How enterprise models contribute to successfully completing a merger, acquisition or divestiture


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Marc Lankhorst
Posted by Marc Lankhorst on May 31, 2017

Enterprise Architecture, Business Process Management, Application Portfolio Management

Organizations involved in major strategic changes such as mergers, acquisitions and divestitures often focus mostly on the financial and market aspects of the change. What is the impact on your market share? How can you increase buying power from your suppliers? What cost savings can be realized by exploiting synergies? Organizational and HR issues are also top of mind for executives involved.

However, integrating at a more operational level is often considered only late in the game. Business leaders have to ensure effective collaboration between stakeholders across the organization, so they obtain the necessary insights and will improve the quality and speed of decision making.

Challenges to solve during a merger or acquisition

Combining business processes and IT systems from different parent companies is complicated. It requires answering questions like:

  • Which capabilities of a take-over target are differentiating, and which are common or overlap with your own?
  • What are potential synergies between the different product portfolios?
  • How can we consolidate systems and reduce technical debt?
  • How can we identify best practices for our business processes?

Challenges to solve during a divestiture

In divestitures, we encounter questions such as:

  • What are the essential business processes and IT systems, and which are redundant?
  • Which dependencies in our business and IT landscape are particularly critical in selling part of the enterprise to a new owner?
  • How can we clearly define our own future state for business and IT, after divesting part of our business? Which gaps do we now need to fill?
  • Which parts need to be duplicated, because they are critical to both the divesting and the acquiring organization?
  • How do we deal with the data involved? What should be transferred and what must be kept

How do models help to answer these questions?

To support organizations in such complex situations, models are an essential instrument.

  • Models are more than pretty pictures
    Models provide precise, well-defined and unambiguous information. Models can be checked, visualized, analyzed, managed, integrated, transformed, interpreted, and sometimes even executed.
  • Models can be used in different business and technology areas
    Organizations use different types of models for the different stages of a merger, acquisition or divestiture, such as strategy maps, process diagrams, architecture views, product breakdown structures and organizational charts.
  • Models enable you to analyze all relationships between your capabilities, products, processes, people and systems
    Models provide information on all these dependencies connect everything from strategy to operations. Thus you can, for example, see what the contribution of some IT project is to the overall business strategy, via its deliverables, the applications it affects, the business processes and products supported by these applications, and the business goals these help to realize.
  • Models support fact-based decision-making
    Models can integrate data from various sources, ensure their consistency, and provide crucial input for well-founded decisions. Relating, for example, financial data to the structural information from an architecture model is crucial in calculating the potential savings of a IT consolidation project, providing much better data than a simple back-of-the-envelope guesstimate that is only based on some financial figures, without taking into account the dependencies in your architecture that may obstruct seemingly simple solutions.
  • Models help you to analyze the impact of changes before you apply them
    Using models to assess the connections and dependencies between the various aspects and elements of your enterprise is a great help in understanding the effects, risks and benefits of changes. Doing this before entering into a merger or divestiture helps mitigate the risks associated with such a major transformation.

Several of these aspects are shown in the figure below, where we see a (simplified) capability map of an insurance company shortly after a merger. This is used to highlight where the underlying application landscape supporting these capabilities exhibits inefficiencies such as duplication. This way, management can quickly identify where to concentrate its attention and which capabilities may be affected by an application consolidation effort.

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Of course, the use of models requires solid software support. BiZZdesign’s unique Enterprise Studio platform provides modeling and analysis support across many disciplines involved, ranging from strategy development and portfolio management to architecture, process, and data management. This allows you to have an integrated view of your M&A or divestiture, with a clear line of sight from the strategic direction and business model of the organization via its architecture and design, to the prioritization of change initiatives.

Benefits for your Stakeholders

The use of models can benefit all stakeholders, including C-level decision makers; business owners such as LoB management; portfolio, project and program managers; architects and designers; and those in daily operations. They can have their own view of the changes involved, where Enterprise Studio presents those aspects relevant to their job in a user-friendly way. All these views are based on a single source of truth, ensuring consistency and transparency.

The benefits of this approach are clear:

  • Shareholders see a shorter time-to-value of a merger through faster exploitation of synergies.
  • C-level is in control and has the necessary fact to decide on the costs, benefits and risk of a merger, acquisition or divestiture.
  • Architects and designers have the information needed to reduce complexity and increase synergy.
  • Portfolio managers can set priorities based on accurate data on cost, value and risk.
  • Program and project managers have a clear scope and know how the initiatives they are responsible for are interdependent with others.
  • Operations managers know what is business-critical and can mitigate operational risks.
  • Risk and compliance managers can ensure the resulting enterprise meets the terms of internal and external regulations.
Learn more about how BiZZdesign Enterprise Studio can help you to successful complete a merger, acquisition or divestiture in our factsheet, that you will find by clicking on the link below.
Mergers, Acquisitions and Divestitures

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