An excellent digital product is a collaborative effort, and the team building such an application should have extensive technical expertise. However, software development is iterative by nature and comprises many stages, with someone tasked to organize it. How to do all of that after a Merger and Acquisition (M&A)?
This individual will help to keep software development team members engaged, in sync, and motivated. The product owner, product manager, may be responsible for this. But, this is challenging when companies merge, and software teams have to come together.
The cultural disconnect is an expected fallout of organizational change and restructuring, meaning teams would inevitably merge, and it’s a collision course that may have telling consequences.
The Importance of Merging Software Development Teams
Team mergers are necessary when mergers or acquisitions happen. There are many reasons for this, but software teams may merge because the company is undertaking new projects.
Merging the software teams is a comprehensive process that aims to get them on the same page in terms of mentality, information, and technology. These elements need to be in place to minimize friction and build the products that customers want.
The Potential Challenges and Benefits of Merging Teams
Assessing the current state of both teams
It’s important to understand the peculiarities of both teams. This makes it easier to understand the best ways to coordinate them as one unit. An initial audit of the teams will also reveal areas of potential conflict after a merger.
Assessing the state of both teams ensures that projects don’t drag and proceed in line with the expectations of the product owner.
Potential challenges of merging software teams
Any number of issues may crop up when merging software teams. These include:
- The presence of concordant and disconnected ideas.
- Each person has a unique way of working.
- Each person maintains a distinctive workflow for development and Quality Assurance (QA).
- Each person will likely reject the workflow of the other members.
- There may be too many defined processes, making it hard to know which to follow.
There are many significant challenges with team mergers. However, good leadership is a necessary solution to resolve issues and provide guidance to get team members on the same page. It strengthens the unit, allowing members to understand each other and improve performance.
Benefits of merging software teams
Changes in a company’s structure can affect many things. Despite adverse effects such as stress and speculation, several inevitable positives exist. Here are five benefits that typically show up when companies merge software teams:
- Access to a broader pool of talent.
- In-house mentoring and nurturing of talent.
- They gain the capacity to build better products, enabling them to win a more significant market share and leave the competition behind.
- The new team helps the company to achieve economies of scale and, by implication, cost reductions. Investment in the team (training and so forth) is spread over a larger output, leading to greater technical economies.
- Merging the team means they’ll likely work on one streamlined product instead of duplication. It, of course, means eliminating the competition, resulting in reduced pricing for the customer.
- Remote software team mergers allow the company to maintain a distributed team that can expand its business across international borders.
- Merged software teams make it possible to keep valuable talent working. If one business was performing at its potential, instead of closing it down, absorb it into a larger company where its software team can continue to churn out great products and preserve jobs.
Considerations Before a Merger and Acquisition
Instead of diving in head-first when merging teams, there are crucial elements that deserve a thorough look. It’s especially tricky because competing firms (and their software teams) are coming together to forge a shared future.
These recommended practices will help you to navigate the challenge of blending your software teams, for what it’s worth.
Assessing the current state of both teams
It’s advisable to begin with an assessment of the pulse of either team. It usually takes a lot of work for two former competitors to become comfortable from the onset, and it’s realistic to expect discomfort and growing pains.
To be clear, early signs of tension are a great indicator that issues between the teams will be ironed out from the outset.
Identifying common goals and values
Perhaps a most important and effective consideration in merging teams is to communicate with all team members and ensure that everyone is on the same page. This is in terms of aspirations, targets, and values, ensuring that there’s minimal to zero conflict on projects.
Evaluating team size and composition
Some teams may be large already, so merging them with another sizable one will inevitably create problems. It’s best to iron out any issues on each team before attempting the merger. In many cases, teams will need trimming to make room for merging successfully. This is especially important when companies discontinue development of one or more products.
Determining the best structure for the merged team (e.g. team per module, team per product)
Structure is crucial to operational fluency. Developers on merged teams come from different structures, therefore it’s important to align this to management’s preferred mode of working. Merging teams by module works well if the individual teams were working on similar products, while merging by product may be suitable depending on the experience level of the engineers on the teams.
Ensuring a Smooth Transition
A smooth transition from the old order ensures that there’s a quick progression from the divergent visions of both teams to a joint and more encompassing impression of the future. Here are four steps to achieve this:
- Begin by building a system to adequately communicate merger details to members of both software teams. Developing a communication plan guarantees that all team members are in the know and have access to necessary product and company process information.
- It’s essential to provide adequate training and support for team members to adapt to new processes and systems. It’ll help them prepare with hands-on analysis and crucial feedback across the organization.
- Establishing clear roles and responsibilities for team members. It’s an effective way to dispel tension between the teams, especially with the likelihood that they may use different processes incompatible with each other or not in tandem with data. The way around this problem is to train each side on the relevant system.
- Prepare a timeline for the merge and set milestones to track progress. It helps both teams to give up on traditional methods more readily and work towards ensuring that things get done as and when due.
- Get both teams to focus on the customer. Because mergers and acquisitions are complex, time-consuming processes, working through the bulk of challenges could take a while. Thus, both teams must realign their thinking to focus on customer service. As customer satisfaction takes the spotlight, the teams are more inclined to work through their variant opinions and work towards expanding the company.
With these few points on ensuring a smooth transition to a joint software team, we must look at two essentials for a good software team merger.
Communication within the teams
The primary way to achieve synergy while merging software teams is to have a foundation of solid communication. While that’s supposed to be a given, we all know too well how communication problems have plagued all types of human relationships. In short, a lack of good communication is a recipe for disconnecting inter-team and intra-team.
The urgency to disseminate new processes, communicate progress, and reveal problems are critical when merging software teams. But good communication is the bedrock of it all. It’s essential, therefore, to fish out communication barriers and promptly remove them.
If one team’s choice of enterprise social network is Slack, and the other prefers Microsoft Teams, it could snowball into a big issue. Finding a way to resolve a simple problem like this could be a big boost to improving things.
With accessible and effective communication processes in place, the transition becomes easier for both software teams. Some tips to achieve this include:
- Onboarding enterprise social networking
- Storing all docs in a single accessible location that everyone knows how to use, such as cloud storage.
It’s also essential to work towards transparency. In tandem with accountability, It paves the way for the openness, clarity, and honesty necessary for a successful merger. Leaving issues unresolved may have short-term benefits, but it quickly becomes a recipe for insurmountable obstacles.
Bringing software teams from different company cultures is tricky business. Therefore, each side needs comprehensive representation in the decision-making process. It’s crucial that no side feels the other has or is attempting to exercise more control than it should. Collaboration is more manageable in an environment where everyone’s voice matters.
Group cohesion after a merger remains the goal. It would help if you also had champions across the teams to communicate the views and choices of management while acting as a bridge between both teams.
When both teams struggle to find common ground, a flatter organizational structure works better than the hierarchical variant present in most businesses.
Synergy matters because the change is not one-sided, so you must ask the right people to do certain things. Besides, since you’re integrating processes from both groups, you need everyone on board. Like a corporate merger, a software team merger means the vision is shared without question, making room for true efficiency as the new team moves forward.
Maintaining Consistency and Cohesiveness
In order for the different development teams to find common ground, here are a few guidelines they can follow:
- The definition of standard design and coding style agreeable to and convenient for the merged team
- The implementation of shared tools and resources.
- Encouraging collaboration and knowledge sharing among team members
- Setting clear goals and expectations for the merged team
- Reflecting on what worked, what didn’t, and why via regular audits.
Dealing with Potential Challenges
Great software companies are now born in any corner of the world. However, these companies attract software employees with attractive working models, such as remote working, allowing them to hire outstanding talent several continents away. Such distributed teams pose a problem when a more significant entity acquires these companies or merges with one of comparable size.
Managing time zone differences
A distributed team may have workers spread across multiple time zones. Therefore, it’s essential to understand how synchronous communication differs from asynchronous communication and when to use each one.
Time zones mean people live in geographical locations with unique daylight hours at any time of the year. So, you may have one software team member asleep when a bug arises in production. It doesn’t mean the developer is not agile, can’t communicate, or lacks collaboration skills.
Across time zones, this pattern is likely to remain the same, but the tendency is that your entire team will mainly communicate asynchronously.
Use the following tips to manage communication for your merged distributed team:
- Depend on async communication channels such as email, chat, or Slack. Effective async communication is vital to business success. However, you may not need async communication if you organize the merged software teams and schedule projects around the time zones of each developer.
- Fix meetings when it’s convenient for developers across two or three adjacent time zones. It’s a more significant challenge when staff are at time zone extremes (say Australia and the US), as the participants may need help to attend meetings simultaneously.
- Cultivate the mindset of the team being together even if they live in different time zones.
- Schedule meetings at optimal times for everyone.
- Know the prevailing working hours for people on the remote team.
Handling the potential loss of organizational knowledge after dissolving one team.
Merging teams and proceeding wholesale with one team’s strategy and approach to writing code, communication, project management, product ownership, and other potential problems. It can easily lead to conflict and disconnect among members of the merged software teams.
A viable approach to this challenge is to run a policy where every voice matters, and the new team only does what’s best for the product, the business, and the team.
Navigating cultural differences between team members
When developers come from diverse ethnic and corporate cultures, they tend to do things differently. It doesn’t mean they’re wrong; their method probably worked best for where they’re coming from.
The developers on a merged team need to realize that things will be different from whatever they’ve been. They’ll need to adapt to significant changes in operations designed to reflect not the preference of the other team but to reflect the expected direction of the organization.
Common Internal Pain Points During Merger and Acquisition and Strategies for Success
Here are critical internal pain points to consider when merging software teams after an M&A.
Lack of Communication
Everyone has a natural communication style, and this includes you. Knowing your communication style influences your effectiveness when dealing with friends, co-workers, and clients.
Outback Team Building & Training cites a PWC study of companies that had completed mergers and acquisitions. Communication challenges emerged which topped why those potentially successful marriages hit the rocks sooner than later.
Proper communication between managers and employees, and their peers is essential in newly-formed workplace environments. For one, employees would wonder why the organization is merging, how it might affect their role, and whether they’ll receive adequate support during the merging process.
The absence of this kind of communication creates uncertainty in the workplace, reducing employee engagement and potentially introducing distrust.
During a merger or acquisition, it’s important to ensure that all parties are informed. Therefore, both management teams must promptly disseminate information to their software teams during the integration. The following tips can help in fostering a comprehensive communication stream during a merger or acquisition:
Provide context by telling the story
Developers from both sides of the table need to understand what’s going on as it happens. Some background and hopes for the future are essential elements of this story, and it ensures that your engineering team doesn’t rely on rumors while seeking facts.
Stories also help to clarify how the company [and the team] will benefit from the merger or acquisition process and why it’s the most favorable move for all stakeholders.
Create a timeline of events
Both software teams will need a timeline for the merger and acquisition process. It should include assigned roles and responsibilities, including milestone dates and product deadlines for important stakeholders. It helps everyone to develop an understanding of what to expect and when.
Create a developer-oriented FAQ document
Even though questions will come from all departments of the organization, it’s essential to address developer-specific concerns adequately. You can do this through a focused FAQ document, and an internal poll is one way to learn what questions to answer in the document. This FAQ doc is an excellent way to handle uncertainty and confusion.
Communication needs to continue and be consistent after an M&A. Here are easy ways to do this with the merged development team:
- Hold regular meetings with all software developers to touch base directly with everyone.
- Hold “town hall-like” meetings to allow every dev to ask questions to senior-level developers.
- Send out regular email updates to communicate events as they occur.
Open communication between individual developers or across front-end, back-end, and other software engineering teams, is beneficial in helping devs feel secure and informed. As you become aware of the concerns, fears, and questions shared by software team members, it opens up avenues to proactively find the answers that’ll help to build transparency and trust, giving the merger a multiplied chance of success.
There are robust training programs to support merged software teams to improve their communication skills before, during, and after the consolidation. Techniques, non-verbal cues, and a productive approach to conflict are crucial skills software teams need to learn much about before, during, and after the merger and acquisition process.
Stripped of Your Company’s Cultural Identity
As with almost any M&A scenario, the inevitable problem of variant cultures comes to the fore. It’s typical to have more employees disengaged after the process is complete. It impacts employee engagement, which is inextricably linked with culture. Software employees are not immune to this.
In a merger and acquisition, cultural differences will become more evident as the software teams adopt an “us vs them” attitude that introduces an unhealthy dynamic among the ranks.
Team culture is an all-hands-on-deck process, and is one way that software management leads can foster a healthy culture that enables high company engagement, improves productivity, and minimizes turnover.
Three ways to preserve healthy software team culture in the wake of an M&A include:
1. Refining core values to accommodate those from the various software teams.
- Use one organization’s core values as a foundation and share them with the other team.
- Choose the preferable components of principles from the teams involved and build an acceptable hybrid from them.
- Create a new set of core values that address the new company’s focus and vision.
It’s important to know what is critical and why it is. You can then build a new and inclusive culture from the ground up.
2. Considering investing in team building and training.
Mergers and acquisitions often take a toll on software teams as it takes from company executives. Protracted stress and uncertainty can cause developers to be less engaged than expected. One cure for this is participating in team-building tasks to help members of involved software teams familiarize themselves and promote collaboration.
Similarly, skill development training sessions can help build a more connected and unified culture.
3. Regular check-ins with employees.
If you want to find out how everyone is coping with the new regime, formal employee engagement surveys are a great way to find out. Services such as OfficeVibe and SurveyMonkey are helpful for automatic feedback collection.
Another way to assess developer integration is to use monthly performance reviews that indicate each person’s contribution to company outcomes. It fosters a connection to the company, especially for new software teams and members.
Low Employee Retention Rate
Transition is a significant consequence of mergers and acquisitions that need careful handling. Software teams commonly experience transitions that the expectations of future products.
Some of the fears these teams face include the following:
- Proving their worth or value to corporate executives
- Losing their jobs
- Requests to re-apply for their current role under more competitive terms
- Radical changes to familiar company culture
If software employees leave during M&A, it inevitably affects business, and a fractured workforce might have to resort to creative coping techniques.
The best thing to do to sustain employee trust during the period is to engage them as much as possible. It doesn’t imply overwhelming them with tasks, but employee engagement promotes retention.
An important note to highlight is that communication, company culture, and core values are essential in encouraging engagement and retention.
The Benefits of a Successfull Merger and Acquisition of Software Development Teams
When software companies merge, and corporate merge the respective technical teams, the fundamental goal is to create a merger for strength as all other aspects of the marriage. Here, we share the specific benefits of successful M&A of software teams.
1. Solid and focused team
A strong software team is an essential foundation for long-term business success. While both teams may have helped their respective employers succeed before the merger, the expectations on the merged software team grow at least in proportion to the vision for the new establishment. The expanded software team often compensates for HR needs in response to company demands.
Small IT or software teams usually have a good proportion of the staff multitasking, and it may save costs in the short run but tends to limit real growth. Having more people on the merged software team sells the importance of the group, making it more challenging to have them engage in distracting tasks such as accounting, sales, and IT hardware support.
In an expanded software team, those more competent to be managers or salespeople will get a chance to take on those responsibilities while others focus on their one true passion – code.
The specialization model prioritizes efficiency and improves competitiveness, allowing everyone to do their best work and enjoy economic benefits.
3. Larger projects
When you merge software teams, you also earn the ability to tackle bigger projects. You’ll also have more software development professionals with diverse specialities such as functional programming, OOP, containerisation, front-end engineering, and so forth.
Clients expect products to be complete; only a larger interdisciplinary software team can achieve this.
IT companies thrive on growth. Merging software teams is a type of growth that ensures you meet product launch deadlines and no one is overwhelmed by the pace and load of work.
5. More profit and financial liquidity
The primary reason for being in business is to turn a profit, and merging your software teams can help you make more money. As you aim to build a bigger and better organization, your stronger software team will enable you to take on larger projects and growth opportunities.
Because of economies of scale, the more prominent tech team offers a more robust operation with lower operating costs.
12 Tips for Overcoming Common Challenges and Achieving Success in the Merger and Acquisition Process
Here are a dozen ways to help software teams merge seamlessly within your organization.
1. Plan for the team merger
Well, before you announce any changes related to the M&A, it’s necessary to make a note of everyone who’ll experience impact and how before merging teams. It’s better to be ready like this instead of leaving things to chance. A good checklist for this is to:
- plan out the process
- communicate early and often
- measure critical metrics
- assess results once the process is in gear
2. Choose the cultural pathway
It’s best to be clear on the outcomes you expect from combining multiple software teams. However, this result needs to be in sync with the cultural contributions of the respective teams.
The emergent structure may align more with one culture than the other(s), or it may lead to an interwoven culture where each team sees the best aspects of their culture well represented.
Defining a cultural pathway or agenda helps to prevent shock and conflict among teams or individuals. When merging teams, you need to know what this culture should look like, what it means to the process, those involved, and the expected outcomes.
3. Understand why it’s challenging to combine teams
When getting teams to function under a standard premise, ensure to first review each team member’s opportunities and strengths via a SWOT analysis. Use multiple perspectives and base your plan on your discovery.
4. Locate where the teams align and where they are different
While teams may have been doing similar work with approximate outcomes, there may be differences in their approach to work. No matter how many similarities exist, it’s the differences that matter.
Successfully merging software teams means closing the gaps that exist between them. A few ways to dovetail teams into one coherent unit include accountability mapping, focus groups, process flow mapping, and user interviews. Surveys are also a great way to collect critical feedback for effective team mergers.
5. Anticipate possible problems during the merger
In most cases, merger problems unfold that no one imagined or expected. While a bump surprises senior leaders down the road, they can at least anticipate it. It puts everyone in the preferred mental shape to deal with the problem.
Asking questions openly and honestly while listening intently for answers is essential. You’ll also need to learn to listen for answers even when you have not asked the questions.
6. Involve everyone in building the team and preparing it for the task ahead
The best way to create buy-in for the new team’s vision is to get employees to co-create the new culture. The focus should be on the areas of similarity relevant to the newly merged team.
7. Exploit the strengths of both teams
Every team has their best parts, yet some bits are best left behind in the interest of the merged unit. It is because this team’s vision is radically different from that of the previous respective teams.
If this new team discovers its vision, it’s easier for team members to take ownership of it.
8. Communicate all the time with all members of the new team
The thread of uncertainty is certain during mergers and acquisitions. However, frequent, targeted communication helps to build confidence and ensure everyone is on the same page as the vision unfolds.
9. Seize every chance to blend the teams better
Separate workplace cultures mean that teams will have social and operational differences. Emphasize opportunities that help the new team members interweave and work together to solve challenges using multiple perspectives to succeed.
10. Continuously measure and track progress
The goal is to remove as many bottlenecks as possible along the way. Therefore, first, identify the principal metrics of cultural and operational success. Then, systematically measure the progress of your new team.
Regular measurement allows you to probe deeper, follow up better, and build a more resilient team. In the aftermath of an M&A, annual measurements may need improvement, and it would be best to have frequent touchpoints to track important issues and opportunities.
Finally, endeavor to share any improvements with your team as you progress.
11. Celebrate wins, big and small
Because you’ve merged teams, addressing everyone and everything as a collective unit is important. Highlight all successes from combining both teams and share how the team has worked to accomplish cultural and operational success.
12. Understand that your results are as important as your merger
As expected, there’s a focus on financial gains and operational efficiencies. However, it’s paramount to remember people’s analytics. Do everything possible to create a seamless cross-culture. That way, leaders can manage and measure how people adapt behaviors and beliefs effectively. It’s then easy to tell whether behaviors will show positive returns.
Exploring Salesforce’s acquisition of Slack – Case Study
It made headlines a few years ago when news broke that Marc Benioff’s Salesforce – a proven CRM giant – was paying $27 billion to acquire Slack – the premium tool for enterprise communication.
The price would be big or small, depending on your school of thought. However, this is a classic case where two strong development teams with successful products to their name had to sit down to talk.
Slack is a much younger company with a workforce that might be less inclined to embrace Salesforce’s legacy-like approach to product development. Make no mistakes, the culture at Slack is solid, demanding, and employee-centric.
By contrast, Salesforce is more results-oriented. It also portrays a strong culture that is as fulfilling to many as it’s crushing to others.
How easy was it to weave Slack’s new wine into Saleforce’s older skin? For one, Salesforce tends to “impose” its culture on companies it buys.
Some critical concerns about the acquisition include integrating Slack into Salesforce’s business. Despite the ease of creating a so-called Collaboration Cloud, cultural issues were the expectation from the outset.
Salesforce and Slack are two different products. The former embodies a marketing and CRM culture, whereas the latter is a culture of internal solutions and collaboration. The approach to building both products differs like day and night.
Cultural sensitivity is the hot topic here, and Salesforce would prefer to avoid the prior experience it had when it tried to buy Seesmic after an initial investment.
Salesforce has yet to take Slack to where it would prefer to be relative to the competition (think Microsoft Teams). The primary reason is that both companies are divergent in culture and product.
Mergers and acquisitions can be successful when the corporate strategy is acceptable to critical stakeholders such as software teams. The potential gains far outweigh the difficulty in the process.
Success in merging software teams is critical to making M&A work. Plus, the people adopting technology and cultural change must be aware of everything happening.
Having a good plan of action is advisable to deal with challenges arising from merging software teams, and it is what makes M&A success feasible.