Mergers and acquisitions are playing an increasingly important role in today’s corporate growth strategies. And while most M&A deals start well, far too many fall short on delivering their expected benefits. In fact, the number of troubled M&As has been estimated as high as eight out of ten.
One key reason that so many M&A deals fail to live up to expectations is that upper management often underestimates the complexity and scope of integrating the two companies’ disparate technologies and workflows.
From a C-level perspective, rationalizing and integrating technology systems are high-level tasks in the overall merger plan. For those on the ground, however, it’s an extremely difficult chore, integrating the highly complex and customized legacy systems that support each operating area, as well as hundreds of small but vital business processes. Integrating all of these moving parts often requires significant changes and unanticipated IT expenditures.
And now that M&A is a staple of many growth strategies, companies repeat their mistakes over and over again.
One of the best ways to position your company for growth – especially when that involves M&A – is to transform your organization into a service-enabled enterprise. Such an organization possesses flexible IT infrastructures that let you rapidly deploy and scale processes and applications while controlling costs.
As-a-Service infrastructure (including cloud) and applications are powerful M&A enablers. Modernizing or replacing old applications and running them in a cloud environment will ensure that your systems have the flexibility to scale and be integrated with other systems more easily.
And what about companies positioning themselves for acquisition? The strategy of transforming into a service-enabled enterprise works equally well for them. By embarking on an application modernization journey and adopting a cloud-based services approach, your organization can become more attractive to potential buyers.
With enterprise applications now available as a service, the arduous task of integration is no longer slow, capital-intensive and complex. And the merged enterprise will be far more financially nimble – a bright spot among the uncertainties that inevitably follow M&As.
By Dean Nelson, Managing Partner of IT Advisory Services, CSC Americas