M&A Success: Why unpacking the tech dynamics is mission critical
In recent years, the corporate world has shown resilience to pandemics, geopolitical conflict and economic shocks. The appetite for growth is recovering, and in the first quarter of 2024, Merger and Acquisition (M&A) activity increased by 58% in Europe compared to the same period last year.
M&As tend to bring together diverse product portfolios, operating models, and critical resources such as IT systems and the talent pool. The integration, and rationalization of all of these parts is where businesses have to tread carefully to ensure the best outcome is delivered.
In these scenarios, seamless alignment between a business’ technology strategy and its business goals is non-negotiable. IT leaders were once viewed as just the driver of a business’ IT function, but today they are so much more than a siloed function of the business working quietly in the background. Today IT leaders need to be transformational, becoming the real bridge between business goals and IT infrastructure in all its increasing complexity. Let’s dive into the key tech twists and turns involved in the M&A process.
Director at Software AG.
The landscape today
Complexity increases with more software being added to the tech stack. At enterprise level alone, businesses saw their average number of applications jump from 843 in 2021 to 1,061 in 2023, according to Salesforce. The pace of industry regulation compounds the tech sprawl and forces businesses to be on the front foot when it comes to optimizing their enterprise tech.
Regulation like the EU’s Digital Operational Resilience Act (DORA) requires businesses to demonstrate full visibility into their IT operations, for example. This includes full oversight of how risks and controls are connected to the IT estate.
Tackling a tricky trifecta
When confronted with a trifecta headache of a bulging tech stack, merging businesses units with different ways of working and evolving strategic corporate needs, the only sane thing to do is to streamline operationally. To do this you need a powerful roadmap and that can’t happen without a powerful 360-degree view of your IT landscape. This is where SPM comes into its own.
It can also help you to identify the legacy or foundational applications and play a key role in planning both modernization roadmaps and your pathway to improving business resilience. SPM delivers value to IT leaders but its benefits ripple across an entire organization. It delivers that much sought-after visibility of the application portfolio, but its impact extends far beyond. Through SPM organizations can easily identify de-duplication opportunities through analysis of business processes and important business services delivered by the application portfolio.
Make IT easy for non-technical staff involved in the M&A
While SPM allows businesses to have a clear picture of the redundancies which lie in the acquirer and acquiree’s IT portfolio, the usability of SPM tooling has an important impact on the delivery of a M&A process.
As business functions become more digital, IT teams could lose critical jurisdiction over the applications powering the business. Businesses must do battle against the technology skills gap – a phenomenon that has seen 93% of UK businesses report an acute IT skills shortage according to Forbes Advisor. The key takeaway here is that the technology should be easy to use for even non-technical staff. Always remember a company’s IT strength, including its cybersecurity posture, is only ever as strong as its least tech-savvy employee.
This means features such as intuitive user profiles, streamlined navigation, and an articulate information search give more people transparency into the IT landscape and the ability to participate in the strategic planning and management activities around the digital product and service portfolio.
Furthermore, innovation in the form of smart data workbenches and individually configurable views and reports let each user self-determine information content and format, reflecting the uniqueness of every person’s responsibility along the decision chain of enterprise M&As.
Saving technology costs while accelerating M&A timelines – Yes, please!
Various departments are consulted during a typical M&A program including legal, risk, compliance, HR and IT. Technology is the bedrock for post-merger success because companies need to know two things. Firstly, that they will have technology portfolios they can count on and secondly that the technology will be run efficiently and effectively.
Having full visibility into all IT means companies understand which applications and processes can be retired, which are critical in terms of use, and which are vulnerable when mapped against licensing terms. This saves employee time, extra licensing and support costs and lays a path for business continuity and growth.
With full oversight of the portfolio, IT can also immediately safeguard critical applications, data and business processes. If danger strikes, damage limitation can be made active quickly, therefore it could reduce the cost of remediation and any regulatory penalties levied upon a business who falls short of the rulebook.
Don’t forget about the tech in the M&A process
As businesses continue to grow and evolve, effective SPM is vital. More complex IT landscapes require more sophisticated tools to manage and optimize them. IT investments can only be aligned with business objectives if there is full transparency. SPM technology plays a pivotal role in enabling organizations to assess their IT landscapes, identify potential vulnerabilities, and develop effective risk mitigation strategies.
Businesses need the right tools if they are to better anticipate and respond to changing internal and market needs, adapt more quickly to shifts in customer and competitor behavior, and gain a fast competitive edge, especially if they’re venturing into an M&A process.
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In recent years, the corporate world has shown resilience to pandemics, geopolitical conflict and economic shocks. The appetite for growth is recovering, and in the first quarter of 2024, Merger and Acquisition (M&A) activity increased by 58% in Europe compared to the same period last year. M&As tend to bring…
