The Technology Factor In Divestitures

 The Technology Factor In Divestitures

By Karthik Agarwal

Divestitures are complex business processes, impacting the entire organizational structure of both parties involved. Thanks to the ever-increasing interweaving of technology and day-to-day business process, divestitures today are as much IT undertakings as business endeavors. If the technology aspects of the carve-out fail, the entire divestiture may be jeopardized, damaging the operations and reputation of the business.

Challenges

There are countless potential obstacles involved in executing a successful carve-out. But planning for these four primary challenges can make the process smoother.

  1. Successful carve-out projects are extremely process driven, and must be led by parties with firsthand experience, who can predict — and preempt or manage — any issues that may arise.
  2. These endeavors require a specific mindset, and a particular blend of perspectives from everyone involved. From the leadership to the lowest rung, to execute a smooth divestiture, a team must maintain a combination of experienced perspective, extensive technological experience in diverse environments, a critical eye and a proclivity for optimization.
  3. Divestitures by their very nature require extreme agility. Their unforgiving timelines, coupled with waning cooperation between parties and conflicting interests make for an unstable environment. During the carve-out, staff will be split, shuffled, realigned and reassigned, generating new vacancies and a sudden surge in demand for personnel. In these situations, just-in-time recruitment is impractical, and leadership must plan ahead in order to move fast.
  4. Technology landscapes in most organizations are highly complex and interdependent. This means the IT component of a carve-out is, more often than not, a complicated and nuanced process. However, documentation is usually sparse or outdated, so this portion of the carve-out relies entirely on those few superstar employees with complete institutional knowledge.

Successful Divestitures — the FAST Way

The list of obstacles may seem overwhelming but, with careful planning and the right mindset, successful divestitures are within any organization’s grasp. The leaders orchestrating the carve-out must think holistically, planning each portion, including the technological elements, in context of the business as a whole in order to satisfy stakeholders’ expectations. They must also think in “win-win” terms, developing solutions and recommendations that are beneficial for both the parent and the divested business.

But, most importantly, these organizations must think FAST. The FAST process is a Framework for Accelerated Separation of Technology, and its five tenets are as follows:

  • Due Diligence
    • Identify the technology needs of both the parent and divested business
    • Analyze the current IT systems and infrastructure
    • Identify the IT systems that need to be migrated, and any new ones to be built or acquired
  • Detailed Separation Planning
    • Plan out the vision for each milestone in the process timeline — Day One, Week One, End of Month, End of Quarter, and End of Year
    • Develop timelines for migrating or implementing systems, accounting for interdependencies
    • Identify resource needs — human and capital — and arrange fulfillment ahead of time
  • Iterative Cut-Over
    • Perform iterative carve-out of systems and data, testing along the way to identify problems early on
    • Keep parallel systems live and perform any tuning necessary throughout the process
    • Perform necessary deprecations and “switch offs” at the parent system
  • Post Go-Live Support
    • Establish repair and maintenance support ahead of time
    • Ensure business continuity
    • Train and support business users
  • Optimization
    • Eliminate redundancies and control stranded costs
    • Further optimize infrastructure and technology landscape
    • Implement enhancements identified throughout the carve-out

The FAST process is based on 20 years of experience guiding Fortune 500 companies and state and local governments through divestitures with complex technology components. When combined with the leadership’s intuition, and customized to the organization’s particular needs, this process provides the cornerstones for a successful technology carve-out.

Karthik Agarwal is a client engagement director at Y&L Consulting, Inc. headquartered in San Antonio. Karthik has successfully led large multi-national teams for numerous Fortune 500 firms, non-profits and government entities on complex, high visibility IT projects. Y&L Consulting is a comprehensive IT services and solutions company specializing in Application Development, Information Management/BI, and IT Help Desk Services.

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