Other parts of this series:
In my recent posts, I have presented the advantages of cloud technologies when it comes to business differentiation, cost and security. But there is much more to cloud.
At Accenture, we believe a cloud-based solution can also be an effective way to address typical transactional pain points during Mergers, Acquisitions and Divestitures, and position these deal types for successful execution post-closing. I will explain how in this post.
Executives indicate that the greatest issues they face with legacy systems are1:
- Efficiency (50 percent)
- Cost (47 percent)
- Speed (44 percent)
Arguably, these are the most critical factors for creating a successful Mergers & Acquisitions (M&A) deal.
In the course of an M&A or divestiture, the IT environment often becomes unnecessarily complex, with significant redundancies and siloed architectures. In fact, the prospect of untangling legacy can act as a deal breaker early on, or it can slow the road to potential opportunities after contracts are signed.
IT poses such a major risk during M&As because legacy platforms, hard-wired processes and staffing availability typically force IT to be integrated first, followed by transformation.
But thanks to the maturation of cloud platforms and as-a-service (XaaS) models, this traditional approach can now shift towards achieving transformation during the post deal planning and execution phase of the M&A process. As a result, deal value is being accelerated with an equal focus on transformation—with cloud serving as a catalyst.
- Transformation during integration:
- Unlocks new opportunities
- Accelerates deal value
- Boosts overall competitiveness
Accenture Strategy research shows: cloud accelerates IT delivery in M&A by 30 percent on average and reduces the IT costs by nearly the same amount2.
At the same time, cloud allows IT to make a transformative leap forward in how it will enable the business post M&A. Cloud not only reduces the lead time to stand up core IT services, it also shifts financial delivery from huge upfront capital expense to ongoing operating expense.
Ultimately, cloud can minimize risk during delivery and an improved time to implement in contrast to the delivery of old legacy solutions. Cloud can provide organizations with a better opportunity to achieve desired outcomes by:
- Speeding timelines
- Reducing planning and implementation costs
- Increasing flexibility
No matter how you look at it: companies need to accelerate their migration to the cloud. M&As are a great opportunity for getting out of unnecessary service agreements and modernize faster. Cloud manages data more effectively, allows companies to scale up, and enables integration of acquired products into the customer experience.
Because of their inherent flexibility, cloud solutions can support both the short-term, transitional needs of a typical divestiture, as well as the longer-term requirements of a large acquisition.
Put simply, cloud cures many of the IT headaches caused by M&A and divestiture processes.
For more information, take a look at the Driving growth and competitiveness: Can the power of cloud lift M&A into the stratosphere? and the Merger, Acquisition and Divestiture Value Creation reports.
- 2016 Accenture Technology Strategy Survey.
- 2016 Accenture Strategy M&A Analysis.