IT poses a risk during M&A because legacy platforms and processes serve as bottlenecks for achieving business objectives. To work around bottlenecks, the traditional approach to IT in M&A calls for integration first, followed by transformation. Thanks to the maturation of cloud platforms and as-a-service models, the approach can now shift towards achieving transformation during the post deal planning phase of M&A.
Companies that grasp this fundamental shift will need to change the way they approach cloud technology, including consideration during pre-deal screening. Those that do will gain a competitive advantage: speeding M&A activity and value realization.
Executives indicate the greatest issues they face with legacy systems are efficiency, cost and speed. Arguably these are among the most critical factors for creating a successful M&A deal. Cloud computing and new delivery models can help overcome these hurdles. Cloud is inherently flexible—software as-a-service provides rich functionality “out of the box” as an alternative to cloning expensive legacy systems.
Cloud allows IT to make a massive leap forward in how it will enable the business post M&A by reducing the lead time to stand up core IT services as well as shifting financial delivery from upfront capital expense to ongoing operating expense.While implementing these platforms in the past has been risky, they are now at a state of maturity that they can be used during M&A, allowing companies to realize synergies from rationalizing applications, consolidating infrastructure and optimizing organizations sooner.
Develop the business case for the opportunities identifying the additional synergies that are generated from the cloud.
Establish strong governance that’s calibrated and equipped to support a cloud-enabled M&A plan. Since there aren’t a lot of resources with skill sets in both areas—M&A and technology—drawing support from outsiders can help.
Revisit the M&A strategy with a view on how leading with cloud can play a part in creating opportunities and adding value to deals.
Plan the integration or divestiture addressing any gaps or risks to achieve the M&A objectives.