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A White Paper

Successful Mergers and Acquisitions Ensure Your M&As Through Strategic Use of Integration

Introduction

Integration: The Backbone of Any M&A

Ensuring IT Integration During M&As

Choosing the Right Integration Solution

Enabling Successful M&As With Robust Integration and BI

A Portfolio of Integration Solutions

Information Builders in Action: Real World M&A Successes

Conclusion

Table of Contents

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Information Builders1

Introduction

Whether friendly or hostile, acquisitions are highly complex projects that pose significant challenges to all involved companies. If not handled properly, combining companies can easily set the stage for failure. A recent KPMG study found that as many as 70 percent of mergers do not create notable shareholder value for the combined companies1. The majority of businesses involved in acquisitions did not experience the kind of significant accelerated growth they anticipated and failed to earn returns great enough to offset the cost of the purchase.

What obstacles do merging companies face? Culture clashes, lack of coordination among joint activities, conflicting priorities and policies, growing pains caused by rapid diversification, and poor cross-organization communication are some of the problems that may arise. One of the greatest challenges can be integrating disparate data and technology environments – a task that must be considered from both a short-term and a long-term perspective.

All parties have made significant investments in systems and applications, and each entity has generated a tremendous amount of vital business information that must be preserved at all costs. First, all of these information sources need to be linked to ensure automation of key processes and workflows, while providing executives with immediate visibility into operations across the entire enterprise. Then, companies must transform those separate and distinct architectures into one fully integrated infrastructure that supports company-wide operations, while maintaining the integrity of existing investments. Most importantly, the only way for a merged organization to meet its objective of rapid speed-to-market and achieve true economies of scale is by accelerating access and delivery of comprehensive, enterprise-wide information across the combined company.

In other words, it’s not just about integration. It’s the speed and efficiency in which integration projects can be completed in the short term, and the value integration solutions provide over the long term that will most impact the success of merged organizations.

In this white paper we will examine the importance of integration as part of any mergers and acquisitions (M&A) strategy, and discuss those factors that need to be carefully considered when defining and implementing an integration plan during and after a merger or acquisition. We’ll also provide valuable tips for choosing integration solutions and highlight real-world scenarios in which cutting-edge integration technologies were leveraged to ensure more successful M&As.

1. “Merger Watch,” The New Economics Foundation, Edition 7, 2005.

Successful Mergers and Acquisitions2

Every company today relies heavily on technology to support its mission-critical activities. When two businesses converge, systems that support their operations must be joined together to effectively and economically address the needs of the new, unified organization.

This can be difficult because technology infrastructures are highly complex, even in the smallest firms. Numerous software packages, ERP systems, databases, and even mainframe systems exist to support customer service, sales, marketing, finance, and other key processes. In spite of its clear importance, many merging businesses forget about technology integration or view it as an afterthought.

A 2007 study by Bloor Research reveals that IT integration is ignored in 79 percent of mergers

and acquisitions.2

IT integration in support of a merger or acquisition isn’t simply about standardizing the technology environment for the sake of cost-efficiency. It is about building a single infrastructure that facilitates synergy and best satisfies the business needs of the combined enterprise – without interrupting or negatively impacting day-to-day activities while that infrastructure is built. As various business functions are consolidated it will be difficult to ensure optimum productivity if staff members are using different systems, or if the information needed to enable execution of related activities resides in multiple, hard-to-reach places.

For example, although sales teams may continue to operate separately, chances are there will be one senior-level executive who oversees sales across the entire company. Without the proper integration in place, managing forecasts and pipelines can be a cumbersome process. Creating a single, company-wide pipeline may require gathering data from disparate salesforce automation systems, contact management applications, or even spreadsheets maintained on the desktops of each individual rep. This approach will not only waste time, it will also result in significant information accuracy issues, which can negatively impact strategic planning and the future of the merged entity. With the right integration foundation in place, along with complementary business intelligence (BI) technologies, sales executives can collect and consolidate vital pipeline information from the various data sources that exist across merged companies and analyze them through an executive dashboard.

Ensuring IT Integration During M&As Make the CaseThe first step is to build a high-level case to senior management in support of an integration initiative. Be sure to validate the need for integration from not only a technical perspective, but also a business one. Cite clear, compelling reasons why IT integration is needed, and what problems are likely to arise without it.

Demonstrate Its Feasibility and ValueMany companies shy away from integration projects – even when they’re as critical as they are

Integration: The Backbone of Any M&A

2. Lawson, Loraine. “The Importance of Integration During Mergers and Acquisitions,” IT Business Edge, 2008.


during mergers and acquisitions – because they believe they are complex, time-consuming, and expensive. Using a proof of concept can demonstrate to executives and other project sponsors how rapidly and cost-efficiently systems can be linked together and how easy it will be to make that information available to end users for reporting and analysis.

In addition to providing evidence that the project can be completed in an efficient and effective fashion, calculating anticipated return on investment (ROI), and showing the potential impact the integration project can have on the bottom line, will go a long way towards obtaining the needed senior management buy-in.

Define Short- and Long-Term Plans SimultaneouslyA properly planned integration effort won’t be just a quick fix. With the right strategy and solutions in place, integration initiatives will provide ongoing value for the foreseeable future. Clearly define how the plan will address imminent needs, then show that the technologies used in the initial effort can be leveraged on an ongoing basis to address emerging integration needs as the combined companies are completely blended and continue to evolve.

Choosing the Right Integration SolutionWhen it comes to mergers and acquisitions, most IT departments will spend an average of three to five years trying to reach previously achieved levels of technological efficiency, according to Aaron Zornes, founder and chief research officer for the CDI-MDM Institute.3 This does not have to be the case. With the right integration foundation, companies can address immediate requirements, while paving the way for broader and more strategic use of integration technologies in the future. To ensure that their integration solution will deliver value in both the short and long term, companies should look for the following:

Wide ReachM&As are likely to result in a slew of disparate systems – some old, some new, some common, and some proprietary. It’s also likely that new applications will be added to the environment at some point. The key to achieving true company-wide integration is to choose a solution with unlimited data access capabilities, so any data, in any source, can be easily retrieved at any time. This will not only ensure true, enterprise-scale integration across the newly consolidated entities, it will also protect all investments – current and future.

Comprehensiveness“Point” solutions are limited in the value they deliver and will likely lead to the need to buy additional tools from other vendors down the road. Experts agree that more complete solutions will give companies the ability to address tactical issues, while laying the foundation for more strategic integration efforts. Gartner suggests looking for “a full lifecycle solution that includes modeling, deployment, monitoring, and maintenance.4

3. Zornes, Aaron. “Customer Data Integration and M&A: Hang Over or Make Over,” Information Management Special Report, 2005.

4. Moyer, Kristin. “The Looming Failure of Post-Merger Integration,” Gartner, 2009.


Flexibility and ScalabilitySome integration solutions are simply Band-Aids, addressing quick integration fixes in a fast and cheap way that may, on the surface, be appealing. But integration is not a one-time endeavor – it’s an ongoing process. Tools like these are likely to render themselves obsolete once the initial problem is solved, and will need to be replaced when more sophisticated integration needs arise. Therefore, it is critical to select an integration solution that is simple and affordable enough to economically satisfy small-scale needs, yet powerful and flexible enough to allow for the effective execution of more complex and strategic integration projects.

Integrated Business IntelligenceOne of the greatest obstacles that executives must overcome post-merger is visibility. Until systems are fully integrated, obtaining a comprehensive view of the business and companies, across all divisions – will be extremely difficult. Only those vendors that offer business intelligence solutions, along with integration capabilities, can help companies involved in mergers and acquisitions to truly maximize the value of their data sources and information assets.


Information Builders offers a full range of powerful, cutting-edge integration and business intelligence solutions that can pave the way for more successful mergers and acquisitions.

The company’s iWay Software suite offers state-of-the-art solutions that are designed to facilitate enterprise-wide integration by linking together disparate information sources – streamlining and enhancing mission-critical business activities, while reducing costs and improving operational efficiency.

What truly makes iWay the ideal integration solution for companies in the midst of a merger or acquisition is its ability to rapidly and cost-effectively satisfy imminent needs, while offering maximum reusability to accelerate the achievement of more strategic integration goals in the future. For example, with iWay, the disparate systems that reside among merged companies can be quickly and easily tied together, without the time, expense, and necessity often associated with large-scale, centralized projects like enterprise application integration (EAI) and data warehousing.

These types of smaller-scale projects will then lay the foundation for higher-level initiatives in the future. iWay eliminates proprietary integration technologies and creates interfaces using simple, easy to understand terms. Existing integration infrastructure can be evolved in an almost unlimited number of ways – without the need to “rip and replace” – including service-oriented architectures (SOA), business process automation (BPA), business-to-business (B2B) integration, enterprise information management (EIM), and more.

A Portfolio of Integration SolutionsThe iWay Service ManagerThis secure, high-performance enterprise service bus (ESB) server provides a broad array of tools that enable the rapid assembly of both simple and sophisticated integrations, including A2A and B2B, from pre-built components. No complex code to write, no custom solutions to maintain, just powerful and seamless integration that effectively serves as the backbone of any SOA or event driven architecture (EDA). With Service Manager, newly merged organizations can leverage combined technology assets to achieve important goals, while realizing accelerated ROI and the lowest possible total cost of ownership (TCO).

The iWay Universal Adapter SuiteThis patented, market-leading suite of pre-packaged adapters quickly and seamlessly connects virtually any mix of information assets. The adapters address nearly any integration need, while eliminating hand coding and shielding developers from the underlying complexities that exist in both out-of-the-box solutions and proprietary systems.

As a result, merging entities can swiftly connect their IT infrastructures, providing unhindered visibility into enterprise data for better reporting and streamlined business processes as well as increased synergy across the merged organization.

Enabling Successful M&As With Robust Integration and BI


iWay adapters can rapidly and economically bring together:

Packaged applications such as ERP, CRM, help desk, salesforce automation, and other systems■■

Mainframe and legacy data, applications, and transactions■■

Data warehouses, data marts, and operational data stores■■

Unstructured content such as documents, files, and e-mail messages■■

Messages and transactions, including EDI formats, HL7, SWIFT, FIX, and ACORD■■

Pre-Built ComponentsiWay Software empowers companies to build business-to-business (B2B), application-to-application (A2A), and business-to-business-to-application (B2B2A) scenarios in the fastest and most economical way by providing a wide array of pre-built integration components. These robust components enable rapid, intuitive integration assembly via a set of user-friendly graphical design tools and allow for quick deployment to a run-time execution engine on any stand-alone environment supporting JVM or any Web application server. As a result, information assets can be connected, and critical processes and transactions can be automated, streamlined, and enhanced. And best of all, with iWay Software, there is absolutely no complex, cumbersome, and costly code writing required.

Once the dust has settled, and all merged and acquired entities have been assimilated, iWay can provide a solid framework for more advanced integration initiatives, including:

Business-to-BusinessiWay’s cutting-edge B2B and managed file transfer (MFT) gateway dramatically improves the way trading partners and related activities are managed. Cross-company transactions, as well as those spanning external exchanges, can be planned, executed, and tracked more efficiently and effectively than ever before.

Business Process AutomationWith a single, fully integrated BPA platform, iWay can facilitate fast, economical streamlining and automation of key processes and activities across an entire company or multiple companies – without the pitfalls associated with piecing together various tools and technologies from different vendors.

Enterprise Information ManagementiWay enables more than just enterprise-wide integration, it provides real-time EIM – access, enrichment, and management of any information from anywhere across an organization, regardless of where it resides or what format it’s in. Capabilities for data quality management and information delivery extend integration functionality to create an environment where information is complete, accurate, consistent, timely, and available at all times.

Comprehensive Business IntelligenceOnce all the technology assets from all merged companies have been integrated, Information Builders offers powerful, enterprise-scale business intelligence and performance management solutions that make accessing and analyzing that data faster and easier than ever before. With the WebFOCUS BI platform, line of business and departmental managers and their staff will have immediate access to real-time operational data, while senior-level executives can achieve complete, unhindered visibility into key activities and metrics across all combined entities.


Information Builders in Action: Real World M&A Successes

CotyWhen Coty, one of the world’s largest and most successful beauty companies, acquired some Unilever assets in July, 2005, it needed a fast, affordable way to align its worldwide logistics and warehouse operations and gain insight into all related activities. To achieve this goal, Coty had to implement a solution that would tightly integrate the two separate infrastructures, creating a single, unified, near real-time organization.

Since time and cost were both major constraints, the traditional approach to integration – which would require cumbersome and expensive manual coding – wasn’t an option. That’s when Coty turned to iWay Software.

iWay’s powerful integration technology was used to seamlessly link a highly complex architecture – SAP, JD Edwards, legacy ERP solutions as well as Oracle and DB2 databases – that was scattered across production plants in four countries and countless distribution hubs. Initially, because accelerated implementation was crucial, Coty took advantage of iWay Service Manager’s flexibility to quickly build an environment that provided full integration in just seven months. Then, shortly after accomplishing enterprise-wide integration, Coty planned to completely deploy Service Manager and provide the future-proof integration framework the company needed to realize its vision of a worldwide service-oriented architecture.

Today, thanks to iWay Software, Coty’s technology environment is not only fully integrated, it’s completely SOA-ready. And best of all, the company achieved full project payback within two short months, and a massive 400 percent return on investment in just six months.

Banco Bilbao Vizcaya ArgentariaBanco Bilbao Vizcaya Argentaria (BBVA) became Spain’s largest bank by expanding into new Latin American markets and European countries through mergers and acquisitions. In addition to the challenges that come along with M&A, the bank was faced with a dynamic economy and a rapidly changing regulatory environment. These factors made it difficult to minimize risk and streamline operations.

As the company grew to span two hemispheres and its team topped 10,000 employees, BBVA realized it needed a better way to handle reporting and analysis. With WebFOCUS, the bank was able to make vital business information readily available to more than 1,500 staff members, allowing them to measure productivity, monitor account trends, assess loan risks, and much more. Users can also analyze costs and profitability from multiple perspectives, including by branch, product, or account holder. Additionally, automatic alert capabilities notify key personnel when loan defaults occur.

WebFOCUS has eased the transitions associated with cross-border M&As, helping BBVA to better tailor its products for local markets, improve loyalty by identifying the best customers, and reduce financial losses due to an improved ability to predict which loan applicants pose the highest risk. The company believes that WebFOCUS’ ability to give staff independence and control has contributed greatly to its overwhelmingly successful M&A strategy.


Today, BBVA is a banking powerhouse across the European and Latin American communities. With the help of WebFOCUS, the company has been able to avoid some of the pitfalls of M&A-led expansion and can ensure fast, convenient access to vital information from varied software applications and incompatible databases.

TelusTelus, the second-largest Canadian telecommunications company, was born from the merger of several large corporate entities. While this consolidation made the company a major force in the telco industry with 25,000 employees, bringing together multiple companies resulted in a disjointed IT infrastructure consisting of disparate data sources. This environment hindered the access and analysis of vital business information and made it nearly impossible to obtain a cohesive view of field productivity.

Using iWay Software and WebFOCUS, Telus gathered field service information from various applications across the organization, consolidated it in a data warehouse, and made it available in the form of key performance indicators (KPIs) through a Web-based scorecard. Company management can now track and measure the effectiveness of Telus field personnel and take immediate corrective action when inefficiencies or problems arise. Since implementation, Telus has realized productivity gains of $1 to $2 million each month.

HexionWhen Hexion, a specialty chemicals producer that manufactures binder, adhesive, coating, and ink resins for industrial applications, brought four separate lines of business under one corporate umbrella, the result was a complex series of incompatible back-end technologies that made it difficult to exchange critical business documents with third-party trading partners. The only solution was to bring all these varied systems together into one cohesive infrastructure.

With iWay’s universal application integration platform and its ability to support multiple standards and connect to virtually any type of technology asset, Hexion has a fast, affordable way to construct new software interfaces. This has enabled the company to overcome three key challenges. The first was a lack of integration among internal applications and the separate instances of SAP running at each entity. The second was an inability to automate and control business-to-business exchange processes. The third involved bringing together new and old information systems.

The iWay deployment has enabled Hexion to leverage code-free connectivity to and from its SAP business applications and link them directly to the various systems of its business partners. The result? A completely unified internal architecture, a reusable and broad-reaching B2B gateway, and a single platform to manage integration efforts in the future.

MonerisMoneris is Canada’s leading processor of debit and credit card transactions. The company began with the merger of two large financial services firms, and until recently, developers continued to wrestle with unrelated systems and data. With the help of iWay Software, Moneris was able to simplify connections among numerous types of databases and applications.


iWay solutions were used to create a comprehensive data warehouse from data originating in the company’s point-of-sale and settlement systems. Detailed information about each and every purchase transaction is stored there, streamlining data access and exchange for sales, marketing, finance, and operations staff across the organization.

This type of application-independent integration architecture has not only enabled more strategic use of information, but also has increased productivity and created a solid foundation for a service-oriented architecture down the road.


The risks associated with M&As are high. Various obstacles exist that, without proactive planning, can set the stage for failure. At the top of the list is the need to bring together disparate IT infrastructures to support the new, combined entity.

The current economic slowdown exacerbates this need, making it increasingly important to not only bring together the organizations’ IT infrastructures, but to do so in a timely and efficient manner to meet time-critical scenarios that change on a daily – sometimes even an hourly – basis.

With the right integration strategy in place, companies that are going through a merger or acquisition can increase their chances of success and accelerate the consolidation of IT systems, as well as the key processes they support. With integration and business intelligence solutions from Information Builders, companies like Coty, Telus, Moneris, Hexion, and BBVA have the tools they need to fully leverage their technology assets and achieve complete visibility into operations across multiple merged companies.

Conclusion

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