M&A Technology Portfolio Management: Your Post-Acquisition Roadmap

By: Sanjay Sen

Enterprises that rely on acquisitions for their growth strategy often take the “if it ain’t broke, don’t fix it” approach, not realizing the harm and cost they’re actually incurring. Over time, each of these acquisitions can quietly use up more resources than you realize, unless you take the time to analyze and streamline them.

The Dark Side of Acquisitions

With each acquisition comes a new set of people, systems, hardware, data, and processes. And while it may seem easier to keep things status quo with a new acquisition, over time, this can actually make the acquisition less of an appealing investment from a financial standpoint.

How so? With each acquisition, you often develop redundancies and waste money that may limit that acquisition’s profitability. You may have multiple instances of the same software (an example I illustrate below) or human resource roles that could be consolidated. But without shining a light on these redundancies, you will continue to bleed money.

Undoing Decades of Damage

Here’s a great example to illustrate what happens if you don’t pay attention to your acquisitions and how they operate. On a two-year enterprise portfolio management (EPM) project with a multinational music company, I saw firsthand how ignoring these problems can create even more.

This company had over 30 divisions around the globe and had grown through acquisitions. The CIO was asked to create a new application roadmap and cut redundant costs across the organization.

My team and I spent six months flying around the globe to catalog all applications and capabilities, software stacks, hardware stacks, connectivity (data coming in and going out), master data, IT owners, business owners, and internal/external resources, all by region and location. It was a mammoth project, as you can imagine. And once we were done, we found very interesting results.

1. Redundant Software Licenses

We discovered that the company was spending thousands of dollars on multiple local Oracle licenses. We deployed a task team to negotiate with Oracle to consolidate those licenses and immediately created significant savings.

We found other redundant local applications that we were able to roll into one. For example, many countries used local royalty systems that served the same function. We developed a very clear and concise consolidation plan and roadmap to use the same system across the company.

2. Poorly-Supported Critical Capabilities

We also discovered that some critical capabilities, thanks to the acquisitions, were poorly or manually supported. For example, marketing and rights data were mostly supported by spreadsheets or access databases, so we created a roadmap to develop applications to support these capabilities. 

3. Opportunities for Upgrades

We were able to identify software stacks that were no longer supported or very close to obsolescence. If the applications supported on these software stacks were deemed critical,  these now went on a future upgrade plan. 

We then looked at critical apps and determined what it would take to upgrade them to put them on the cloud versus keep them local, and were able to create more cost savings.

4. Lack of Master Data and Data Governance Strategy

An entire master data and data governance strategy came out of this exercise as we discovered that critical master data had been created in several different systems. With the new plan, there would be one master data system and governance policies for product data, for example.

The CIO was able to go to the Board with the roadmap we had created and show that, if the company were to spend $X million over 5 years, it could recoup $X+Y million.

What to Know About Enterprise Portfolio Management

If your enterprise has become a jigsaw puzzle of acquisitions, it’s time to consider how enterprise portfolio management could streamline operations and save money. Here’s what you need to know before going down the EPM road.

It’s Not (Always) a Quick Win

Yes, we had a quick win with consolidating the Oracle licenses, but other consolidation plans were more long-term. Employing enterprise portfolio management requires patience.

This is Not a One-Time Job

Acquisitions will continue, and as such, an enterprise needs to continually work at ensuring the portfolio is streamlined and that there are no redundancies. We established a company-wide strategy for key personnel to update the portfolio every six months.

It Will Take an Investment to Save Time and Money in the Long Run

Few CFOs and execs are excited about spending more money, but when they see the roadmap and consolidation plan and realize how much money (and time) they’re wasting, the investment should be a no-brainer.

You Must Execute Your EPM Carefully

Employees are understandably nervous when you come around to document what they’re doing in their fiefdoms. They fear losing their jobs. 

It’s important to get their support, so be sensitive during this process. Don’t appear threatening. Be there to document, not discuss possible outcomes of the process. That is above their pay grade.

Acquisitions can be a wonderful growth strategy but left unchecked, they can run rampant. Enterprise portfolio management serves to create a roadmap to consolidating and removing redundancies so your company can realize more profit and be more productive.