Why carve-out is a success factor in separation of IT systems?

AvenDATA - IT Applications Decommissioning | Application Retirement

Recently, the economy is witnessing one of its toughest times. Due to the pandemic, many companies are taking drastic steps. Many companies, for whom IT is not a core operation, are opting to carve-out their IT units.

Companies are keen to sell or spin-off their IT units. They want to concentrate on their core business. Others are divesting individual subsidiaries from the central IT system. carve-out has become a common business practice.

What is a carve-out and how does it affect IT separation?

Understanding carve-out

A carve out essentially is divestment from the parent company. In a legal and operational sense, it is considered independent. It may be in the form of a subsidiary, joint venture, or a completely independent company.

carve-outs help existing companies keep an eye on their operational activities. They permit new companies to establish and stabilize themselves.

Carve-out and IT separation

IT separation refers to the act of separating IT assets from a specific business while preserving the core of a company. However, IT has evolved from a business support task to a core part of the business. Hence, it is essential to have a sustainable plan in place for carve-outs or de-merger projects when IT separation is involved.