In advance of its publication, I wanted to excerpt and share three installments of a new Software AG white paper focusing on both Integration and Master Data Management as two key accelerators for M&A.
When you consider the 12 month period ending on November 30, 2014, produced (according to FACTSET Flashwire US Monthly, Dec 2014), 11,643 M&A deals in the U.S. alone - and that this is an 18 percent increase over the 12 months before that, there’s undoubtedly more to be said about M&A’s very specific challenges and how they impact IT – and the personnel who manage it.
There are three forms of IT integration that are critical during an M&A: systems integration, application integration and data integration. Systems integration involves bringing together of all IT systems between the two companies for inventory of IT assets, portfolio management, ownership, dependencies, deprecation and maintenance. This is not a simple task accomplished in Microsoft® Excel® spreadsheet, but one requiring inputs from various stakeholders and visibility across the organization to provide a fair assessment and an actionable strategy. The output of this exercise may also result in using a common platform, such as consolidated data centers or a private cloud infrastructure.
Application integration is also very relevant and critical during an M&A as it enables the cohesive functioning of the IT systems from the two companies. Adopting a common integration backbone enables the two companies to on-board new applications and retire redundant or old applications smoothly. Automating common business processes across new and old IT systems can be achieved only by connecting them all through a common integration platform. The third form of IT integration is data integration. This umbrella term covers a broad set of requirements including these and beyond: Master Data Management (MDM), data cleansing, data quality and data synchronization. This is very critical to address during an M&A since there can be multiple master records across multiple IT systems.
An IT manager’s guide to M&A planning should highlight a few specific items. Typically, in an M&A, IT involvement is held in abeyance until the deal is closed. In fact, the IT teams on both sides have very poor visibility, little detail and insufficient support to develop any practical integration program before the deal is closed. This leads to IT juggling business-as usual support with a poorly estimated integration project workload. On top of this, IT has to deal with organizational issues, such as ownership of new and old systems in the combine IT organization. As a secondary but more important issue, the question of supporting acquired IT assets that should be scrapped looms large. Suddenly, sequencing IT integration initiatives
becomes a major challenge.
In order to ensure M&A success, the synergy of both IT organizations should focus on creating a common integration initiative that enables new business processes to smoothly span across the combined IT infrastructure. For this to happen, companies undergoing an M&A need to focus on creating key strategies around systems integration, application integration and data integration.
Stay tuned! Chapter 2: Integration and Key Elements for M&A Success