This article was written by Jeff Highley, Vice President of Solution Engineering at Rackspace Technology.
2021 has been a record-breaking year for mergers and acquisitions, with $2.4 trillion in deals on the books as of early June, but getting full value out of an acquisition takes more than just inking a contract — it involves careful thinking about how to achieve your strategic goals.
Among those considerations is creating a detailed plan for how to integrate the acquired company’s technology, including marketing/sales tools, finance and billing systems, and third-party communication, and collaboration software. For every piece of tech, you must decide between three courses of action:
- Fully integrate it into your own stack.
- Sunset it and migrate its processes and data to another platform.
- Let it run parallel to existing systems.
To do it right, you’ll need to consider both big-picture concerns and granular details. Ultimately the time investment is worth it to ensure you’re getting full value from the acquisition.
7 steps to tech integration
You’ll get the best results out of the integration process if you treat it like a structured program, with clear milestones, timelines, and reporting. Many companies set up an integration management office (IMO) to manage the transition — from technology to onboarding the acquired company’s employees and customers into the new brand.
Integration plan milestones and key decision-making should be identified at the 30-, 60-, and 90-day marks, with results monitored closely for at least 12 months after the acquisition. To ensure the tech side of integration proceeds as smoothly as possible, make sure the following steps are a part of your process.
- Define your goals.
Before you decide what to do with the acquired company’s technology, you need an understanding of the ultimate purpose of the relationship. If the acquisition is focused on absorbing talent, it may not be necessary to integrate their technology at all. But if your goal is to consolidate with a competitor and cross-sell, integration of their products and infrastructure might be key to success.
- Develop a clear plan for each product or service.
Determine which of the acquired company’s products and services have the greatest value to you, either because they fill a gap in your own portfolio or because they offer high margins or strong revenue. Technology related to those products and services is worth investing in for the long-term, whether that means maintaining it in parallel with your systems or integrating it with your existing infrastructure. By contrast, technology related to lower-value offerings can likely be phased out, with data and processes migrated to your systems.
- Be willing to change.
Don’t put the burden solely on the acquired company to adapt to your processes and tools. An acquisition is an opportunity to make both companies better. Look at systems in foundational categories such as sales and marketing, finance, and billing. Are there areas where you’d welcome improvement? The acquisition could be the catalyst to break through inertia.
- Take an inventory of their technology.
Begin with a discovery phase where the acquired company teaches your team how they run their business. Your goal should be to understand their process for generating revenue, from identifying leads to receiving payment on invoices, so you don’t unintentionally disrupt it.
- Consider running useful technology in parallel.
Sometimes there are good reasons not to migrate systems. If the acquired company has a strong brand in an area where the acquirer’s current offerings are still emerging, it might make sense to maintain that separate brand and some of its associated sales and marketing infrastructure. By keeping the top of the sales funnel separate, you might be able to capture more revenue from customers in the long run.
- Decide how to handle data.
The acquired company’s data can be one of the most valuable gains from an acquisition — but it can be a challenge to integrate it in a way that produces useful research. If the acquired company uses a different cloud provider, you may need to build a multi-cloud strategy to gain insights from merged datasets.
- Align contracts and licensing.
Once you have the larger integration plan hammered out, it’s time to dive in on the details. If your company and the acquired company license the same software, you’ll want to line up contract renewal dates, terms and conditions, and subscription plans. If the acquired company is getting a better deal, you may be able to find additional savings.
Taking a long-term view
Don’t make the mistake of thinking that integration ends the day you welcome the acquired company’s employees to your organization. Integrating people, processes and technology takes time — and a lot of thought. By laying the groundwork on the technology side from the beginning you can set the integration up for success — and derive maximum value from your acquisition.
Jeff Highley is currently the Vice President of Solution Engineering at Rackspace Technology, leading a team of technical pre-sales experts in the Americas region. Jeff has over 20 years of technology leadership working across multiple industries and companies.
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