Mergers & Acquisitions – IT Integration Challenges

Mergers & Acquisitions – IT Integration challenges

Date: July 17, 2014
Posted by Litcom Team
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Category: Merger & Acquisition Due Diligence

Post Merger Integration Litcom1 Organizations must overcome many technology challenges after an acquisition in order to unify and streamline business processes across the entire enterprise. It is rare, (if not impossible) to find two organizations using matching systems and applications, particularly when they can employ up to as many as ten to fifteen applications to run separate business processes. This scattered structure makes it crucial for organizations to quickly integrate systems, applications, and databases in order to get business processes up and running in synchronization.

Primary technical challenges that organizations face following M&As include:

Inadequate IT integration:

A lack of synchronization throughout the IT infrastructure can result in difficulties with everyday business processes, producing complications and slowing down overall operations. In addition, without integration of supporting and operational process applications (e.g. HR, finance, CRM, ERP, sales, marketing) within the entire organization, errors and replications are inevitable. As both the acquired and the acquiring organization come in with separate financial systems, suppliers, partners, etc., it is crucial to ensure a standard is established.

Lack of visibility

With two merging organizations in a similar technology environment it is possible to have duplicate client information. Additionally, unless the two merged companies have established a customer data integration system, the challenge of procuring an updated single view of the customer is essential. For example, having two disparate Salesforce.com enterprises can result in two sales representatives contacting a single client, portraying a disorganized picture of the organization.

Data amalgamation

Data amalgamation makes certain that companies have access to updated information across the entire organization regardless of whether it resides on premise or in the cloud. Lacking an effective data integration solution, retrieval of information scattered across various systems, applications, and services is complicated.

Compliance Regulation

Compliance issues are likely as two converging businesses do not have the same levels of compliance. Policies, contracts, and guidelines are essential and regular enforcement, visibility, and control is required to permit organizations run smoothly. Furthermore, if the acquiring company is global, the possibility of training and education around new compliance policies may be needed.

In light of the information above, the goal of most organizations is to limit the time and cost spent on integrating IT systems, while at the same time achieving the data consolidation that is required to improve the organization’s performance. The problem is that typically, after a merger or acquisition, organizations need to gather, analyze and report on information that may be coming from a number of disparate and complex systems. The need to maintain the integrity of transactional data in financial, customer and other operational systems is extremely vital. There is also a necessity to improve reporting systems to provide information at a broader, more consolidated level. More efficient communication among application systems is important, in order to provide management with the data they need, and the ability to produce the information required to make more informed and timely decisions.

During a system integration project, it is important to ensure that all the areas of IT are worked upon for smooth integration. A sample checklist is provided below:

Before Starting:

Has the IT roadmap and strategy been determined?
Based on the IT strategy, is the consolidation plan for the IT systems established?
Does a consolidation plan have adequate time and resources for integration?
Have test plans been developed?
Based on the IT strategy is there a contingency plan on hand?
Are all systems elements included in the consolidation plan?
Has the plan for IT procurement, physical location and resources been determined?
Is all the documentation being obtained from the merging parties?
Are the productive IT integration team formed with efficient leadership and team members?
Is there a risk management plan in in place?

During Integration:

Are the following particulars of the IT environment addressed?

Network Connectivity
IT Leadership team
IT Integration of work culture
Mainframe infrastructure
Business application and architecture
Data or call center facilities
IT Processes
IT products and services
Licensing of products
Office applications
Desktop/laptop systems
Machine setups

Post Integration:

After the consolidation, is ample testing performed on integrated systems to ensure the success of integration and seamless functioning of integrated applications?
Are the timelines and milestones being considered?
Is the whole integration process documented, updated in a timely manner and properly maintained?
Is the integration report and plan made available organization-wide?

Proper systems integration can help an organization achieve anticipated synergies by consolidating the key data and transactions that enable effective decision making. The challenge is integrating the merged organization’s different technologies systems, and processes while protecting the organizations’ investments in each of these areas.

The Litcom Approach

Litcom’s PMI methodology provides a structured approach for rapid integration of IT Services & Technologies to deliver optimum value to the new organization. Within our PMI process, we focus on our client’s key needs and issues including retention of people, reduction of costs and maintaining market confidence.

At Litcom, our post-merger integration team provides strategic due diligence, communication planning, implementation planning and change management in order to meet your post-merger IT needs. Our goal is to provide a cost-effective way to ensure that your new company merges all of its IT operations as seamlessly as possible. Our strength is our extensive experience in information technology and project management. With these skills, we can create concrete goals and executable projects that ensure your merger will be as productive as possible. To learn more about Litcom’s PMI methodology, please contact us at: [email protected]

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Mergers & Acquisitions – IT Integration Challenges