Traditionally, the mergers and acquisitions (M&A) market isn’t one to embrace uncertainty. In fact, the one thing that organizations don’t want when embarking on M&A strategies is a mercurial and uncertain economic outlook. And yet, the past year has seen numerous leading companies take the M&A bull by the proverbial horns and double-down on their M&A strategies. Companies such as Microsoft, Apple, Amazon, and Google have been actively acquiring throughout the pandemic – as CB Insights points out, Apple purchased eight companies and Microsoft bought seven.
These bold M&A strategies are not the only ones. EY Global Consulting found that the global rebound in M&A value has been stronger than anticipated with strong growth set to continue well into the last half of this year. A view shared by financial firm Morgan Stanley that said, "All the elements are there for an active M&A market in 2021."
It is all about momentum. Momentum that’s essential to economic growth and the soothing of turbulent financial waters and the shifting of sands back to a level of pre-pandemic normalcy. But it is also about data.
Data systems are often the last thing that companies think about when they’re undertaking M&A; an item on a checklist far down the priority ladder. It is also a critical function that can have a significant negative impact on M&A success if it isn’t planned for, managed, and approached properly.
How do your data systems work? Do you have a very specific log-in protocol? What are your multi-factor authentication (MFA) requirements? How will colleagues cross-collaborate across disparate systems?
These questions can make all the difference between a successful integration of systems and applications, and one that hits the bottom line with reduced productivity, higher overheads, and limited functionality. If legacy systems are unable to integrate then workflows will be complex, communication limited, and redundancies plentiful. And, to add further fuel to the complex fire, systems that are not smoothed across multiple organizations are more likely to introduce unexpected security vulnerabilities that could cost the business in reputation, fines and customers if left unfound.
Data consolidation and automation has the power to translate M&A inefficiencies into a long-term success story, but this is only achieved with a clear modernization strategy, simplified consolidation planning, and intelligent third-party collaboration.
Modernization can feel quite daunting for the average organization. Technology is constantly changing, evolving its capabilities and shifting the goalposts. An investment purchased today, is suddenly obsolete a few months from tomorrow. There is a constant balance between CAPEX and OPEX, between what’s essential optimization and what’s just an expensive fall for hype, smoke, and mirrors.
According to McKinsey, modernization is critical to ensuring that an organization isn’t hamstrung by the limitations of legacy technology, but can be achieved intelligently with careful approaches that are balanced against cost, strategy, and existing investments. As the research firm points out, if companies don’t modernize in an attempt to minimize costs and sweat existing infrastructure, they run the risk of losing "opportunities to embrace more efficient and more innovative ways of working through digitization.”
If legacy infrastructure is left to creak onwards within acquired companies, it can potentially limit their agility and their scope for innovation and growth. This will reduce the value of the acquisition over the long and the short term, and introduce an expensive problem further down the line. By implementing a clear modernization strategy, organizations can enhance infrastructure across global operations incrementally, intelligently. This ensures that expenditure is minimized for maximum gain.
Data systems are the first, and perhaps most challenging, step is to unpack how the organization can simplify existing infrastructure so that any investment into modernization is done from a point of clarity. This requires a comprehensive audit of existing infrastructure across all acquisitions and satellite organizations for complete visibility into technology, applications, and operating policy.
With a clear playing field, you can then determine which systems are the right fit for the business and how to optimize them using a cohesive application management strategy. A recent post on Hosting Tribunal unpacked a plethora of statistics that underscored the value of cloud and strategy, but the most relevant is the one that points to an average of 15% saving on data management spend with a clear application management strategy.
When acquiring fresh business through a rigorous M&A strategy, make sure that your data systems are visible throughout the M&A process. This will significantly improve operations, reduce culture shock, enhance productivity, and deliver speed to return on investment.
Setting out on a new data integration and automation journey with each new acquisition can seem a daunting process. However, this is where third-party expertise and collaboration kick in. The right partner will help you assess your systems, unpack your data governance, unwrap unnecessary complexity, and shine a spotlight on areas of synchronicity.
Every step along this road as you explore a modernized, integrated, and intelligent infrastructure is one towards an organization that’s embracing the full value of digital transformation. With the right partners, you can ensure that your investments are future-proof, relevant, scalable and elastic, offering you the right tools to streamline operations and maximize your investment value. And importantly maximizing your investment both into technology and new companies.