M&A Success: Why Unraveling Technology Dynamics is Critical
In recent years, the corporate world has shown resilience in the face of pandemics, geopolitical conflicts and economic shocks. The appetite for growth is recovering, with merger and acquisition (M&A) activity in Europe up 58% in the first quarter of 2024 compared to the same period last year.
M&As often bring together disparate product portfolios, operating models and critical resources such as IT systems and talent pools. The integration and rationalization of all these components is something companies need to be careful about to ensure the best results are delivered.
In these scenarios, seamless alignment between a company’s technology strategy and its business goals is non-negotiable. IT leaders were once seen as just the drivers of a company’s IT function, but today they are so much more than a siloed function of the business that works quietly in the background. Today, IT leaders must be transformational and become the true bridge between business goals and IT infrastructure in all its increasing complexity. Let’s dive into the key technology twists and turns involved in the M&A process.
The landscape today
Complexity is increasing as more software is added to the tech stack. At the enterprise level alone, companies saw their average number of applications increase from 843 in 2021 to 1,061 in 2023, according to Salesforce. The pace of industry regulation is exacerbating the tech sprawl and forcing companies to get ahead of the curve when it comes to optimizing their enterprise technology.
For example, regulations such as the EU’s Digital Operational Resilience Act (DORA) require companies to have full visibility into their IT operations. This includes full oversight of how risks and controls are connected to the IT estate.
Tackling a Tough Trifecta
When faced with the trifecta headache of a bulging tech stack, merging business units with different ways of working, and evolving strategic business needs, the only sensible thing to do is streamline operations. To do this, you need a strong roadmap, and you can’t do that without a powerful 360-degree view of your IT landscape. This is where SPM comes into its own.
It can also help you identify legacy or foundational applications and play a key role in planning both modernization roadmaps and your path to improving business resilience. SPM delivers value to IT leaders, but its benefits trickle down throughout an organization. It delivers that much-needed visibility into the application portfolio, but its impact extends much further. Through SPM, organizations can easily identify de-duplication opportunities through analysis of business processes and key business services delivered by the application portfolio.
Make IT easy for non-technical personnel involved in the merger or acquisition
With SPM, companies get a clear picture of the redundancies in the acquiring party’s IT portfolio and the acquiring party. In addition, the usability of SPM tools has a significant impact on the execution of an M&A process.
As business functions become more digital, IT teams may lose critical jurisdiction over the applications that power the business. Businesses must combat 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 from this is that technology must be easy to use for even non-technical staff. Never forget that a business’s IT strengths, including its cybersecurity posture, are only as strong as its least tech-savvy employee.
This means that features such as intuitive user profiles, streamlined navigation and clear information search give more people insight into the IT landscape and the opportunity to participate in the strategic planning and management activities surrounding the digital product and service portfolio.
In addition, innovation in the form of smart data workbeches and individually configurable views and reports ensures that each user can determine the content and format of information themselves. This takes into account the unique responsibility of each person in the decision-making chain of mergers and acquisitions within companies.
Cutting technology costs while accelerating merger and acquisition timelines – Yes, please!
During a typical M&A program, several departments are consulted, including legal, risk, compliance, HR and IT. Technology is the foundation for post-merger success, because companies need to know two things. First, that they have technology portfolios they can count on, and second, that the technology is executed efficiently and effectively.
Full visibility across all IT means businesses understand which applications and processes can be stopped, which are critical in terms of usage, and which are vulnerable when tied to licensing terms. This saves employees time, additional licensing and support costs, and paves the way for business continuity and growth.
With full control of the portfolio, IT can also immediately protect critical applications, data and business processes. If a threat is imminent, damage control can be activated quickly, reducing the cost of recovery and any regulatory fines imposed on a non-compliant business.
Don’t forget technology in the M&A process
As businesses continue to grow and evolve, effective SPM is vital. More complex IT landscapes require more advanced tools to manage and optimize them. IT investments can only be aligned with business objectives if there is complete transparency. SPM technology plays a critical role in enabling organizations to assess their IT landscapes, identify potential vulnerabilities, and develop effective risk mitigation strategies.
Companies need the right tools to better anticipate and respond to changing internal and market needs, to adapt more quickly to changes in customer and competitor behavior, and to quickly gain a competitive advantage, especially when embarking on a merger and acquisition process.
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