Against a backdrop of political uncertainty across Europe, 2019 has been a strong year to date for merger and acquisition (M&A) activity in the region as companies seek to bolster market share, secure new avenues for growth and create economies of scale or ownership.
At the heart of all these strategies is the successful integration of enterprise IT systems, yet ‘technology fit’ rarely features in the all-important process of due diligence.
elastic.io CEO Renat Zubairov calls for IT leadership to be included earlier in the M&A timeline and identifies three critical areas that companies should cover.
Don’t leave ‘technology fit’ to chance
- The halfway point – what is on the horizon for the UK M&A market in 2018? (opens in new tab)
If a successful M&A is an expensive activity, the cost of an unsuccessful undertaking can run even higher in time, money and reputation. However, whilst many of the potential pitfalls are researched during the period of due diligence – from organisational synergies to cultural match – one critical consideration often left to chance is IT. Companies that fail to assess the potential technology fit can find themselves exposed to costly and time-consuming challenges down the line that hinder the newly-formed entity in reaching its strategic goals.
By exploring the following factors at an early stage, companies can create a clear vision for the technology and skills required to support M&A activity, rather than stand it the way of success.
1. Create a technology fit roadmap
Planning for M&A needs to start with an audit of both company’s systems to understand the assets, app subscriptions, demands and skills available in each, as well as where resources are duplicated. If the goal is to combine the entities, as is usually the case (rather than continue to operate separately) then the next step should be to create an enterprise infrastructure map for the newly-formed organisation.
Building interoperability across billing, logistics, CRM or CIM systems will require integration across database systems that can be achieved with an integration platform as a service (iPaaS) to link the same field of data in different locations, and involving IT early in the process allows planning to minimise costly systems’ downtime and ensure customer service continuity.
2. Skills and training audit
Often companies involved in M&A deploy a specialist change management team to handle staff moves, role realignments, redundancies and cultural shifts. But how often is the same principle applied in the IT environment?
Critically, there is the need to pre-plan to ensure that the right skills are on-board to manage integration of systems across the two entities from day one. Many organisations start integrations without having appropriate experience with the applications, vendors and tools that they are using – treating it as ‘just another IT project’ rather than an area of specialism, which can lead to difficulties when new and different variables arise that most IT teams don’t face on a regular basis.
Furthermore, IT skills planning is an essential part of change management across the organisation as a whole. It is vital that the newly-formed IT support is uniformly trained on the solutions deployed and equally important that end user teams fully understand how to enter data consistently and accurately in order for the newly formed entity to operate efficiently and reliably.
3. Protect data security and integrity
Whatever the operational goals for the M&A, data is usually the precious commodity and it is vital that it remains secure and accurate at all times during the transition process.
Without disruption to day-to-day business, certain iPaaS solutions can build a test environment that creates connections between existing business applications outside of operation. With links in place, databases can be connected and tested while the organisation operates in the ‘live’ setting, with data integration, management and update between new and existing sources. This maintains data integrity within the source database, whilst identifying what works – and what doesn’t – in an interoperable and secure environment.
The same iPaaS can also flag inconsistencies across data in the same field across different systems. This is particularly useful across databases where common fields are used by different departments and can result in customer service issues if not consistent. It enables cleaner and more useful data from combined systems, quicker, without transferring any data outside of the field that might compromise integrity or security.
IT planning for success
- How to manage the cyber risks involved in M&A (opens in new tab)
Due diligence is designed to identify areas of significant challenge, cost and complexity in the joining of two entities through merger or acquisition. But if technology isn’t considered as part of this process – as too often it isn’t – companies run the risk of incurring higher costs and possible delays to realising the full potential of the merged organisation.
Without proper planning, systems can become over-stretched with risk to data security or systems requiring total replacement rather than a more cost-effective solution. On the other hand, efficiency gains and cost cuts can be maximised if the organisations plan ahead to create a fully technology-integrated entity.
- The need for cyber security during an M&A (opens in new tab)
Renat Zubairov, CEO and co-founder, elastic.io (opens in new tab)