A post-merger challenge: ensuring the smooth integration of disparate IT systems

February 2015 | EXPERT BRIEFING | MERGERS & ACQUISITIONS

financierworldwide.com

Organisations 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 organisations using matching systems and applications, particularly when they can employ up to as many as 10 to 15 applications to run separate business processes. This scattered structure makes it crucial for organisations to quickly integrate systems, applications and databases in order to get business processes up and running in synchronisation.

Primary technical challenges that organisations face following M&A include: inadequate IT integration, lack of visibility, data amalgamation and compliance regulation. Each of these areas will be expanded on below.

Inadequate integration

A lack of synchronisation 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 organisation, errors and replications are inevitable. As both the acquired and the acquiring organisation come in with separate financial systems, suppliers, partners, etc., it is crucial to ensure a standard is established.

Lack of visibility

With two merging organisations 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, 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 disorganised picture of the organisation.

Data amalgamation

Data amalgamation makes certain that companies have access to updated information across the entire organisation 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 and 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 organisations to 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 this information, the goal of most organisations 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 organisation’s performance. The problem is that typically, after a merger or acquisition, organisations need to gather, analyse 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 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 to give them 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. As an example, prior to commencing a project of this nature, certain key items need to be in place, such as an IT roadmap, a consolidation plan, proper Test Plans, structured procurement processes, an integration team, and a risk management plan.

Once a project has started, key areas of the IT environment should be addressed, including the leadership team, the business application and data architectures, the IT processes, and the network infrastructure.

After the consolidation, it is important to ensure that there is ample testing performed on the integrated systems, the whole integration process is properly documented, and the integration report and plan is available to the whole organisation.

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

Steve Litwin is the president of Litcom. He can be contacted on +1 (905) 763 8900 ext 201 or by email: steve.litwin@litcom.ca.

Steve Litwin

Litcom