The modern enterprise is a complex environment.
Under normal conditions, the precise orchestration of business and technical processes is required to achieve a high level of efficiency and productivity. In a separation environment, the complexity levels increase exponentially.
A simple Internet search returns examples of high-profile companies that have handled the process poorly, sometimes torpedoing their position in the marketplace. But the process of separating one company into two doesn’t have to be fraught with missteps.
In fact, in our view, it offers companies the opportunity to embark on transformation (with a little “t”) that can improve business in the years to come.
Here are our top tips for separation success based on extensive experience in the field:
1 Start with the People
Remember that new companies – even in very early stages – exist, at least in the minds of their future employees. Many in the workforce automatically align with the business that will eventually employ them and feel responsible for its success. This can be an asset to the separation process.
2 Establish a Governance Model
This crucial point cannot be overlooked. Earlier in the process than you might expect, leaders in both the “Old-Co” and “New-Co” develop priorities and objectives based on their loyalties after the split. A governance model agreed to by both parties, as well as any important third parties, will keep the process on track. Technical and business governance should be given equal weight. The sooner this model is established, the smoother the separation will go.
3 Get into a Communication Rhythm
Leaders of separating companies have a battery of big decisions to make, and every stakeholder seems to have a competing point of view. We recommend regular, standing meetings with key decision-makers to drive out issues and decide a verdict that can get passed down to the people doing the work. It doesn’t have to be a long, laborious meeting. We’ve hosted daily calls as short as 15 minutes to discuss and decide on important actions driving the separation.
4 Consider Data Residency and Legal Hold
One of the most important considerations in a separation is who owns the company’s historical data. In the event of a legal claim, legislation review or any incident requiring a trawl of historical data, there needs to be clarity about which organization has the responsibility to handle the situation. In many cases, Old-Co remains the responsible party, but this decision should ultimately come out of the governance committee.
5 Decide Like-for-Like, or Make-New
Many organizations make an early decision to produce a like-for-like separation, when it comes to technology and business processes, and this can be a perfectly appropriate path. However, a separation also provides the opportunity for companies to examine their components and, if necessary, make changes to drive improvements.
To be sure, we don’t recommend large-scale transformation during a period of separation. But “little t” transformations that could streamline, reduce or even change the business process or technical infrastructure might make sense for one or both companies.
6 Carefully Consider a Partner
When going through a separation, the right partner can make all the difference.
Our team has helped lead many large and high-profile separations, including the Post Office Limited and Royal Mail Group, Ford and Volvo and our own recent separation from CSRA. We’ve seen everything from legacy IT migrations to the cloud to separations in which currency transfers were a major issue – and we’ve handled it all.
We know, breaking up can be hard for an enterprise. But it does not have to be – and you definitely don’t have to go it alone.
Derek Heard has 25 years of IT experience, of which 16 years have been in the Aeronautics and Defense industry. He is the CSC Account General Manager for Sikorsky Aircraft, leading the separation of Sikorsky Aircraft (a $7 billion organization with offices in nine countries) from United Technologies Corporation and integrating Sikorsky Aircraft into Lockheed Martin.
Richard Ginger is a technology and business consultant with experience in separations, mergers and acquisitions spanning 15 years. He is a Director of Solutions in CSC’s Consulting organization and recently led the separation of The Post Office from Royal Mail Group.