an improvement in technology may help deliver to the new organisation and then use such feedback as a useful “bargaining chip” to promote the virtues of any pending changes.
Audits should extend to, end user interviews and include all stakeholders and ask the questions not just from an IT perspective but to include the business process and the end user experience. One of the biggest reasons associate with IT project failures is a lack of take up by the end user. This often leads to thousands of pounds of development hours and system delivery floundering with very little end user take up and consequently not delivering expected benefits and savings.
Vital for this part of an investigation is the ability to talk to end users in a non-technical language and with an open and inclusive communication style that encourages good feedback. This information can then form the basis of the client requirements and communicated back to people with a technical ability. The technical team can then use this feedback to develop an environment and solutions that can match business and service delivery needs with the technology. It is a particular skill that many IT consultancy organisations lack and where the end user’s input and experience is often misinterpreted or worse, missed out from this important phase of an audit.
Another question to consider:
“Are there any other forms of collaboration working we could explore that might achieve the same benefits?”
Not all relationships have to be permanent, and I have occasionally seen two or more organisations come together for the sole purpose of delivering a specific project and then revert back to a prior position once the project has been delivered.
Such opportunities for service delivery require an agile and flexible approach to IT that may not be easily achieved with an old and antiquated infrastructure. An opportunity to investigate what will be needed in terms of the IT and communication applications will help an organisation to analyse if such a partnership arrangement is feasible and if so, can it deliver advantages over and above the current service delivery.
Questions such as, are their savings to be made on software licenses or conversely, are there service level agreements that can’t be broken, or worse still, may lead to your organisation taking on another organisations liabilities in terms of out dated software and support and maintenance renewals. I recently witnessed an organisation that had not updated MS licences and saw a merger as an opportunity to pass on outstanding IP infringements.
This point also, leads onto our final question within this paper:
“Have we estimated the full cost of merging? This should include issues such as staff time, rebranding, professional fees, relocation and unanticipated costs.”
Linking this question specifically to IT the cost of getting two disparate systems to work together may well prohibit an effective merger or temporary collaborative partnership. It is good practice to get some professional help to investigate this at the early staged of the due diligence exercise. Build into the audit skill questionnaires and interviews to see where resources can be shared and where additional skills will need to be found as appropriate. If two systems are to merge, where will the rationalisation of labour costs be made and if these are evident, what might be the cost of redundancies and how will they be added into the overall costs relating to a merger. How will contractual and pension arrangements of IT staff be handled? Will there be a requirement to TUPE over staff?
Finally, what is the retention and storage policy that will relate to historic data once the new organisation has been formed. Who is responsible for the data, its safety and its integrity? Are there any service level agreements relating to the historic data and archives that need to be accommodated and included from the old organisations and merged into the new. Consider too the accessibility of historic archives, will any new systems and applications still enable access to these records and how will the changes in legislation such a Freedom Of Information and GDPR have an impact.
If the collaboration is temporary, how is the information to be stored and made accessible after the event. Who is responsible and for how long and in what format?
If your organisation is considering a merger or, if any of the ideas for consideration are unclear, I would be delighted to talk with you in more detail.
For further information on mergers and acquisitions or to read the full list of 20 questions visit the Blue Saffron web site at: http://managedit.bluesaffron.com/vision/ and download our resource on “IT Best Practice for Charity Mergers and Collaboration”.
I would be interested to talk and learn of your experience if you are a trustee or a senior manager in a charity who has experienced integrating two independent IT systems to support a merger of collaborative working relationship. By understanding a wider perspective, I would hope to build on my own experience and pass this onto the third sector community.