From couch potato to cutover

how we ate the elephant in 8 months

Abstract

How can one small company acquire a much larger company and achieve integration success against very challenging odds---ambitious objectives, aggressive timeframe, technology challenges, small staff, and high expectations---without missing a beat? This paper documents many of the enormous challenges and remarkable successes that were achieved when one such extremely complex acquisition/integration project was brought to a successful conclusion. The success factors discussed include management’s requirements for a smooth transition, the importance of people and teaming, the contributions vendors and other business partners, the management of expectations to satisfy the requirements, the lessons learned, and the pitfalls to avoid in the future.

The Assignment

The Buyer

The buyer company publishes yellow pages and internet advertising. The company was formed as a holding company in mid-2006 by a private equity firm with experience and successful investments in the advertising industry. For privacy purposes, the company shall be referred to as Publishing Media, Inc. Publishing Media, Inc. was established for the main purposes of (1) acquiring companies in the same industry, (2) consolidating and integrating the acquired companies into a singular, nationwide entity, (3) creating an enterprisewide production platform and obtaining economies of scale, and (4) executing a funding transaction to provide a return to investors.

With backing from its PE firm, Publishing Media, Inc. made its first and second acquisitions within its first 5 months of existence.

Both the PE firm and Publishing Media, Inc. were relatively small firms, and both operated with little intervention from the new owner. In its 6th month, however, Publishing Media, Inc. executed a purchase agreement to acquire the yellow pages and internet advertising division of a major telephone company. The target acquisition, Tiptop Yellow Pages (TYP), was significantly larger then any of the previous acquisitions, and much larger than Publishing Media, Inc. itself. TYP had office locations in 10 states and customers in 32 states. Upon the close of this transaction, which was scheduled to occur in Publishing Media, Inc.’s 9th month of existence (i.e., 3 months later), Publishing Media, Inc.’s annual revenue run rate would jump from approximately US $50 million to $400 million per year.

The transition and integration program that was launched upon execution of the above-mentioned purchase agreement and continued through the transaction close date are the subject of this paper. The planned 3-month close did not occur as anticipated due to several delays that will be discussed later in this paper; however, the transaction did close in 8 months. The extraordinary nature of this program can be found at the starting point: at the time of execution of the purchase agreement, Publishing Media, Inc. had only 14 employees and lacked key policies and procedures, corporate infrastructure, systems, and even its own office space. It was a brand-new company and had yet to put in place everything from organizational policies and procedures, to an IT data network, to financial applications---in fact, to put in place the environment to support an influx of 500 new employees and a 4x revenue increase. Yet management instructed that the transition of TYP into Publishing Media, Inc. be delivered with no interruption to customers, publication schedules, and employees, and all program participants were determined to meet these expectations.

Thus the program participants---Publishing Media, Inc., TYP, employees, customers, consultants, and vendors---are the ones who “ate the elephant” in just 8 months. The process was extremely challenging and gruelling, but was ultimately extremely successful.

The Program and Objectives

The program objective was to convert and integrate TYP into Publishing Media, Inc. without disruption to either customer-facing processes or the advertising and publication schedule. A program management organization was formed to spearhead the entire conversion/integration effort, with representatives from the key business functions from Publishing Media, Inc. and TYP serving on the program team. These “business owners” were the project managers for the conversion/integration initiatives in each of their areas, and formed the program management organization “core team” to coordinate and assure implementation of the conversion/integration plan. The business owners and the functional areas they represented are shown in Exhibit 1.

Business Owners and Functions

Exhibit 1: Business Owners and Functions

At a general level, each business owner was asked to engage fully as a member of the core team. A summary of their key responsibilities included the following:

  • Represent their business function to the program management organization/represent the program management organization to their business function
  • Lead projects and/or project team(s) in their functional areas
  • Designate leaders for projects/initiatives in their functional areas and assure their accountability
  • Ensure timely development/updating of project plans, and coordinate resource availability
  • Align area plans/results with overall program management organization schedule and goals
  • Monitor and proactively manage tasks and deliverables/results
  • Maintain timely data on program portal
  • Enforce timely issue resolution process
  • Maintain scope control according to change control process
  • Participate in weekly program management organization core team meetings.

Each business owner was responsible for all integration-related activities in his or her functional area. Exhibit 2 lists the key initiatives for each functional area as well as illustrates the extensive scope of work each business owner faced.

Key Initiates by Functional Area

Exhibit 2: Key Initiates by Functional Area

Program Management Organization Overview

The executive team, working with outside consultants, expected the TYP conversion/integration program to pervade the entire Publishing Media, Inc. organization as it progressed toward conclusion. Therefore the program management organization was structured to facilitate communications horizontally and vertically within the company, and to reach out to each functional area to ensure coordination for all conversion/integration tasks. The overall structure included the following entities:

  1. Executive steering committee: to provide governance and guidance to the program, to oversee the progress of the program management organization, to resolve critical issues and assure scope control.
  2. Program management organization “core team” team; – included representatives (business owners) from each functional area (as mentioned above) and charged with assuring that the goals and results of the conversion/integration plan were achieved.
  3. Functional area subteams: Program management organization core team members formed subteams as needed to execute the various initiatives and projects in each of their areas.
  4. Vendor/Partners: Program management organization core team members engaged third parties as consultants to assist with planning and implementing tasks associated with the plan, or as short- and long-term outsourcers to provide products and services.

At the time that the program management organization was formed, Publishing Media, Inc.’s executive leadership team recognized the need to establish a framework of leadership objectives to provide a basis for the program management organization’s daily operations and objectives. The framework formed guiding principles that the program management organization adopted to facilitate success for the program, and was referred to as the list of “Things to Get Right.” This list was embraced by the executives and the program management organization members, and was used to remind the team of the important cultural characteristics that needed to be incorporated into the transition effort. Culture was an important element to the success of the program, and the program management organization was to adhere to these principles. These guiding principles are listed in Exhibit 3.

“Things to Get Right”

Exhibit 3: “Things to Get Right”

The foundation of the program management organization’s efforts to drive the program to successful closure was the integration master plan. It was the key document that incorporated all of the key transition/integration activities, including milestones and deliverables, at the program management organization level and at business owner level, into one grand master project plan. It was established once the initial project plans for each business area were developed, and then it was used throughout the program to track planned versus actual accomplishments, and to highlight areas where project/task movement (ahead and/or slippage) was occurring.

Essentially, the program management organization leadership used the integration master plan as a critical communications tool to assist with the following:

  • Communicating and managing the implementation
  • Coordinating across functions, among teams, and with third parties
  • Connecting critical dates with outstanding issues to assure resolution on a timely basis
  • Engaging discussion regarding financial implications of the timing of costs and savings
  • Determining alternative actions and implementation strategies if necessary, and their consequences

The program management organization core team met weekly throughout the program. A typical meeting would last 1 to 1.5 hours and would be focused on coordinating, communicating, and connecting activities and issues among the business owners. Core team members would attend in person or via a dial-in conference call number. Before a weekly meeting, each business owner was asked to submit updated versions of their project plans and issues lists to the program management organization. These updates would be consolidated, and then the updated integration master plan and program management organization issues lists would be distributed and discussed at each meeting.

The weekly program management organization meetings were essential to assure that the overall transition/integration plan stayed on track and that cross-functional communications on key topics occurred on a timely basis. Business owners readily participated in each meeting, as they valued the dedicated time each week to meet, share, and coordinate.

Issues Resolution Process and Scope Control

The executive steering committee insisted that two important processes be identified and put in place when the program management organization was established: (1) issue resolution and (2) scope control. Each process would be treated similarly from a work step and escalation point of view in that issues or scope change requests that could not be resolved at the program management organization level would be escalated to the executive steering committee; however, scope change requests were to be isolated from other types of issues and requests to assure focus on the approved transition/integration scope.

The essential elements of both processes focused on early identification of issues and requests, then on a diligent and concerted effort to track them to resolution. The outline of each process included these steps:

  1. Identification: Recognize an issue or scope change request
  2. Document: Record it into either the issues log or scope control log
  3. Initial resolution process: Attempt to resolve within the appropriate core team; if resolved, provide the resolution to the originator and close it on the log
  4. Program management organization escalation: If the issue or scope change request cannot be resolved, then escalate to the program management organization (in most cases, escalation would activate when the issue or question impacts or is impacted by more than one core team and cannot be resolved without intervention at the program management organization level)
  5. Document: Record it into either the program management organization issues log or scope control log
  6. PMO resolution process: If resolved, provide the resolution to the originator and close it on the program management organization log and the core team log
  7. Executive steering committee escalation: If the issue or scope change request cannot be resolved, then escalate to the executive steering committee (in most cases, escalation would activate when the issue or question would have a financial impact, or when it required executive intervention)
  8. Document: Record it into either the executive steering committee issues log or scope control log
  9. Executive steering committee resolution: When resolved, provide the resolution to the originator and close it on the executive steering committee log, the program management organization log, and the core team log

Timing and Plan

The overall conversion/integration plan went through three iterations until the final “go live” date was established. As shown in Exhibit 4 below, the final change established the “go live” date as November 1, 2007, 8 months after the launch of the program.

Major Program Schedule Changes

Exhibit 4: Major Program Schedule Changes

The first program plan was agreed upon when the initial purchase agreement was executed and target “go live” date was established as June 1, 2007. At that time, the financial markets were very strong, and it was thought that the financing for the acquisition would be lined up easily and quickly. The program management organization was tasked with converting and integrating the acquisition in just 90 to 120 days. As winter turned to summer, the financial markets weakened and management decided more time was needed to obtain financing and so pushed back the close date to August 31. This provided the program management organization core team with an additional 90 days (which was much appreciated) to bring the program to successful implementation.

As August 31 approached, the financial markets were steadying but changes being made to the billing and collections agreement and to the transition services agreement were not fully agreed upon, and therefore the date was pushed back to November 1. Again, the core team breathed a sigh of relief and enjoyed an additional 90 days to complete testing and quality assurance prior to cutover. Finally, on October 31, the financing was in place and the final paperwork was executed, the transaction was closed, and the cutover successfully took place.

The Confirmatory Due Diligence

The confirmatory due diligence (CDD) process included the discovery and investigation work steps that occurred between the execution date of the purchase agreement and date of agreement upon the final version of the transition services agreement (TSA). These work steps led to the definition of many detail requirements for conversion and integration, as well as the detailed contents of the TSA. Both parties used the CDD process to clarify postconversion responsibilities and finalize a TSA that would clearly outline the rights and responsibilities of the buyer and seller in the 6-month period following close, and assure separation of business operations with minimal impact to customers and employees.

The CDD work also created additional work for the program team. As CDD discovery exposed problems and issues, they were recorded and tracked to conclusion. Many of these issues were escalated to the executive steering committee due to their impact on provisions in the TSA. Consequently, each core team had a very important role to play during CDD. Exhibit 5 below lists several examples of the work process requirements and/or issues that each core team sought to define.

Critical Tasks by Function

Exhibit 5: Critical Tasks by Function

The Suspense Builds

Preparing for Cutover

As the close date approached, the program management organization, working with each business owner, developed the “cutover plan,” a subset of tasks detailed from the master integration plan and focused exclusively on the work steps required in the final month prior to going live, for the actual cutover, and after going live to achieve stabilization and normal operations. The objectives of the program management organization in developing this plan were to (1) provide an overall point of coordination and control for the entire effort, (2) clarify roles and responsibilities for cutover, (3) assure that the business owners were focused on the appropriate tasks and details, and (4) use the plan as a checklist to assure tracking of the key tasks to completion.

The cutover plan also addressed three important areas not typically found in a “plan,” but which were viewed as essential to the conversion/integration process. They included:

  • Cutover control points: key milestones that would need to be completed and without which close could not take place
  • Stakeholder expectation management: clarification of stakeholder management requirements for close process
  • Risk planning and management: list of issues to monitor and to assure closure before conversion

The key issues addressed in the plan in each of these areas are listed in the Exhibits 6 through 8 below.

Example Cutover Control Points

Exhibit 6: Example Cutover Control Points

Example Stakeholder Management Requirements

Exhibit 7: Example Stakeholder Management Requirements

Example Risk Management Issues

Exhibit 8: Example Risk Management Issues

The Final Lap

The Program Management Organization Testing and Cutover Plan

The most important tasks in the program management organization cutover plan were those dedicated to testing and quality assurance of the new IT infrastructure and applications. As this was new technology, it had not previously been loaded with the projected network, user, and application traffic. Thorough and intensive testing was a critical requirement for success. The IT team was responsible for developing and implementing the testing and QA plan, while the program management organization leadership assumed responsibility for integrating and coordinating IT testing with the testing activities of the other core teams (who were testing their own new work processes and touch points with the new technology). Some example steps from the program management organization testing plan are shown in Exhibit 9 below.

Example Testing Activities

Exhibit 9: Example Testing Activities

The overall program management organization cutover plan included work steps for all core teams, many of which were busily involved in testing new manual processes that had to be proven and documented before cutover. As such, the program management organization cutover plan became the checklist upon which each core team depended to assure that the key work steps were completed in the right sequence, on a timely basis, and with minimal disruption to the business. Several of the most important steps from the cutover plan---specifically the final prep and cutover tasks---are as follows:

  • Conduct integrated walk-through with core teams
  • Establish program management organization “war room’
  • Establish cutover issue list
  • Confirm that infrastructure is operational and tested
  • Confirm that data migration is ready for conversion
  • Confirm that standard PC images are ready and tested
  • Noon EST: employees log out of e-mail; e-mail forwarding begins
  • 1 P.M. EST: IT transitions servers to new network
  • 2 P.M. EST: Start PC and data migration
  • Verify that applications are installed and ready for use
  • Verify that new employee badges are activated
  • Verify that key vendors are notified and ready
  • Verify that wireless uses phones/accounts are activated and ready for use
  • Verify that online benefits system are ready
  • Verify that employee data are loaded into payroll system and that payroll system is ready for use

The Cutover

The conversion to Publishing Media, Inc.’s systems and business environment took place as planned and according to the schedule shown in Exhibit 10.

Cutover Timing

Exhibit 10: Cutover Timing

It was as complicated and far-reaching as anticipated, but the extensive planning and thorough testing, as well as partnerships with vendors to provide support services, had prepared the team to address all issues that arose. The program management organization also established an environment of standards and tasks to support timely issue resolution and meet the cutover milestones. They included the following:

  • Open conference line---to discuss problems and issues
  • Periodic scheduled conference calls---among the core team and executive steering committee throughout the cutover
  • Regular e-mails---to program participants and management throughout the cutover
  • Deployment of core team participants and executive steering committee members---working in either field locations or the “war room” with project team participants
  • 800 toll free number---staffed by human resources department staffers as first-responders to employee inquiries
  • Activating IT help desk support---for calls as soon as the cutover began on Friday.

The Lessons Learned

A program as large and complex as this one, although ultimately successful, encounters numerous issues and problems along the way. Lessons learned can be documented from both the successes and the problems. Exhibit 11 shows our list of the key lessons that we learned, and which we now share with others.

Lessons Learned

Exhibit 11 – Lessons Learned

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2008, Mark Davison
Originally published as a part of 2008 PMI Global Congress Proceedings – Denver, Colorado, USA

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