Why Leading Companies Migrate to Purpose-Built Solutions: Pt 2

05 April 2016

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Part 2: The Selection and Implementation Process

eknow: All of you have said that you liked your process; that you were comfortable with the process that you have. However, the tools you were using didn’t adequately or accurately reflect that process.

 

How did you know you were ready for a tool to map to those processes?

 

Mark: We have three people in corporate development who do the overall program management for M&A integration, but we also have single points of contact in each of our various functions. I have counterparts in IT, HR and facilities, and we talk a lot. When you get those people together and you compare notes about what’s needed, things like this begin to bubble up. You reach a point where everybody’s aligned that you’re ready for something.

 

Tiffany: We immediately identified that it would be helpful to have a new tool other than what we were using manually, for several different reasons. One reason is that we have several channels offering targets. They can come in through Venture Capitalists, through our corporate office as well as through our business units within marketing and R&D. With these numerous channels sometimes it’s difficult to track activity that’s going on with the same target within such a large company.

 

We realized there needs to be a central location and a ‘project portal’ for tracking that activity. Within the business unit, there’s always an opportunity to streamline processes when you’re working with all your functional areas and your key people. Unfortunately, business development seems to be in addition to their day jobs. It’s a little bit extra for them. Anything you can do to simplify the process is really helpful. We did a pilot with about 30 of our business unit people and we used the iMemo tool within eknow to get their feedback on it. It was simple. It cut down on the email traffic for them. They loved it. We got great feedback there.

 

The third aspect was our need to be able to track who, internally, had access to confidential information that was provided by a target. Once we’re under a non- disclosure agreement, we want to be able to track who’s accessing that information. At any given time, we can go out and bring that information back and return it to the target, if we’re requested under that contract. It was a compliance matter for us as well.

 

eknow: Tiffany just mentioned functionality within the eknow solution called the iMemo or interactive memorandum; it is an eknow specific feature that leverages standard email. It just makes it easy to collect, disseminate information and communicate with team members both inside and outside your company by just using email as the mechanism. It’s an extension to that M&A workflow without becoming cumbersome or bothersome to those users.

 

Carla: My background is in systems implementation selection design. Having watched the chaos that could sometimes ensue, to me, the system was an obvious thing to do.

 

To determine ROI on something like this, because what you’re trying to do is quantify an intangible, is very difficult. How much time? How much frustration? What’s the value of a lost document or designing a facility, moving people into a facility with the wrong number of people? You can’t really put a price tag on those but you can talk about how much is it going to cost if I had to bring somebody on board even for the duration of just the project, to manage all the details for me. Do I need one person or will I need two or three? I think that’s a very good point. I think for us, it was just a question, we had the in-house expertise and we were in a bit of a lull, so it was a good time to try to get into that.

 

Tiffany: We are managing about 40 projects, actively, at any given time. Nothing in business development ever dies. We could look at something and in two years, it will come back around and it’s good to have that ability to go back and look at our notes and say, “Oh, so that’s why we made a decision on this strategically.” Now, we may revisit it and go after it two years later, but it is helpful to have a central location to go back and look at what our strategy was and what we were thinking at that time.

 

eknow: What kind of concerns did you have about implementing an automation solution for something that was previously not automated and do you use the solution to help enforce the discipline?

 

Carla: It’s all about the people. Even with the best system in the world, if you don’t do a good job, nobody’s going to use it. What’s really important is that you understand your user base, what their behaviors are like and in what context they’re operating.

 

I think the same is true in a lot of companies. Once you start engaging functional people, for us in corporate development, it’s a luxury. We do this full time. We can take the time to train ourselves and enforce our own behavior, but when you’re talking about functional leads who have a 40 or 50 or 60 hour week job in the first place and they have to take on a deal or two or however many they have, you really have to appreciate the fact that they don’t have a lot of time and they probably have even less when they’re under stress like that, less goodwill to be able to learn how to use something new. And it’s a cycle, and it takes multiple iterations before you are comfortable navigating and know how to make good use of what you have.

 

We actually decided to roll it out with due diligence and now we do due diligence and integration and then we’ll work the funnel in. However, we’ve rolled out the functionality in phases. We don’t use all of what’s there. Whatever we think is the biggest hitting functionality, we implement that first and then on the next deal, we add some more.

 

Mark: Change management I think is the biggest issue. We started with the funnel which was all self-contained within corporate development. There are two key aspects about that. One is that we can train ourselves before involving more people, but also, the major driver behind the funnel management was our mutual boss. Having support and interest at the top, she’s the person who will receive the data that we put in to the system, causes the initial engagement to occur. I think having support at the top is a key factor.

 

Tiffany: It was helpful for us to have support from the top to implement something new because we do have a lot of the existing tools within Medtronic and we would be adding to that. Management’s main concern was the users being willing to use something new. That’s why we conducted a 30 person pilot and solicited their feedback. We also received input from several key executive managers including how they might envision using the tool. Usually they just are looking for an executive summary and a one-click approach to get a full download of what’s going on at any given time. Getting that feedback was very helpful.

We’re using the tool mainly for pipeline management. The struggle has been having someone specifically assigned to managing the database and keeping that tool current and running. Just being a little resource constrained.

 

eknow: You also talked about adoption and getting users to utilize the system. Given that different people need to have different permissions, how did that work when you rolled it out to people, especially in larger groups?

 

Tiffany: The eknow team was able to walk us through the different levels of access and how that’s provided. That was extremely helpful. Again, there’s a lot of value with the tool if you can have the users input everything through due diligence there in the database. It provides continuity through integration for any given transaction. There is a lot of value in having users go to that place and making it automated more than manual and trying to feed files back and forth.

 

eknow: How do you find the interaction with the larger teams? Did they adopt easily?

 

Carla: Some of that’s personality-based. Some do and some don’t.

 

What’s been interesting is if you can start with the self-contained group of folks and test-drive it on yourself, that is probably the optimal way to give it a go. The way our process works, we couldn’t start with the funnel, just for a number of reasons. We started with due diligence. We found it critical to ensure very, very high levels of support so that people feel like this is for them. It’s not just a corporate development tool. It’s used to make everybody’s life easier.

 

Also significant and interesting was the interaction with the target. We use eknow extensively with our targets and we create a ‘portal’ where they interact and they upload information directly. There’s a back and forth that the functional leads can have with a target without having gotten on the phone or exchanging an email. The thing that we hadn’t expected is that the target becomes very attached to this as it gives them just a tiny little view, very clean, of just the sets that matter to them. They actually started requesting to our PMO lead, “Could you please ask so and so to answer their questions in the tool?” That’s what we do now. I haven’t expected that kind of adoption.

 

Mark: We started with the funnel and then have used it for two deals for due diligence and are starting our first integration project management. I would agree that of the two deals we’ve used for due diligence, one already had a data room established. In that case, we were using the diligence questions that we have in the system to guide our diligence team and they would go often to the data room, seek the answer and then make the response in the system.

 

In the second deal, they didn’t have a data room set-up and they have used the iMemo which gets them into the system in a very limited fashion and they’ve used that very effectively. They dumped a bunch of documents into the system and the neat thing is that instead of having to go look for the data in a data room, the data is right with the question that you asked. It makes it real easy on the reviewers once the data is there. I think that has become very successful in the hopes that we can talk more targets into doing it that way.

 

Carla: We’ve actually gone to the point where unless it’s a situation where there are multiple bidders and they’ve set the rules, we actually tell them that’s our process, “This is how we do due diligence.” It’s funny; you don’t get a lot of push back, “Oh okay.” They don’t know any different.

Tiffany: In addition to providing value with your targets, we’ve seen a lot of value added with our outside legal counsel. One roadblock we had internally with our existing tools was that we were unable to provide anyone outside of Medtronic access to, say, our SharePoint site. We were limited there and we were also limited within SharePoint with file size capacity. We saw two key value-adds in being able to provide access to eknow, to our outside counsel, to our targets, and then also not having a limit on what size files we could save and put out there on the server. That was helpful for us as well.

 

Mark: That’s an excellent point. The deals that we do, the international deals sometimes have our own in-house M&A counsel; however all the documents show up in Spanish, you hire outside counsel and the same thing is true. Yes, you put the target and the target’s attorneys in via the iMemo. You give access to your attorneys into the dashboard directly so they can be reviewers and it works very well.

 

eknow: With all this external access, are you concerned about security? Especially when there are so many different roles you need to support in these transactions.

Mark: One of the issues that our IT risk management folks had with having very, very sensitive data outside was multiple factor authentication. The fact is that username and password is not sufficient. One of the reasons that we liked eknow so much is their flexibility to work with us. We have a scheme whereby you have username and password but you also have to get a PIN that only lasts a half an hour and that PIN either comes to your cellphone or to your email just behind the firewall. We feel like we have much better security solution, frankly, than the data rooms run by most of the bankers.

 

Tiffany: It was really helpful for us for eknow to be so flexible and I think that’s what we liked the most about the team is that they really have been able to work with us to meet our needs. We were able to work with our IT department to ensure that security was fully in place and we were comfortable with that and it meets our corporate standards. The eknow team really does tailor the dashboard to meet your security needs, your process needs; all the needs. A lot of times, when I feed them some suggestions, they come back to me with a better idea. There’s been a lot of value, not only in the tool itself, but to the team there. Their flexibility made a big difference in making our company comfortable with the security.

 

Carla: From a visibility perspective, you don’t want just anybody hacking into your sensitive stuff. Once you’re inside, once you’ve made it past the options to limit people’s visibility based on what organization they belong to or what role they play, provided a lot of options that made it useful to us. We decided our internal team can see everything until we have a reason for that to not be true. We’re going to start with the least restrictive things so we don’t accidentally trample on ourselves.

 

For the target and what the target gets to see, we actually limit, not just via the iMemo. If we ever involve them in the dashboard, getting literally into the system, you can actually limit what fields they see. We have comment fields where we have internal dialog that they never get a chance to see. We’ve managed to structure the log-in such that they can only get to certain data. That’s been very, very helpful to us.

 

From an auditing perspective, the fact that we can audit everything that’s happened is obviously very useful. The thing that you don’t think about is that, “That’s fine, the internal auditors are now happy,” which is always a good thing. It’s really great to see where you’ve made your major mistakes. I can’t tell you how many times somebody would say, “I didn’t get that.” I’d go and look at, “Yeah, but it went to you, so and so,” and “Oh by the way, here’s what happened to it.” It helps from a troubleshooting perspective. More often than not, it’s been something that I messed up. I know I did that. It also is a great training mechanism.

Stay tuned for the conclusion (part 3) of our series.