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Mergers and Acquisitions - Oracle SaaS to the rescue!

Mergers and Acquisitions (M&As) are time-tested strategies adopted by companies small and large to strengthen their market position and beat competition. In this process, parents usually acquire or merge with entities that are smaller or larger than themselves or of comparable size as theirs. Companies that get acquired could operate in niche areas, possess rare skills and be winners in their business arena. For the consolidation to be successful and yield results, business objectives & strategies need to align/complement, corporate/work cultures need to harmonize and business process synergies need to be realized

After the transaction...

  • The hardest part of M&As is to make the deal work after the consolidation transaction has been completed. Very often, the success of the deal depends on how well the two companies integrate while maintaining day-to-day operations.
  • One of the studies on M&As by a global management consulting leader revealed that day-to-day business operations are severely affected at the expense of over-focus on cost cutting and other integrations

  • Successful integration in the IT arena is a key determinant of the consolidation activity's success

I came across an interesting proposal that was made for such a consolidation. The acquirer was a leader in the discrete manufacturing space serving various industry segments with annual sales of over USD 15bn and the target was a relatively much smaller/niche player with annual sales of USD 2mn in a geography in which the acquirer did not operate. Since the target company was small enough and did not have complex business processes, the acquirer (running eBS) promptly advised the target to embrace and adopt Oracle SaaS so that they could reap the benefits of alignment to globally benchmarked business processes/practices of the acquirer and still not incur the same level of cost & time that the implementation and maintenance of a typical on-premise ERP application may involve. For example - in this case, the acquired company was in a new geography that the parent did not operate in - this meant integrating operations in these countries. The merger/acquisition could also mean changes to Chart of Accounts (COA) and Oracle SaaS can come in very handy in these situations by helping achieve seamless alignment. Another key dimension was integrating Oracle ERP Cloud with on-premise eBS. Available integration options include - data extracts, spreadsheet loads, file based data import (FBDI), usage of web-services etc. Depending on the nature and criticality of the underlying business requirements, the appropriate integration method can be used

Oracle SaaS has compelling characteristics such as enhanced scalability/agility, ease of doing business and reduced cost of ownership. Supply chain operations are increasingly becoming global and extended with several associated risks. Embracing Oracle SaaS can help target companies achieve challenging business objectives that the parent might have envisioned

System & IT related challenges in M&As typically include ensuring integration between disparate systems, ensuring co-existence of systems and processes of varying maturity levels, evolving solutions that are globally applicable for the organization etc. Oracle SaaS can act as an effective partner in ensuring that day-to-day operations remain on track thereby keeping customers, vendors and other key stakeholders in good humor. It can also help employees remain focused on business operations, allowing senior managers to focus on other aspects necessary for the success of the consolidation

Though there are a multitude of factors that determine the success of consolidations, these interventions can help align IT objectives of entities involved and in-turn catalyze/contribute to the success of the consolidation

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