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The 4 Levels of Acquisition Integration

Discover Which Strategy Works Best for You

by Rick Cimino | insiderPROFILES, Volume 6, Issue 3

July 6, 2015

4 levels of acquisition integration

IT application and platform integration remains a top challenge for many companies that rely on mergers and acquisitions. This article explains the four levels on acquisition integration based on SAP’s solution set and the benefits of each approach.

 

Mergers and acquisitions have been on the rise over the past couple of years, driven by the need of acquirers to lower costs or gain marketshare with new products, solutions, and geographies.
 
For many companies that take part in a merger or acquisition, IT application and platform integration remains a top challenge. Buyers have to integrate the acquired company from a technology, people, and business-process perspective, all within the time constraints of a transitional services agreement (TSA). This integration can be especially difficult when the acquired company comes with its own instances of SAP and non-SAP applications that the buyer does not support. Let’s look at some integration strategies that can help companies avoid this complexity.

 

Develop an Integration Strategy

Companies that run SAP solutions and are active acquirers should develop a strategy for post-acquisition integration somewhere along an integration continuum (see the figure above). The simplest option involves a basic “lift and shift” of the acquired company’s existing SAP and non-SAP applications onto the buyer’s infrastructure. This approach requires the least amount of time, cost, and disruption, but also tends to provide fewer integration benefits for the buyer. Consolidated financial reporting is provided through SAP Business Planning and Consolidation, and the operations of the acquisition are kept at an arms-length distance.
 
The next level of integration might involve the buyer having an “Acquisition Hub” designed solely for acquisitions, based on a single, dedicated SAP instance. Cloud-based software-as-a-service (SaaS) solutions like SAP Business ByDesign on SAP HANA can provide buyers with another alternative. In both cases, the acquisition is brought into the SAP solution and provides synergies for the buyer. Once again, consolidated financial reporting is provided with SAP Business Planning and Consolidation.
 
SAP Simple Finance on SAP S/4HANA offers a greater range of integration capabilities for the buyer, including integrated finance and accounting and shared services enablement. Buyers can lift and shift the existing SAP and non-SAP applications of the acquisition, stand up SAP Simple Finance on SAP S/4HANA (or as a sidecar to their existing SAP instance) and use SAP’s global finance hub or the central journal approach for increased integration.
 
The final option is full integration into a single, global instance of the buyer’s SAP solutions. This offers the greatest level of integration of people, business processes, and data from a business-operations perspective, along with shared services enablement.

Maintain a Repeatable Playbook

The best option depends on the size, type, and purpose behind the acquisition, along with terms in the TSA. In any case, buyers should develop and maintain a repeatable playbook of options for integration. Equally important, each option should be driven by the strategic business goals of the buyer. For more information, visit kpmg.com/us/sap.

 

This article is intended solely for informational and educational purposes. KPMG LLP audits SAP. KPMG LLP is not endorsing or recommending the products or solutions discussed in this article nor selling, marketing, or implementing these products or solutions for KPMG LLP audit clients.

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Rick Cimino
Rick Cimino

Principal
KPMG



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