Last year, many companies completed mergers and acquisitions (M&A). In fact, between May and August there were almost 30 mega mergers and acquisitions: Microsoft acquired Nuance Communications, Apollo Funds acquired Verizon Media, Amazon acquired MGM, Celonis acquired Integromat, and many more.
Globally, M&A volumes have topped $4.3 trillion this year so far, for a number of reasons: Larger companies tend to acquire smaller competitors that aren’t doing well in tough times, companies They want to expand or increase their current product portfolio, or a company may want to enter new markets.
Process mining: the key to successful mergers and acquisitions
No matter the reason, mergers and acquisitions are a complex project for everyone involved: lawyers, human resources, accounting, IT services, employees, and many other stakeholders.
But the most difficult thing is for the directors; connecting two companies with different cultures and established business processes is not easy.
In recent years, ABBYY has acquired several companies around the world, most recently Timeline PI in the United States and Pericom Singapore in Southeast Asia. Here, we’ll dive into three groups—resources, processes, and people—and discuss how process mining can successfully integrate businesses without creating lost profits, process bottlenecks, or employee attrition.
It is not just legal entities that are acquired when it comes to mergers and acquisitions. Legacy buildings and equipment are taken over by IT systems, and everything is usually audited by the parent company to decide which resources should stay and which are best offloaded.
However, when evaluating different technologies and generations of systems, IT leaders must ensure business continuity of end-to-end business processes while integrating processes. And the sooner they start doing it, the better.
The common way is to meet with stakeholders and manually map known systems, applications, and processes. But it is a slow and expensive process that takes months. Another way is to automate integration with robotic process automation (RPA) software robots. Software robots copy human actions on a computer interface and transfer data from one system to another.
However, robots work effectively only on well-structured processes and do not understand which systems have been optimized for integration. If the business needs integration to be optimized faster, process discovery and mining tools are the key accelerators.
Process mining platforms duplicate information about the execution of processes (digital traces) from corporate systems and build a model of the company’s processes, calculate metrics, help find optimization methods and help with analysis to initiate integration and digital transformation. Ultimately, this helps streamline processes, identify bottlenecks and improve operational efficiency.
business management system
Another use for process mining is as an Enterprise Management System (EMS), which does not require large-scale work related to configuration or writing code. In this case, each of the linked systems uploads its audit logs (or the data may come from databases, custom data extracts, etc.) to the analytics platform.
The platform, based on the actions recorded in them, will record the occurrence of a business event that corresponds to a scenario, a set of conditions and causes.
This is what it looks like: Imagine that an end-to-end process chain of events goes through two non-integrated systems from different companies, and the start of a certain business situation requires switching to another system. Process mining provides visibility and alerts in a distributed system, allowing you to rapidly establish interaction between IT environments of different companies and ensure business continuity.
How the business management system works
This is how it might work in a car dealership that has acquired a transport company with its own car transport fleet. Perhaps the dealership is now offering a new service to customers where they can transport cars anywhere in the world, but there are several different companies that work together and go through various steps to make this happen. Below are examples of steps that can be taken:
- For starters, each company has its own separate IT system, each transmitting digital traces of transactions in different formats to a process mining platform. When a car dealer signs a preliminary contract with the customer, it determines the date of sale and shipment of the car to the buyer.
- For the analytics platform, a sequence of events occurs in the accounting system, including determining a preliminary contract and making an advance payment.
- Then, in the dealer’s system, it is noted that the car transport service is required to the destination and, in the carrier’s system, the process of reserving a carrier for the desired delivery date range begins.
- If the payments are complete, a trigger occurs. In the carrier’s IT system, the process mining platform can see the attributed address of the warehouse where the car is located, along with a waybill for the driver.
Although none of the systems communicate with each other directly in this example, the task still gets done. All of this is happening at a stage where companies are not yet established to work on different delineations and businesses.
After integrating the resources, it is important to understand how the processes of the merged businesses flow. This is only possible when you have a complete and detailed understanding of data and business workflows in organizations.
This transparency can be achieved through intelligent analysis of business processes. Process mining allows you to see what a typical sequence of actions looks like in real time when performing a particular task, such as accepting a contract with a vendor or responding to a customer request within a call center.
With these decisions, you can find deviations from the norm, who is making them, and how the process can be optimized and improved.
ERP system, a common process with M&As
For example, many companies have integrated all their branches into a single ERP system, a common process with mergers and acquisitions, while other companies operate in several dozen countries around the world and use multiple ERPs from different generations and vendors. This can make it difficult for equipment and assets to have consistent data reporting, making it difficult to prepare financial statements.
By applying process intelligence to collect and correlate data from disparate systems, companies can explore different options for the same process and identify any deviations.
There are various approaches to merging company cultures during a merger and acquisition. Autonomy is most often used if the new company is engaged in activities that are radically different from those of the parent company and when the acquired company’s processes are fully retained. But this option contradicts the notion of merging companies. Customers often do not suspect that two companies are part of the same brand.
Fully integrate the platform
The “roll method” approach fully integrates the parent company’s platforms, processes and corporate culture. This is a fairly common and successful method when the acquired company is much smaller than the parent company, but sometimes it does not always lead to good results.
There are plenty of examples of failed mergers and acquisitions, from Microsoft and Nokia to Google and Motorola to Daimler and Chrysler. Each case has different details, but one thing united them: the new owner was looking to take “his charter into someone else’s monastery” and very quickly brought his corporate culture, KPIs and processes into the business.
A new business model for better benefits
The third (and less common) method brings the best of both worlds: a new business is built from elements of both the buyer and the seller. It may seem more labor intensive at first, but it can provide more benefits to both companies.
Also, with both methods, HR plays an important role. It is important to maintain communication as employees become part of the new system, sharing what opportunities and tasks await them and what limitations exist.
From the perspective of managers during a merger and acquisition, it is helpful to identify best practices and determine which employees are the most productive. this is where task mining It can be useful. Task mining maps how people accomplish steps within a process and enables companies to understand how people use and interact with systems to improve their productivity and streamline workflows.
Modern technologies like this allow you to identify the real picture of what is happening, including the conditions when the task is performed, the cost of the process, the opportunities for improvement.
As companies continue to find opportunities to remain competitive in 2022, many analysts agree that M&A transactions will continue to rise. The winners will be those who acquire companies wisely based on understanding and careful integration of resources, processes and people.
Image credit: Gabrielle Henderson; Unsplash; Thanks!