Mergers and acquisitions (M&A) are strategic tools for organizations seeking growth, diversification, and a competitive advantage. These transactions enable institutions to access new markets, technologies, or product lines quickly and provide economies of scale, operational efficiencies, and synergies that organically grown businesses might take decades to develop.
By acquiring or merging with other entities, organizations can eliminate competition, increase market share, and enhance shareholder value as part of an overarching growth strategy. However, at the heart of a successful M&A lies the ability to swiftly integrate and optimize processes across departments in old and new organizations.
Mergers, acquisitions, and divestitures are peppered with (often hidden) challenges that can derail even the most meticulously planned strategies.
A friend of mine famously owned a T-shirt that said, “Hell is other people’s code.” The same can be true of other people’s IT networks, with their monolithic legacy applications, outdated permissions, inconsistent data structures, dark and unpatched corners, a hidden litany of tech debt, compliance and regulatory potholes, unsupported proprietary tools written in the likes of COBOL (I’m lookin’ at you, banking industry), and inefficient but institutionalized manual components.
Data consolidation challenges include wrangling disparate data formats, aligning differing data structures, and managing the potential scale of the data, not to mention the inevitable security issues. Then, once the business merger is underway, there’s the possibility of redundancy and inefficiency from overlapping workflows. It’s not going to help that some of the people who’ve maintained these networks may be the victims of “talent redeployment” or embrace retirement during the consolidation process, taking their knowledge with them.
And somehow, the unknown has to fit with your current systems at a speed and accuracy that will cause minimal friction and downtime for both organizations. So, yeah, good luck with that.
To circumvent these hurdles and ensure a smoother transition and integration, process orchestration and process automation are the twin pillars upon which smart institutions build post-merger IT success.
Streamlining due diligence
Due diligence is a legal term meaning the reasonable steps a prospective buyer takes to prevent committing a tort or offense when appraising a business to ascertain its assets, liabilities, and commercial viability. During due diligence, time is of the essence. Orchestration tools can make company-wide changes in hours, even minutes, instead of weeks, even months, rapidly gathering and consolidating data from disparate sources, allowing for a quicker, more accurate analysis. Automated systems can perform initial compliance checks, flag potential issues early in the process, and allow for swifter adherence to regulatory standards.
Harmonizing systems and processes
Post-acquisition, disparate systems need to be integrated or rationalized. Orchestration can prioritize systems and identify which are mission-critical and should be integrated first. During data migration, automation and orchestration can be employed to transfer data between systems accurately and efficiently.
Orchestration tools can also help to model new, unified processes that take the best from both entities. Using cross-functional team workshops, it is possible to map out the processes needing integration and test how integrated processes will work in a controlled environment before full-scale roll-out.
Accelerating post-merger integration (PMI)
Rapid standardization of business processes across merged entities is crucial for operational efficiency. It is possible to use orchestration to enforce industry and regulatory best practices across the board for best practice implementation.
In addition, implementing feedback loops to refine processes over time promotes continuous improvement and process orchestration can indirectly support cultural integration by providing clear, consistent workflows and cultural alignment.
- Why not automate the rollout of training programs to bring teams up to speed on new processes and use centralized communication tools to keep teams aligned and informed?
Below are some of the common negative issues encountered during business mergers, acquisitions, and divestitures, along with how process orchestration can address them:
Legacy systems
Inherited outdated systems can be incompatible with modern technology, hindering integration. Process orchestration can facilitate the gradual phasing out of legacy apps by bridging the gap with middleware, ensuring continuity while new systems are brought online.
Outdated permissions structures
Mergers often uncover convoluted permission systems that are difficult to manage and secure. A centralized orchestration system can streamline permission management, ensuring access rights are correctly assigned and updated across the combined entity.
Unpatched IT
Unmaintained or forgotten segments of IT infrastructure can pose significant security risks. Process orchestration and automation tools can automate such vulnerabilities’ discovery, reporting, and updating, ensuring they are patched and brought under active management.
Monolithic tools
Large, unwieldy tools can be challenging to integrate and may not meet the agile needs of a newly formed entity. Process orchestration can facilitate the decomposition of monolithic systems into microservices, allowing for more flexible and scalable technology stacks.
Manual processes
Manual processes are slow and time-consuming, error-prone, and often unnecessary. They need to scale better, ultimately leading to inefficiencies and increased risk. Automating manual methods through orchestration reduces human error, increases speed, and frees up valuable resources for more strategic tasks.
Inconsistent data structures
Differing data schemas and formats can complicate data integration and analysis. Process orchestration can manage data transformation and cleansing, ensuring uniformity and accessibility of data.
Redundant processes
Overlapping processes from merged entities can result in redundancy and inefficiency. Orchestration tools can identify and consolidate redundant processes, streamlining operations and reducing costs.
Cultural misalignment
Different corporate cultures can lead to resistance and a lack of cohesion. While primarily a human issue, process orchestration can support cultural alignment by standardizing workflows and communication, thus setting a foundation for unified practices.
Compliance and regulatory challenges
Merged entities must navigate a complex web of regulatory requirements. Process orchestration can automate compliance checks and reporting, ensuring the newly merged entity meets all legal obligations.
By addressing these issues through process orchestration, organizations can not only avoid the pitfalls associated with M&A activities but can also lay the groundwork for a more agile, efficient, and competitive business.
Automating for agility
Consider the case of a global telecommunications merger in which two companies with distinct legacy systems and complex compliance requirements had to unify operations.
By deploying process automation, they achieved a 30% reduction in data reconciliation times and a significant decrease in compliance-related errors. Process orchestration provided a framework that streamlined integration and supported the continuous evolution of their business processes and customer experience.
Process orchestration and automation are not just tools for efficiency; they are the enablers of a strategic vision in the M&A challenge. By embracing these technologies, businesses can confidently navigate the complexities of M&A, ensuring that the promise of synergy is not just a theoretical concept but a tangible reality.
Camunda’s cloud-friendly BPMN engine swiftly orchestrates microservices, offering centralized control for easy tracking and managing intricate workflows. Our Operate feature facilitates error recovery, while Camunda’s agility allows for rapid adjustment to process changes, accelerating the journey from concept to production in situations like mergers and acquisitions.
If you’d like to know more, please drop us a line for further information and take a no-obligation trial.
Start the discussion at forum.camunda.io