Factors to consider for Merging two or more IT Operations team into ONE

Question

I believe this question falls under a Project from the Management side.

But I would appreciate any help or resources for the scenario. The project as an IT Manager, is responsible for merging IT operations team(approx 2-4 employees) of 4 sister companies, into One IT OPERATION TEAM.

Challenges here are:

1. How do I calculate the cost per employee for the company since, there are some similarities in the nature of work they do? Like for example, supporting Exchange, Level 3 support, etc...

2. Is there a Model which I can refer to or any sources that I should read through before moving ahead?

I did go through resources from the management side, which include the following:

1. Mergers and Acquisitions: Best Practices for Successful Integration
2. Successful Post-Merger Integration: Realizing the Synergies
3. The Role of IT in Successful Merger Integration

But was checking if I am in the right direction, or need to consider more resources.

Any help/suggestions/comments regarding the same will be highly appreciated.

Answer 1

How do I calculate the cost per employee for the company since, there are some similarities in the nature of work they do? Like for example, supporting Exchange, Level 3 support, etc...

• Your focus shouldn't be your employees costs, but your services costs. First get a list of all services the IT department delivers. Then you should calculate the specific costs for the services and spread your overhead and general costs across your service portfolio.

Answer 2

At first glance, your question is not entirely related to the community (this is Project Management not people management). However, you could gain some useful information if you borrow parts of the Project Charter creation process from the PMBoK.

Specifically, I'm thinking of building the list of stakeholders and getting input from them before you launch off on the integration project. You're asking about cost-per-employee guidelines but it may not be important to all of the stakeholders involved. One of our recent acquisitions had an extremely elaborate charge-back structure for IT services where each group was billed with very detailed reports. They assumed we did the same thing and kept pushing for information that our internal financial group had zero interest in providing. It look quite a bit of discussion at levels much higher than mine to get everyone to understand what will be happening in the future.

Cutting through assumptions, building commonly held list of priorities for the integration, and actually writing down what everyone agrees will be done is vitally important at the start of an integration process.

ITIL does have a big picture framework for Financial management for IT services that could be a useful place to start for the specific questions you are asking.

My current company is a growth-through-acquisition organization and we have several integration projects running at any given point in time. Unfortunately, IT is dropped into these projects quite late (confidentiality concerns, NDA restrictions, etc.) so we don't always get to have this discussions - and that hurts us in the long run.

Answer 3

I don't think there is a model you can refer to that states how much more efficient you will be, and I think this will be really hard to calculate. Maybe you should take all employee profiles and sum up their skillsets. That way you will have insight in for example how many employees have "Microft Exchange" -skills etc.

After that you can maybe identify obsolete personell, or the other way around you can substatiate the improvement in continuity and other qualitative areas.

Answer 4

You can do a functional analysis on the workload to determine an estimated count of employees. Here are the steps I used in a similar effort to consolidate an IT application packaging team that originally all reported to different areas:

1. Build a breakdown of how each person spends their time:
   • Ex: Employee A, 50% time resolving tickets, 25% changes/adds, 25% reporting
2. Determine how much time is spent on each functional work area currently:
   • Ex: Total current time spent resolving tickets = .5 Empl A + .75 Empl B...etc. = total of 4 employee's time
3. Determine how much efficiency expect to gain by combining this area. This is more art than science, but you can get pretty close. In my effort, most efficiency came from specialization. This is where you can look at different things organizationally: make full specialists (e.g., one person does only resolving tickets) or consolidate to a location or whatever options you have. Obviously, you must keep in mind how people may perceive or react to these changes.
   • Ex: If current time resolving tickets = is 4 employees, consolidating the work might improve that by 25% = 3 employees.
4. Add up total employee time for each functional area...there's your total count and a way to determine cost per employee after the change.

When we did this, the consolidation included tasks that weren't in the new team's scope. This actually helped us NOT to have reduce staff so much as those people who weren't in the new team were assigned other roles.

Beyond cost efficiency of the team, the biggest gain we had was the EFFECTIVENESS of the team. Cycle time for application packaging requests went down 70%!