CIOs Struggling to Deliver M&A Software Savings

New survey finds that opportunities to reduce risk and increase shareholder value continue to be ignored

A new organisation’s software licenses and liabilities pose the biggest IT challenge to Chief Information Officers following a merger, according to new research from Computacenter. Senior IT executives view the prospect of a merger as a minefield of software compliance and legal issues. The findings come at a time when global M&A transactions have reached a record $3.36bn this year, levels unseen since the days of the dotcom boom.

On a more positive note, 44% of the 100 CIOs questioned recognised that the audit, change and consolidation involved in the M&A cycle was an opportunity to improve existing IT systems and procedures. However, this positive outlook is not shared by all. A hardcore of nearly a quarter (22%) don’t see the potential improvements that can be realised post-merger.

Other key findings include:

• Software is not a soft touch – 45% of IT directors questioned agreed that savings from hardware were easier to achieve. Only 13% thought software savings were easy to realise
• M&A minefield - IT directors overwhelmingly agree that M&As are a minefield of compliance and legal issues, with 68% flagging this as an area of concern
• Compliance concerns - 47% of enterprise IT directors believe that compliance is the hardest element of software to get to grips with

Cherry Freeman, director of Computacenter’s Software Division comments on the findings: “The number and size of M&As has hit record levels and CIOs are under intense pressure to achieve efficiency savings and enable the delivery of shareholder value quickly. IT offers the greatest potential opportunity and risk, so leaving software off the agenda is no longer an option.”

David Mitchell, practice leader software, Ovum puts the potential savings in context; "If a company says that it’s looking to make savings of X when an acquisition takes place then we estimate that between 30-50% of those savings will come from IT. Of the IT savings we put about 25-40% of those down to software. In simple terms, if they’re quoting £5m savings, there's at least £1m to play for."

Mitchell continues: "At each stage of the M&A lifecycle there are clear & significant software asset management issues, representing either cost-savings or risk for the buyer. Despite this, software asset management takes a seemingly low priority in the grand IT picture. With compliance and speed to cost-savings being at the top of the IT agenda, ignoring the software asset management 'wild card' is not an option."

On 16 January 2007 Computacenter is hosting a “Strategic M&A Roundtable” in association with a software compliance expert from law firm Herbert Smith and a software analyst from Ovum. The CXO level event is taking place in central London and will provide invaluable insight and advice for those trying to get to grips with the challenges of software asset management across the M&A lifecycle. To register for the event please visit: www.computacenter.com/excluded/landingpage/mergermarket/index.html

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About Computacenter

Computacenter is Europe’s leading independent provider of IT infrastructure services. To help our customers maximise the value of IT to their businesses, we offer services at every stage of infrastructure investment.

We can advise customers on their IT strategy, implement the most appropriate technology from a wide range of leading vendors and manage elements of their technology infrastructures on their behalf. At every stage we help them minimise the cost and maximise the business value of their IT expenditure.

Our corporate and government clients are served by a network of branch offices across the UK, Germany, France, Netherlands, Luxembourg and Belgium and, through our international partners, at locations across the globe.