Gauteng Business News

Send  Share  RSS  Twitter  18 Apr 2011

BUSINESS: Should You Merge Your Company and Your Systems?


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“The process of company acquisitions or mergers is complex by nature. One of the challenges faced is the decision around systems. A typical pattern is that the acquiring company replaces the systems and processes with its own,” says Kevin Phillips, MD of idu Software.

There are a few problems with this approach. For starters, any systems change on a large scale can take between six and twelve months. While everyone is waiting for the single system, information still needs to be shared and exchanged, which usually results in a large stack of reports being exported to Excel and e-mailed back and forth. During this period, information can get lost or incorrectly captured, and very often different people end up with different versions of the facts. The upshot is that not everybody has the same view of what is going on. This is not a recipe for good decision making.

Secondly, while most popular ERP systems are substantially similar in broad outline, there are however important differences in the details. As a result certain systems are better suited to specific types of business than others. What is perfect for the acquiring company may not be a good fit for the new acquisition.

Then there is the third problem: The impact of changing systems on the incumbent staff i.e. people issues. Morale is always fragile in the wake of a merger or acquisition and there is inevitably a lot of apprehension and suspicion. Changing systems removes a pillar or foundation stone that incumbent staff cling to like ship wreck victims to a life raft. This is the one area where they feel they can add value to the new owners and its removal frequently accelerates the loss of staff. There is a risk of losing the most valuable staff in the acquired company during the period of uncertainty, as the first ones to leave will typically be those who can most quickly get good jobs elsewhere. Those who can’t, will wait for retrenchment packages.

There is an alternative. Keeping a familiar system running will not only promote a far greater sense of security, it has a better chance of maintaining productivity. And there is no need to sacrifice the easy exchange of information: Plenty of tools on the market will read the underlying data from both ERP systems and merge it quickly, seamlessly and accurately into a single unified view. It’s quite possible to get this single view within days or weeks, without going through the pain and expense of a massive system migration.

This way you can keep both businesses running in parallel, and take the time to see clearly where a systems change might actually be useful.

The most common reason to buy a business as a going concern is that it’s a good business: And usually good businesses are built on some combination of their processes and their people. Mess with either, and you may kill the very thing that made the acquisition attractive in the first place.

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