An IT organization comes of age
An IT organization comes of age
CLIENT STORY

An IT organization comes of age

KPMG helped a growing medical device manufacturer quickly integrate IT operations after a merger.

Client
A medical device manufacturer
Sector
Life sciences
Project
Postmerger IT integration
  • Client challenge
  • Benefits to client
  • Approach
  • KPMG insights

Client challenge

When this medical device manufacturer purchased parts of its competitor, IT leadership wanted a roadmap to quickly integrate the two organizations without disruption, then support a combined entity with three times the premerger revenues. The assignment would be challenging; the purchase excluded corporate IT knowledge and assets in the acquired businesses. The IT team knew it needed to grow to fulfill its new mandate but was keen to preserve its lean culture. With just weeks to work before the merger became effective, the company needed a rapid response team already experienced in IT integration, with a ready perspective from comparable life sciences clients.

 

Benefits to client

Collaborating with KPMG, our client’s IT organization has successfully scaled to meet the needs of a substantially larger postmerger enterprise, with a parallel strengthening in leading-edge practices, partnership with the company’s core businesses, and strategic outlook.

 

  • IT has transitioned from more than 30 independent legacy sites to centrally managed service contracts, network services, hardware and software assets, and application services.
  • The project has delivered exits from more than 400 services and applications provided by the former parent company. Over the span of the program, we reduced monthly payments from $3.5 million to $0 by exiting services and found over $2 million in credits to our client for services that were underutilized or not used at all.
  • IT has installed a centralized project management office, with enterprise-wide visibility of all ongoing and future project needs.
  • The project delivered valuable insight into all IT contracts, which will be leveraged for future negotiations.
  • Leading-practice hiring and staffing have been introduced, including a strategic shift from onshore support to an offshore shared service model that will reduce labor costs and improve IT’s ability to deliver rapid support across the globe.
  • IT has stood up a robust service management capability, containing a stable and scalable ServiceNow platform with suitable processes and an application inventory with a plan to drive rationalization and cost savings.
  • Working relationships between IT and other back-office functions, such as HR, legal, and compliance, have been dramatically upgraded.

Approach

KPMG drew upon deep experience in IT postmerger integration and IT operating model design to assemble a multidisciplinary team. KPMG service offerings included Shared Services and Outsourcing Advisory (contracting), People and Change, CIO Advisory, and Strategy. The team was configured to act decisively on our client’s behalf during the first 100 days after legal day one and quickly helped them develop a target IT operating model and integration program:

  • using industry benchmarks for companies of comparable size, drew upon timetables and templates to plan, budget, hire, and train an expanded IT team that could centrally and locally support a projected total workforce of 9,000 employees
  • worked with our client to establish an independent IT project management office
  • set up a schedule and process for network and voice migration, hardware rollout, mobility provisioning, and communications for more than 30 independent sites
  • implemented leading help desk practices with ServiceNow implementation to improve experience, scalability, and support audit/regulatory compliance.

KPMG insights

We understand the stakes

Mergers and postmerger integration are high-stakes, high-contingency-risk affairs. The window to deliver on the strategic promise of mergers is finite, and securing stakeholder trust is critical during the early stages.

 

We take the long view

While the ability to realize hard-metric efficiencies or synergies from postmerger integration is important, we pay strong attention to human dimensions of postmerger integration: staffing, training, and organizational design. Experience has shown us that these softer metrics are more important indicators of the sustained, long-term health of the IT enterprise.

KPMG responded rapidly to this client's needs with a multi-disciplinary team and deep experience in both IT postmerger integration and IT operating model design.

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