Recently, one of our clients was acquired by a larger company in the same industry. Like any M&A transaction, it brought about the usual set of questions about the future, uncertainties and apprehensions. Will our current projects be put on hold? What happens to the pipeline of new initiatives that the client has put in place? Which technologies will survive? While the possibility of a short-term impact on immediate plans was evident, I saw BPM for M&A – a large opportunity to play a significant role in ensuring this acquisition to be a success in the long term.
Almost every month, we all hear about interesting M&A stories. Often, both companies are in the same industry leveraging synergy and lower cost for rapid growth. Sometimes though, the company being acquired is in a completely different industry, and yet promises to be a great match for the parent company’s strategic vision.
Irrespective of the industries, size and scale of the merged entities, I think the secret behind the success of an M&A lies in aligning and streamlining business processes of the merged organization. Peter Drucker says, “Respect the Business, Products, Customers and Values” of each other in an M&A transaction. I cannot agree more. Ensuring that both sets of customers face the minimum disruption has got to be the top priority for any organization involved in M&A, and, in my opinion, that means aligning the business processes of both entities ASAP.
How is that done easily? That is the key question. And my one-line take for an efficient process alignment is simple – Think BPM for M&A. Business Process Management. Right from the beginning.
Here are a few key areas where BPM can add significant value to the combined organization.
You’ll miss the point if you treat business processes as an afterthought. Any M&A needs a strong strategy much before the actual merger takes place, and it must include how business processes of the two companies are handled. In the pre-merger phase, it is essential that the key stakeholders from the two companies discuss this aspect thoroughly. As different companies have different ways of doing business, they must spend enough time to understand and discover these processes. The next step is to identify the best practices and standardize the processes.
A good BPM platform provides process discovery tools, which you can couple with process modeling, documentation, and process analysis. You can also put simulation to good use here, to assess the impact of changes to these processes and critical work steps. The collaborative process discovery, review, documentation, and creation of a shared repository of a discovered process can present a clear picture of what to expect post-merger. You can then chalk out a plan to ensure fast and efficient implementation with minimal business disruption.
Two merged entities most often than not, have a completely different enterprise stack (ERP, CRM, and other systems). It is impractical to rip and replace those with a single enterprise system. Too much investment and sweat has gone into customizing them to the organization’s requirements and rebuilding everything again is not an option at this stage. You need a way to consolidate business processes while keeping the underlying systems separate, at least until the time comes when you are ready to retire one of them in the medium-long term.
Using BPM for M&A allows you to think about a seamless business process without worrying about the underlying enterprise systems. With BPM, you can build a unified process layer on top of the disparate IT stack of the merged entities. BPM platforms provide complete visibility into business processes and can be leveraged to implement best practices quickly.
Read: The Evolution of BPM
We all know that the rationalizing of the enterprise IT systems cannot be done as part of the Day 1 Integration and must be spread out over a longer period of time. If we establish that the systems of records for both entities will remain as they are, and will integrate with the new business process layer of the combined organization, the transition can be much more streamlined.
Business rules are enterprise resources that define specific business aspects or constraints. They are mostly embedded into the code while automating business activities. The merger brings even more complexity to business rules as the merged entities could be operating in different business environments/markets/geographies/regulatory environments.
BPM allows the merged entities to externalize these business rules and provide flexibility to manage them without hard-coding. When the business rules are managed independent of business applications, the response to changing business needs is faster and more efficient. The centralized rule management with BPM helps create a valuable enterprise resource that evolves and matures over time.
Post-merger, things become hectic. Business, Products, Customers, and Values that Peter Drucker mentioned, become even more critical as the combined organization tries to deliver on the pre-M&A promise to shareholders as rapidly as possible. Meanwhile, processes are defined, tested, and deployed. The groundwork you do in consolidating business processes, rules and enterprise systems using BPM delivers significant business ROI in the form of faster integration rollout, fewer business disruptions and, hopefully, a better customer experience.
It’s important to measure the outcome of any M&A activity. Other than financial indicators, one primary indicator of this measurement is how well the business processes are performing with respect to the key business areas and business metrics. Using BPM for M&A provides deep insight into process execution through a robust set of process and business metrics to give you a clear view of how business functions are performing after the merger. These BPM metrics provide an opportunity to continuously monitor and optimize the processes and improve your business agility.
With over 16 years in the BPM space, I have seen enterprises delighted with the process-centric approach and use BPM as a tool for successful process transformation. It is simple to understand and flexible to implement. BPM provides a productive link between business and IT empowering business users to make changes on the fly. In the modern business landscape, this benefit is significant, especially when you want to respond rapidly to the ever-changing business needs. This value proposition is even more relevant and significant in an M&A situation.
My take-away is simple. Any M&A is a huge undertaking and has potential traps for integration disaster. You can minimize the risk of failure and business disruption by early thinking and strategic planning to leverage the power of business-rules-driven BPM for M&A and ensure your mergers and acquisitions delivers value for your stakeholders in a timely manner.