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Top Considerations For a Mergers and Acquisitions Technology Integration

2021 has been an unprecedented year from a mergers and acquisitions (M&A) standpoint. According to Reuters, Q3 alone saw $1.52 trillion in global M&A activity, which was the largest quarter ever. As of writing, M&As have hit an all-time high of $4.33 trillion in 2021, a number that is still rising. This trend is not just localized to a specific region, either: The United States, Europe, and Asia Pacific are all seeing an incredible rise in M&As. It is also impacting nearly every industry, at least in the US, though some industries have seen more significant activity. Due to this increase, there has been a renewed focus on streamlining the M&A process, especially from a technology standpoint.

The Price of Failure

Whether it is the acquirer or the acquired company, an M&A is one of the most challenging processes an organization can undergo. According to a study by The Harvard Business Review, about 70% to 90% of M&As fail. Moreover, according to research by McKinsey and Company, about 10% of M&As don’t even make it past the finish line, being abandoned at some point in the process.

That said, it is possible for businesses looking to grow through mergers and acquisitions to do so in a way that is both successful and repeatable. Cisco, for example, has a great track record when it comes to acquisitions, having performed over 200 of them with typically great results. Having a well-defined M&A strategy, one that is repeatable, can be easily adapted depending on the circumstances, and that considers best practices, can help ensure a mutually beneficial merger or acquisition.

Important M&A Technology Integration Considerations

Having assisted in the successful technology integration for numerous clients undergoing a merger or acquisition, Collaborative solutions has a deep understanding of the process. Here are a few of the top considerations for an M&A technology integration:

  • Identify which tenant will become the system of record. For an acquisition, this will often be the acquirer’s system, but not always. Should the acquired company be further along on its transformation journey, it may make sense to utilize their system. Similarly, if two organizations are merging, then it typically makes sense to utilize the tenant of the organization further along in their digital transformation.
  • Determine organizational alignment and data harmonization strategies. How will you ensure both parties have a clear understanding of what will change? Will the acquired organization’s structure be integrated into the acquiring organizations existing structure? Will you be adding the acquired structure to the existing structure? Will the acquired company move to the acquiring company data structure and nomenclature, or will there be parallel data requirements?
  • Consider your current technology roadmap and determine how will it be impacted. No matter what, a merger or acquisition will require IT resources; Determining how much resources will be required will help you ascertain the impact to your technology roadmap. Once you have determined which will be the system of record as well as the overall scale of the technology integration, you can determine just how it will impact your existing roadmap.
  • Consider how this will impact data security and what steps need to be taken. There is a lot of opportunities for critical information to be leaked during a technology integration. It is also imperative to keep in mind that organizations can’t just worry about external threats. For example, system permissions need to be carefully considered before an integration takes place to ensure that employees aren’t given access to critical company information that they normally would not be able to access. This could create the opportunity for a disgruntled employee to then leak that information.
  • Research data availability and accuracy. Organizations that are operating with older legacy systems may have trouble pulling certain data. Data hygiene will also be a concern. Newer solutions, such as a cloud-based ERP system, will make it easier to pull data from and will generally provide more accurate data.
  • Determine the new reporting and analytics needs. Will it be as simple as one company adopting the same reporting as the other, or will the larger, combined organization require more robust reporting? You will also need to determine whether the current technology for both organizations will support these new reporting needs.
  • Look at this change from an employee experience perspective. Critical to the success of any merger or acquisition is employee – buy-in. Creating as seamless of an experience as possible from a technology standpoint helps minimize productivity loss and ensure that critical employees don’t grow frustrated with the M&A process.
  • Review process efficiencies and determine areas of improvement. Are new technologies going to be made available that can further improve efficiency? A mergers and acquisitions technology integration is a good opportunity to look at the internal workflows of both organizations and determine if there are ways to improve upon them.
  • Determine what the cutover plan looks like. Have all dependencies been accounted for? How will this plan be communicated to workers? What contingencies are in place should something goes wrong?

If you are undergoing a merger or acquisition and plan on switching one or both organizations to Workday, then Collaborative Solutions can help ensure a smooth deployment. We provide mergers and acquisitions erp consulting services for both medium and large global enterprises.

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