Improving Merger and Acquisition Integration
Chad recently forwarded me an article from insurancenewsnet called “M&As on the Fast Track”. The URL to the article is:
In the section on "Nuts-and-Bolts Tech Integration", there is the following interesting paragraph:
"Having structured metrics in place from Day One is vital," says CapGemini's Drewitt. "The CapGemini Accelerated Solutions Environment [ASE] is a methodology that speeds all the aspects of an integration - IT and culture," he claims, explaining that the ASE provides banks with metrics to quantify the actual value of an application or cost center and to help them develop strategies.Also, the fact that more banks are adopting a service-oriented architecture (SOA) significantly helps when merging IT systems, according to Sterling's Gahagan. "Organizations that have adopted SOA tend to be more adaptable and nimble in how they perform a migration," he observes. "It makes things much easier than doing individual migrations."
Recently I wrote about a concept called the Federation Oriented Architecture (http://www.coreblox.com/blog/?p=220). Leveraging this type of a system could greatly facilitate the acquisition of an acquired banks systems into the broader infrastructure. By combining federation and a virtual directory, new applications can be plugged into the virtual network and registered for their authoritative information. Existing applications would then be able to access that information without even having to know that the new application was added. Additionally, the virtual directory can be leveraged to provide context for the added data. Context provides the real life view of the information and captures the relationships between the data. For example:
- Todd has three accounts
- His checking account number is 123
- Todd’s wife also has access to the account
These relationships can all be modeled in the virtual directory, eliminating the need for the existing applications to have to add logic to handle these structures.
In the section “The Customer Conundrum” the article goes on to talk about handling customers during this transition period:
Not to be forgotten amid all the M&A hubbub are the customers. "A merger is an imposition to the client," states Patni's Cohen. "You'd better do it right and make sure it's seamless; otherwise people will just walk out." Diamond's Gavin says customers should be core to a bank's merger integration strategy. "Retaining customers is a challenge," he acknowledges. "Historically the focus in M&As was on shareholder value. Now, with the speed of these new mergers, there will be even more pressure to focus on the customers. You have to earn their trust - take advantage of the merger to improve the customer experience and establish a customer-centric culture. So banks should focus their integration strategies around the customers."
The same concepts that apply for application federation also apply to users. Leveraging the same federation and virtual directory infrastructure, users can be correlated together ensuring access to all necessary applications and increasing customer retention. I wrote about a concept called “Identity Acquisition” in our blog entry on SSO and Virtual Directories (http://www.coreblox.com/blog/?p=145). In the article we talk about how a company used a virtual directory from Radiant Logic and SiteMinder for single sign-on to improve customer experience during acquisitions. These concepts were also highlighted in Radiant Logic’s newsletter (http://www.radiantlogic.com/main/news_newsletter_042008_sso.html).
There is no question that M&A activity will accelerate during this period of economic recession. Having the correct foundation in place during this period will help to ensure that immediate benefit can be gained from the acquired company and that there will be continued customer loyalty.