Many companies do not realize successful economies of scale and resource synergies from a merger or
acquisition because they are unable to rapidly
consolidate disparate organizations and
business systems. For every day that passes
without true business integration, money is
squandered. In fact, a 2004 study by Huang & Kleiner reported
that in the first 4-8 months following a deal, productivity may be
reduced by up to 50 percent.
Organizations currently on or considering a Merger and Acquisition path will be tasked with bringing those companies together.
One of the most critical projects in this endeavor will be implementing the selected go-forward ERP (Enterprise Resource Planning) system. A properly executed onboarding strategy will enable
you to recognize ROI by leveraging the scale of the new organization, and capitalize on the synergies of the merger or acquisition.
“RAPID” in the title of
this article represents an
acronym and a framework
for executing a fast-tracked ERP implementation. RAPID is actually
an acronym within an
Reports - Reports include any business intelligence output, such
as: dashboards, printed reports, transactional information, and
external data sources. Cross-reference the current outputs to
existing reports or data displays/dashboards that you may already
have. If the information is not needed to conduct daily operations, then determine if it is necessary to strategically manage the
business. The cross-reference can serve as a navigation path for
the acquired or merged companies’ managers to find the needed
information. Also, if reports need to be written, or dashboards
created, this same list can serve as a work effort estimating tool.
Interfaces - Interfaces are any systems that may push or pull
information from the ERP. Examples may include EDI, Manifest
Systems, Credit Card Processing, Shop Floor Automation, and
Warehouse Management. You may need to purchase additional
RAPID Onboarding of Acquired
Companies To Your ERP
products or modules from your ERP provider, so the acquired company does not regress in process automation or efficiencies.
Conversions - This step should encompass all activities related to
data conversion or data transfer. As you are courting the prospective acquisition, and have a non-disclosure agreement in place,
request their product master data file. The acquiring company
may be sensitive to providing sales history, item usage, purchasing
costs, and sales pricing of the items, but you can reassure them
that this information is not necessary. You simply need to obtain
item IDs, item descriptions, product classifications, and vendors.
The greatest work effort required will likely be item master
rationalization. Item rationalization is referred to by many terms,
including matching, merging, or cross-referencing. The goal of
item rationalization is to cross-reference the acquired company’s item ID to your item ID, so that you have one item “master
record” across all branches, locations, and entities, allowing you
to best leverage your assets. Starting this cross-reference early in
the acquisition process will allow you to aggressively complete the
rationalization after the acquisition is finalized.
Similar to the item rationalization, you will likely need to
perform vendor/supplier and customer/ship to rationalization.
Also, rationalizing core data (sub-tables, dependent records, etc.)
is necessary to scale the business and report consistently across all
entities. Cross-referencing the acquired company’s product groups
to your current product groups will enable you to identify the
synergies of product types, and the additional product lines that
you may soon need to sell.
Enhancements - Any functional gaps between your current
ERP and the acquired company’s ERP should be fully documented, focusing on the impacts to your value stream. The acquired
company’s customer-facing requirements accommodated through
the functionality should receive the highest priority. Other functional gaps may be accommodated through your current standard
operating procedures. Ideally, extensive enhancements or modifications will not need to be pursued.
The near-term action items resulting from each meeting should be
tracked to completion. A project schedule is necessary for managing tasks, dependencies, resource allocation, and milestones. A
running list of action items is important to track short-term tasks
BY JON W. SNOW