Customer Relationship Management: Mergers and Acquisitions

One of the key strategies for growth is Mergers and Acquisitions of companies and today, I would like to present my perspective on typical MDM challenges an enterprise faces in Merger and Acquisition scenario. One of the critical activities in an M&A scenario is to take stock of the data hubs present in each of the acquired companies and to weigh the options finding the strengths and weaknesses of the data hubs. Next step is to strategize, plan and consolidate these hubs into a single hub or re-architect as multiple hubs based on specific need like a Line of business requirement. The next implementation activity is data migration; define a unique identifier tying across all the systems, data integration and retirement of legacy applications.

Some of the typical challenges that I believe could be are listed below

1. Presence of duplicate CDI/PIM/MDM hubs - The acquired company could have a MDM hub on its own. The challenge is to store the same entity (customer, product) in multiple hubs and hence the difficulty in identifying the complete customer portfolio.

2. Lack of common unique identifier– Each hub will have its own unique identifier for the entity and hence leading to the unavailability of the golden record. There is a strong need to establish a common identifier across the hubs to have a seamless transition.

3. Data & Application Integration challenges - Disparate technologies across parent and acquired enterprises... for instance – It is challenging to integrate these systems with SOA and AS400 technologies. Because of such variant systems often the data delivery is near real time versus real time which might be attribute delayed data delivery for decision making.

4. Data consolidation challenges– Attributed to disparate data structures, complex mapping and transformation rules, match/merge and survivorship rules is quite difficult in defining data consolidation strategy in a typical M&A scenario

5. Data Governance challenges - Data ownership definition, lack of common data governance framework, lack of data quality metrics are few of the hindrances in M&A scenario

6. Change Management across the stakeholders to undergo the IT system transformation. Often in an implementation there could be a lack of complete involvement from the acquired company to the overall program goal for various reasons like cultural differences/working style/ staffing problems and things similar. One of the key challenges in change management is retirement of the existing hubs and managing the after affects.

In the next blog post, I will discuss about the possible solutions to address the above mentioned challenges.

Comments

Madhukar,
Agreed, M&A is a key driver for achieving synergetic growth (non linear growth) for an acquiring organization. Usually when two companies merge, the key focus is driven around business transformation and less on IT transformation. The acquiring organization will have to hasten the end to end business transformation exercise, so that value obtained by the CAPEX investment be realized within 1 to 1 ½ years. The shorter the better.

Within the business paradigm, it is usually related to consolidation of business operations (administration, sales and marketing, finance) into one seamless collaborative unit. Within the IT paradigm, it is usually consolidation of financial application, customer facing application (CRM) and marketing application. When these applications are discussed typically SOA is considered and sometimes a quick win data layer integration of critical application, with possible road map to sunset legacy applications.

Other areas would utilize an already existing hosted application. i.e. go towards a hosted application to support a quick win integration to support the M&A.

An MDM solution offers a quick start for an organization, to take the SOA route and also provides the flexibility for collating the customer, vendor and product data into a central hub. Alternately it allows developing process around smoother integration between diverse applications.

Great article.

Posted by: Jairaj Asok Kumar | August 27, 2009 9:07 AM

Hi,
This is one of the most relevant and challenging situations that organizations face today.

I wonder if any of the MDM vendors like IBM, Initiate, Siperian, Oracle offer any kind of ready made solution/template in such cases to narrow down all the possibilities listed in the blog?

It would be really handy to have a tool which takes all the user's inputs - number of systems, type of sources, no. of recs, no. of entities etc.. to then churn out a set of suggestions, akin to a DSS system.

This could be the next level of differentiator in the MDM space.

Posted by: Venkataraman.R | September 8, 2009 11:39 AM