ERP success during an M&A transaction - part 1

You are in the middle of a large ERP implementation when business leaders decide to acquire a large, similarly-sized business. You will need to task the current ERP project resources with facilitating design changes and handling change management, as well as other project deliverables across the newly integrated business.

Sound challenging? It may seem that way at first, but it doesn't have to be.

There are a few key points to consider when implementing ERP in the midst of a large acquisition. Dedicating time to coordinate design validation sessions between the initial business process and technology design (blueprint phase) and the current design of the acquired company is a critical success factor in order to adhere to the stringent timeline for most ERP implementations. This may include potentially selecting the acquired company's ERP system as it may better fit the needs of the newly integrated business. Additionally, it is important to ensure the best resources from both businesses are aligned with their appropriate project roles in order to optimize design and future success of the new company.

Secure buy-in early

Both business operations and technology integration should remain a focal point when facilitating design validation sessions. It is imperative to document business processes from both organizations, discuss synergies among key business process team members, and determine which business processes are the best way forward for the new business. The business process design will ultimately drive how well the systems work together, and therefore the correct ERP system to select. Once the decision to continue with the current ERP system or select the alternative is made, coordinating technology demonstrations to acquire business buy-in can help improve morale and make behavioral changes needed in the long term. Thorough review of business operations should be evaluated and documented. This includes but is not limited to procurement, production planning & execution, warehouse management, logistics, sales, and financials. Technology strategy processes and product life cycle management should also be validated across the integrated business. Don’t be afraid to abandon obsolete business practices if the acquired company has more optimized business process procedures. Depending on what phase of the project is underway during announcement of the acquisition, it is important to understand if key business applications should be interfaced with the acquired company’s applications or consolidated to ease processes. Technology infrastructure should also be evaluated across both companies to streamline and ensure a scalable process is in place.

Don’t underestimate the importance of incentives

Evaluation of team members’ benefits and incentives are important as uneven pay structures across businesses may reduce morale and team efficiency. If, for example, a shop floor worker has transitioned to a project team member role, incentives and pay should be adjusted to meet the new workload requirements and expectations on the project team (longer hours, travel requirements, weekend work, etc.). As the project team is being reformulated, thorough interviews and skills assessment is necessary for all interested team members. Also, it is important for leadership to recruit key individuals that are known assets to the business – remember the system you build will be relevant and impact day-to-day business operations for years to come.

Make yourself visible and accessible to all levels of the project

It is also critical for all members of the program management team to remain visible to the project team throughout all phases. Companies often underestimate the impact this seemingly simple act can have on the overall project team in terms of morale and optimism that the integration and ERP implementation will be a success. Some influential actions may include:

• Being present on site during go-lives

• Having a speaking role at internal meetings

• Walking around the project area asking team members how the project is progressing ("boots on the ground")

Implementing an ERP system in the midst of a large acquisition can seem daunting at first; however, with proper planning, resources and communication, companies can ensure a successful outcome. Look for Part 2 of "ERP Success During an M&A Transaction" regarding the ERP scalability analysis of both companies' ERP systems.