This article originally appeared on Smart Enterprise Exchange.
We often hear about the need for IT and business leaders to communicate better and to learn about each other’s roles. Rarely, though, do we get a business executive’s perspective. It was particularly insightful, therefore, to speak recently with Jonathan Kissane, SVP Corporate Development at CA Technologies.
For the past three years, Jon has “kept the pulse” of trends in the high-tech industry, with an eye toward possible merger-and-acquisition targets. He and his team have led the M&A process across CA Technologies’ businesses, resulting in more than $1 billion in transactions. He brings a unique mix of IT and business experience to the job, including many years as SVP for e-commerce and IT at Corel Corp., as well as SVP of Corporate Development there. In addition, he’s been both a technology venture capital investor and a venture-backed start-up executive.
With an MBA from INSEAD, a degree from Harvard Law School and an engineering degree from Stanford, Jon — now based in Palo Alto, Calif. — has a keen understanding of the global enterprise and what it takes to succeed. Below are excerpts from a recent interview with Paula Klein, Editor and Community Manager of Smart Enterprise Exchange.
Q: Who typically leads M&A efforts? Is a corporate development role such as yours very common?
A: Large and midsize publicly traded organizations that want to grow and scale up and supplement their organic growth plans typically have an executive in charge of mergers and acquisitions (M&A), also known as corporate development. In the tech industry, it is not a given that all growth should be achieved by the in-house development of new products. Careful analysis may prove that mergers, acquisitions, partnerships or strategic investing may be most effective to round out a company’s product portfolio, get to market faster, improve customer service and achieve other goals. At CA Technologies, the Corporate Development group is closely aligned with the Corporate Strategy group to make sure we are making the right decisions to build, buy and partner for success in the marketplace.
Q: Ideally, what role, if any, should CIOs play in corporate M&As and corporate development? Does it vary by industry?
A: CIOs and the IT team should be tapped early on in an M&A process so that their intimate knowledge of IT infrastructure can be used to assess IT compatibility between a company and an M&A target. CIOs and their teams may also be important in conducting proof-of-concepts as part of the research surrounding a potential deal. In some industries, such as airlines e-commerce, and retail banking or brokerage, where the business runs on key infrastructure, IT takes on an even larger role before and during a transaction.
For this reason, CIOs are very important for their critical knowledge of system compatibility and integration. For example, in the recent merger of United and Continental airlines, the press has reported on how it was a monumental task to keep systems running flawlessly for customers while merging the companies.
As a software manufacturer, CA Technologies can tap our research and development organization for these efforts. However, depending on the available in-house expertise and on what is being acquired, organizations in other industries may enlist the CIO’s help.
Q: Is IT integration generally considered when mergers or acquisitions take place? How are CIOs viewed by most business and financial leaders during these negotiations?
A: There’s a wide spectrum. While IT is generally part of the operations team involved from the start of a potential deal, IT isn’t necessarily the primary consideration for making an investment decision and may not be part of the negotiation process. Nevertheless, the CIO will be tasked with mitigating risk in the combined systems post-acquisition. For example, the error-free and timely transfer of employee, customer and financial data is of extreme importance and will be the responsibility of the CIO.
When IT assets are competitive differentiators and key to an acquisition — as when a bricks-and-mortar company is looking to acquire IT e-commerce expertise — the role of the CIOs of both the target and acquiring companies is elevated.
At CA Technologies, our IT knowledge is a strategic asset because we have the means to do exhaustive proof of concepts and testing of products in-house before an acquisition. Some acquisitions take us into new IT fields, such as Nimsoft, where we were seeking expertise in Software as a Service (SaaS). While we were able to turn to R&D resources to investigate Nimsoft’s product offerings, if we had not been a software manufacturer, that role would have gone exclusively to the CIO and his team.
Read the entire interview on Smart Enterprise Exchange here.