Navigating The Complexities Of Integration In Post-Merger Businesses
By Max Kryvoshlyk Forbes Councils Member Oct 24, 2024, 07:30am EDT
Max Kryvoshlyk is Founder and CEO at FlexMade, a Leader in Custom Software Development.
With 18 years of running a software development company, I've worked with clients across various industries, including retail, telecommunication and online media. Mergers and acquisitions are common growth strategies in these domains. Although these deals offer immense growth potential, they often have a hidden cost.
One of the most persistent and overlooked challenges is integrating systems and processes across newly merged companies. In theory, merging two businesses should create efficiencies, but in practice, this is often hindered by fragmented systems left in place long after the deal is closed.
1. The Issue With Fragmented Systems
After an acquisition, companies often focus on rebranding, aligning marketing strategies, and announcing the merger to customers and shareholders. What's less emphasized, though, is what happens internally. It's common to see the external brand unified while internal processes and legacy systems are left fragmented. This can result in different parts of the business operating in silos, using incompatible tools that don't communicate effectively.
I've encountered this challenge several times while working with large organizations. After developing tailored software solutions for one division, we found that the success couldn't be replicated in other company areas because they were operating on entirely different systems. What could have been a company-wide improvement was limited by incompatible infrastructure.
2. Why Companies Resist Integration
There are several reasons why businesses hesitate to fully integrate their systems after an acquisition:
Risk Mitigation: Many companies fear that switching to new systems might disrupt current operations. They feel that legacy systems, while outdated, are a safer option to maintain; after all, they've been reliable over the years.
Cultural Resistance: Acquired businesses tend to have their own established cultures and workflows. Forcing a standardized system on a newly merged company can lead to pushback. People are generally wary of change, especially if it affects how they've always worked.
Cost Concerns: Integrating a new, unified system is expensive in terms of costs and resources. Many companies are reluctant to invest in this journey, especially when the immediate benefits aren't always clear.
3. The Consequences Of Fragmentation
When companies don't consolidate systems, they can lead to a patchwork of workflows and technologies that are difficult to manage. This fragmentation can result in inefficiencies, increased operational costs, and missed opportunities for synergy. Employees may struggle with inconsistent processes, leading to decreased productivity and morale. Moreover, the lack of integration can hinder the company's ability to scale and adapt to market changes effectively.
4. The Case For Integration
Integrating systems and processes post-merger is crucial for realizing the full potential of the acquisition. A unified approach can enhance operational efficiency, improve data accuracy, and foster better communication across departments. It enables the organization to leverage combined strengths, streamline workflows, and provide a consistent experience for customers and employees alike. Ultimately, thoughtful integration lays the foundation for sustainable growth and innovation.
5. How To Approach Integration
To effectively integrate post-merger, companies should:
- Conduct a thorough assessment of existing systems and processes to identify redundancies and areas for improvement.
- Engage stakeholders from both organizations to ensure buy-in and address cultural differences.
- Develop a clear integration roadmap with defined goals, timelines, and responsibilities.
- Invest in change management to support employees through the transition and minimize resistance.
- Monitor progress and adjust strategies as needed to address challenges and capitalize on opportunities.
6. Final Thoughts
Post-merger integration is a complex but essential process for achieving the desired outcomes of an acquisition. By prioritizing system and process alignment, companies can unlock efficiencies, drive innovation, and position themselves for long-term success. While challenges are inevitable, a strategic and inclusive approach to integration can transform potential obstacles into opportunities for growth.
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