M&A Rebound: How tech’s powering a 21st century approach to the process

Published : 1 week ago, on 26/09/2024

Steve Ponting, Director at Software AG

Mergers and Acquisitions (M&A) are on the rebound – and surprise, surprise – one of the central recovery drivers is Gen-AI. AI Appetite is alive and kicking with AI firms receiving early-stage investments totalling $7.5 billion in the first quarter alone globally. Following a sluggish slowdown due in no small part to a heady cocktail of economic and geopolitical storms, it seems that sentiment is on the up but make no mistake it’s fragile and there’s a whole new tech playbook to master.

M&As represent the bringing together of diverse product portfolios, operating models, and critical resources such as IT systems and the talent pool. The integration of all of these parts is where businesses have to tread carefully to ensure the best outcome is delivered. Yet, it’s a process that keeps shape shifting with the breakneck speed of tech advancement making tech-confidence and agility a non-negotiable in what’s become a truly digital M&A environment.

At a time when momentum is creeping back it’s vital for M&A strategies to reflect this complex and tech-fuelled world businesses operate in today. Seamless alignment between a business’ technology strategy and its business goals is mission critical. IT leaders were once viewed as just the driver of a business’ IT function, but today they are so much more than a siloed function of the business working quietly in the background. Today IT leaders need to be transformational, becoming the real bridge between business goals and IT infrastructure in all its increasing complexity. Let’s dive into the key tech twists and turns involved in the M&A process.

 M&As in the Digital Age 

Complexity increases with more software being added to the tech stack. At enterprise level alone, businesses saw their average number of applications jump from 843 in 2021 to 1,061 in 2023, according to Salesforce. The pace of industry regulation compounds the tech sprawl and forces businesses to be on the front foot when it comes to optimising their enterprise tech.

Regulation like the EU’s Digital Operational Resilience Act (DORA) requires businesses to demonstrate full visibility into their IT operations, for example. This includes full oversight of how risks and controls are connected to the IT estate.

 Streamlining for success 

When confronted with a trifecta headache of a bulging tech stack, merging businesses units with different ways of working and evolving strategic corporate needs, the only sane thing to do is to streamline operationally. To do this you need a powerful technology roadmap and that can’t happen without a powerful 360-degree view of your IT landscape. This is where Strategic Portfolio Management  (SPM) comes into its own.

It can also help you to identify the legacy or foundational applications and play a key role in planning both modernisation roadmaps and your pathway to improving business resilience. SPM delivers value to IT leaders but its benefits ripple across an entire organisation. It delivers that much sought-after visibility of the whole application portfolio, but its impact extends far beyond. Through SPM organisations can easily identify de-duplication opportunities through analysis of business processes and important business services delivered by the application portfolio.

Tackling the tech skills gap 

While SPM allows businesses to have a clear picture of the redundancies which lie in the acquirer and acquiree’s IT portfolio, the usability of SPM tooling has an important impact on the delivery of a M&A process.

As business functions become more digital, IT teams could lose critical jurisdiction over the applications powering the business.  Businesses must do battle against the technology skills gap – a phenomenon that has seen 93% of UK businesses report an acute IT skills shortage according to Forbes Advisor. The key takeaway here is that the technology should be easy to use for even the least tech savvy employee you know . Always remember a company’s IT strength, including its security posture, is only ever as strong as its least tech-confident employee.

This means features such as intuitive user profiles, streamlined navigation, and an articulate information search give more people transparency into the IT landscape and the ability to participate in the strategic planning and management activities around the digital product and service portfolio.

Furthermore, innovation in the form of smart data workbenches and individually configurable views and reports let each user self-determine information content and format, reflecting the uniqueness of every person’s responsibility along the decision chain of enterprise M&As.

Driving down costs and getting on top of runaway IT spend

Various departments are consulted during a typical M&A programme including finance, legal, risk, compliance and HR. Technology is the bedrock for post-merger success because companies need to know two things. Firstly, that they will have technology portfolios they can count on and secondly that the technology will be run efficiently and effectively.

Having full visibility into all IT means companies understand which applications and processes can be retired, which are critical in terms of use, and which are vulnerable when mapped against licensing terms. This saves employee time, extra licensing and support costs and lays a path for business continuity and growth.

With full oversight of the portfolio, IT can also immediately safeguard critical applications, data and business processes. If danger strikes, damage limitation can be made active quickly, therefore it could reduce the cost of remediation and any regulatory penalties levied upon a business who falls short of the rulebook.

Understanding of tech is central to any M&A success 

In a world where a successful M&A hinges on a powerful mix of talent, technology and strategy effective SPM has come into a league of its own. Tech disruption has been further accelerated through the irrepressible cascade of AI into business.

We’re witnessing the emergence of an increasingly complex IT environment which demands more sophisticated tools to manage and optimise and meet the needs of bullish dealmaking.

SPM technology plays a pivotal role in enabling organisations to assess their IT landscapes, identify potential vulnerabilities, and develop effective risk mitigation strategies.

Implemented strategically to full effect, tech can be a catalyst for a world of business deals. And it’s also got a huge role to play in helping businesses withstand and prepare for whatever shocks, surprises or next great disruptions are around the corner. Ultimately, tech will be central in bringing stability to the resurgence of the M&A process.