Mergers and acquisitions: the information systems integration puzzle

Every quarter in France, around 750 M&A transactions take place in all sectors and involving companies of all sizes. Tiffany by LVMH, Fiat Chrysler by Peugeot, or Grand Vision by Essilor Luxottica, to name only the largest, are all merger operations between companies that have made the headlines. These operations are often times of restlessness for both the acquired company and the acquiring company, a time when every aspect of these companies must be scrutinized to achieve the best possible result. The success of mergers & acquisitions often depends on the ability of management teams to handle all the dimensions of the operation, from the most obvious to the most subtle.

Indeed, once the financial and legal part has been completed, the much more critical and tedious part of the integration between the two former companies begins, in order to form one coherent and efficient company: the identity of the new company, the process of the new structure, the staff of the new organization are all heavy decisions and trade-offs to be made.

Then, a new challenge comes into play, which must receive the greatest attention, the integration of the two Information Systems (IS) of the two former companies. Indeed, it is almost impossible for two IT ecosystems to integrate agilely with each other. This would be even more true if the new partners had invested their time in heterogeneous IT solutions, which sometimes aim to create an exclusive ecosystem, deliberately rejecting exogenous elements.

The integration of IT ecosystems can be even more complex when each of them has strengths and weaknesses in certain areas, or when they have specific features that are comparative advantages in certain businesses or markets. No IT manager wants to announce the abandonment of a specificity or feature that represented a competitive advantage or that had enabled a vital customer for one of the companies behind the merger to be won.

The headache of defining the company’s new IT architecture then begins.

Once the new IT architecture has been defined, it must be given new meaning. By defining its evolutionary trajectory for the coming years, based on the new expectations of the market, customers and the ecosystem. And last but not least, companies need to quickly regain control in terms of identity and access management. Indeed, access rights to the different applications of the two former companies are often temporarily superimposed to guarantee business continuity and employee access.

But these overlays can be dangerous or ineffective if they are poorly managed and therefore deserve to be considered. We had a perfect example of this when we implemented the Kleverware IAG solution at one of our key account customers. Fifteen years after a merger of two companies, we realized that the rights models still accounted for many disparities in the access given to employees occupying the same position but coming from different structures.

When integrating IS from several hundred applications, the task is bound to be colossal. All the more so because, unlike a well-established company, the business and process environment itself is still in motion. So sometimes it is necessary to determine who should have access to what within the information system.

The most effective approach to this type of situation is to go step by step, producing visible results as soon as possible. Effective tools are available on the market. They can be deployed quickly without disrupting operations. They allow to synthesize very heterogeneous sources and to quickly produce the first access maps. These solutions can be lightweight, adaptive and scalable for controlled identity and access governance.

 Written by Arnaud Fléchard, CTO of Kleverware

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