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Technology is the backbone of a modern business, powering everything from day-to-day operations to customer interactions to product development. It’s so vital that more than a third of all mergers and acquisitions (M&A) have the express goal of improving the acquiring company’s technology stack.
During an M&A, IT integration is not just about ensuring that computer systems can communicate with each other or that data is consolidated. I’ve spent my career guiding companies through the intricate pathways of optimizing their enterprise and cloud architecture, and I’ve witnessed firsthand the potential pitfalls and triumphs of technology integrations. My role has been to ensure that M&A technology integrations are seamless and secure, and that they add significant value to the business. Most recently, I helped an acquiring company realize a 20% increase in operational efficiency and a 15% reduction in IT costs within the first year post-integration by managing each aspect of the technology integration.
The most important thing I’ve learned is that companies seeking to acquire or merge with another business must meticulously align their technology strategies with business objectives, which will ensure clear governance and drive digital transformation initiatives across various business units.
This might involve adopting more efficient workflows, gaining new insights from combined data analytics, or launching innovative products and services that were impossible before the merger. Achieving optimal IT integration may include investing in scalable cloud infrastructure, employing flexible and responsive development methodologies, or prioritizing cybersecurity and data privacy. These components have long-term implications for the organization’s resilience, agility, and ability to pursue new opportunities.
Done properly, an IT integration can define the future direction and potential of the company. However, according to Bain and Company, 70% of systems integrations fail at the beginning, not the end, strongly suggesting that it’s essential for acquiring companies to approach the deal with a robust M&A IT integration strategy already in place.
Without such a roadmap, the target company’s unique advantages and innovations could be diluted or wholly lost—especially when the acquiring company is pursuing the M&A for other strategic reasons and fails to recognize the value of leveraging the target’s technology. A haphazard or suboptimal integration could result in inefficiencies, increased costs, and lost competitive advantage. And for companies pursuing a deal for the explicit purpose of acquiring the target company’s technology, a failed integration could spoil the deal altogether.
A Structured Approach to Technology Integration
A successful M&A IT integration enables a merged entity to leverage each organization’s best technologies and practices, potentially transforming its capabilities and market position. Ultimately, the benefits include increased agility, improved efficiency, and the ability to innovate faster than competitors.