IT Carve-Outs Don’t Have to Equal Disruption and Long Timelines

An IT carve-out is often a complicated and crucial process involving the careful separation and transfer of data and IT elements from one company to another. IT carve-outs are very challenging endeavors that require careful planning and testing to maintain stable operations and minimize risk. Projects to carve out IT are not the same as typical system implementations and are intended to simplify the separation from a parent company to avoid business disruption.

New work streams for a carve-out can create added stress factors that impact the usual operations of an organization. IT teams are faced with the task of continued support for the business status quo, while simultaneously subject to a division process. The strategic and efficient separation of IT elements, i.e., services, processes, data, systems, and projects is essential for the success of the parent company and newly created entity.

Read More
Key IT Carve out consulting benefits

Establishing an IT Carve-Out Strategy

The myriad steps involved in the full cycle of an IT separation process can be overwhelming. A great deal of preliminary assessment of data and infrastructure assets must be conducted before initiating any agreements or actions. Knowledgeable and effective project leadership for both the parent and newly formed entity is essential, with well-orchestrated management teams for communication and transparency. Cooperation and alignment is a necessity between all business, IT, and legal teams.
There are two types of IT separation agreements that are essential for establishing agreement on key issues. Asset Transfer Agreements (ATAs) define which assets are going to be transferred to the carve-out object, while the Transition Services Agreement (TSA) outlines which services the parent company continues to provide to the new company during a clearly stated, limited period of time and the total timeline for the project.

TSA documents also detail the associated costs as well as terms and conditions of the carve-out project, stating clearly what is and is not included in the separation. The separation of the data and IT systems has to ultimately deliver accuracy and security to ensure by completion that:

  • Parent company cannot access the data of the new entity any longer
  • New carve-out entity can no longer retrieve the data from its former parent

Fission’s Superior IT Carve-Out Methodology

Often the best first step for successfully navigating a carve-out transaction is to bring in professionals with the experience and expertise to coordinate all of the cycle steps. Without strategic guidance, companies can face heightened risk, excess costs, business disruption, and asset loss. The services of experienced consultants can untangle and streamline the matrix of team components, service contracts and projects, software licenses, data, infrastructure, and system access rights, just to name a few.

Fission specializes in successful IT transitions and transformations. Fission expertly assists all clients with TSA negotiations, IT carve-out planning and execution, and post-separation optimization. Our approach simplifies and streamlines complicated carve-out processes to accelerate the separation timeline and eliminate disruption. We focus on delivering data accuracy and removing uncertainty, to guide our clients throughout the project for an effective TSA exit.

Fission’s six-phase IT carve-out checklist and methodology clarifies and streamlines the work:

Kickoff

Fission communicates with each project team member to understand the magnitude of information that needs to be gathered to properly design the IT carve out project plan. Gathering extensive information upfront in the process leads to an easier separation phase and a predictable working schedule throughout the project.

Design

This phase identifies custom data and all standard and custom data rules. The project plan is detailed and finalized with all resources required and hours allocated for work. The cutover plan is drafted and refined throughout the coming weeks.

Infrastructure Build
The technical team holds design sessions to build the project landscape for data migration, ensuring resources have system access for data migration activities, and set-up of the new hosted IT environment.
Migration Execution
Three rounds of data migration and system testing are conducted to check for issues in system performance and functionality in the new entity’s IT environment. Data is validated to ensure all data belonging to the new entity is migrated and parent data is no longer present. Test scripts are executed to identify system functionality errors and a mock cutover is performed at the end of migration execution to simulate the final cutover that will be used for the separation from the parent’s IT environment.
Cutover
The cutover is a coordinated effort with Fission, parent, and new entity team members. The separation process will begin on a Friday with the migration of the most recent copy of the new entity data. The entire project team will be on call over the weekend to execute their assigned tasks according to the cutover plan. The new system is user tested to ensure no critical errors occurred during the cutover process. Normal operations are resumed on Monday in the new system as separation has completed.
Run the Business
The Fission team is on call to resolve any issues encountered during the initial weeks following cutover and offer system support. When IT support responsibilities are completely transitioned to the new entity’s designated provider, the carve-out project has concluded.

Learn more about Fission’s six-phase methodology in greater detail.

Fission’s team of experienced professionals will deliver on the promise of simplified IT carve-outs with reduced project cost and risk, data accuracy, shorter timelines, and measurable TSA savings.

Click here to learn more about comprehensive Fission Consulting services.

Preparing for an IT Separation OR Merger?

Fission was built to support private equity firms and enterprise clients as they work through common — yet critical — IT project challenges.

Contact Us