IT Carve-outs - Challenges & Success Factors

 

Introduction

When carving out corporate units, the focus lies not only on restructuring existing system landscapes, but also on data – as IT forms the backbone of almost all business activities. Decision-makers ask themselves which data must, can and may be migrated – and which historical data should be archived.

During project planning and implementation, there are quite a few guidelines to follow. It is essential to take the guidelines into account when selecting data and migrating the same, to keep regular business operations hassle-free while remaining compliant with regulations. Obviously, there is a huge risk of penalties.

1) Involving IT at early stages for better IT business alignment

Although the decision to carve out is for the decision-makers, the IT department should be in the know to develop a reorganization plan right at the early stages. After all, they assume a key function in the overall carve-out of a business unit and hence should be integral to any transformation strategy to actively shape the procedure.

In practice, they need to ensure the transfer of IT infrastructure, the systems and data to existing corporate IT within a stipulated timeframe.

Carve-out projects have generally been successfully completed when the IT team is working collaboratively with other business departments, especially in the process of a data carve-out. The business-IT alignment needs to be pronounced and flexible so that friction losses can be avoided.

2) Entrusting experienced employees with project management

In a carve-out project, keep an eye on the dimensions of the time involved, project/ operational complexity and budget. Decision-makers should always allocate the responsibility of project management to employees who are well versed in both IT and project management, and possess required expertise in addressing the challenges of transformation projects. It is often advisable to release managers from menial tasks for involving them in the preparation planning phase in line with the scheduled project duration. Employees from different silos should be helped in coordination as data suppliers in their respective division process. They need to collaborate in workstreams featuring fixed deadlines. Additionally, everyone in the organization should be informed transparently and continuously about project status especially if it is an equity carve-out and could affect the future of employees, even possible resistance.

3) Involving external consulting expertise

It is evident that decision-makers seldom underestimate the costs and effort associated with a IT separation project and most roadblocks become apparent only during the course of the project. Many struggle to meet increased resource requirements too. The extent of the technical changes are often prone to misjudgement. Here, companies need competent support from experts and experienced partners to manage a fresh carve-out strategy.

Conclusion

Ensure that the provider is a specialist in handling carve-outs and possesses comprehensive expertise in data migration, change management, SAP carve-outs and more. They should have experience in project consulting, and should be conversant with the right approach that could allow the entire project to be predicted and planned precisely.