Merger and Acquisition with the Cloud Technology

By | August 26, 2014

Mergers, acquisitions and divestitures are significant events which have a powerful impact on one and all. The success of this depends upon the ability to integrate and/or isolate vital systems and data, ensure uninterrupted operations during the transition period and create synergy right from day one. The conventional approach is to make adjustments to the existing IT environment. These adjustments are generally implemented by removing particular components from established ERP systems or replicating existing ERP environments. Other practices include deploying new instances of current systems in the business asset being treated or transferring data between different systems, assuming no integration or data management problems will manifest themselves.

Cloud as a superior alternative – While these approaches have mostly been met with success the problem is they are not very easy or inexpensive. Normally, companies invest a lot of money in their ERP systems. Carving out or cloning ERP components results in disruption of operation and inefficiencies. It also increases deal related costs significantly. Increasingly, companies are looking at creating flexible, second tier cloud based systems which can extend ERP and other functional capabilities to newly acquired or divested assets not only during the transition period but in the future too.

The cloud provides more options – Today the priority is to meet merger and acquisition related IT challenges with agility and cost effective technologies. Upcoming business deals are also looked at and evaluated in this prism. Thanks to the advantages delivered by cloud solutions in terms of cost, adaptability and scalability enterprises are able to leverage opportunities in new markets which were previously not financially or strategically feasible.

How cloud helps – As firms craft the integration and targets of a deal, there is a need to identify the applications, infrastructure and data that will be impacted. Following that they can examine alternative sourcing opportunities in the cloud domain. Mostly, cloud based email procurement, HR and other functional options are found, which fulfill the cost, timing and business capability demands of a business deal.

Planning for the future – There has been a proactive approach for using cloud assessment processes instead of waiting for deals to happen. Many firms have etched out strategies for leveraging the cloud which satisfies the different demands of different merger and acquisition settings. One pertinent factor involved in merger and acquisition deals is the suitability of existing data for storage in the cloud. If the data are highly sensitive the federal government and customers may make it mandatory to manage it internally. Otherwise, most of the data can be safely stored in the cloud.

Some cloud drawbacks – Keep in mind that the cloud may not solve all the potential IT challenges. In some deals using the cloud may not be a financially sound decision. The fact is cloud may not eliminate completely the need for in house support. Only the percentage and nature of support will change. In spite of these drawbacks cloud is likely to consolidate its growth in the domain of mergers and acquisition. When the cloud implementation is well executed it transforms the process of mergers and acquisition into a speedy and cost saving one. Hence, IT will no longer just have a supporting role, but a significant and full-fledged one.

Cloud technology has transformed the merger and acquisition landscape and is well on its way to become a mature and immensely effective technological process.

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