How to modernize applications during mergers, acquisitions, and divestitures

As a company advances in digital maturity, it tends to amass applications, infrastructure, and digital processes—a predicament known as tool sprawl. This phenomenon is exacerbated by business restructuring events like mergers and acquisitions (M&A), when two or more companies merge and bring their entire application portfolios together. Without careful thought and leadership, this scenario can lead to organizational redundancies, inefficiencies, and half-formed processes.

However, M&A, as well as divestitures, present an opportunity to evaluate and modernize the application portfolio of your newly unified organization. In fact, a legacy software stack can be a viable reason for an organization to seek out a merger or acquisition, as its slowing technology makes it challenging to stay competitive. When a company takes the time to streamline and update its apps, the stakeholders emerge with faster workloads and a roadmap for organizational growth and increased profits.  

Benefits of updating applications during an M&A

Each stakeholder, from buyers to sellers and spinoff businesses, benefits from modernizing applications in the M&A process. These benefits include:

• Reduced functional redundancies and overall number of applications.
• Integrated applications to maximize flexibility and refine workflows into single-pane-of-glass dashboards.
• Boosted cost efficiency.
• De-siloed data for boosted visibility and access.
• Reorganized IT infrastructure for faster, more user-friendly experience.

Create a modernization plan

There are numerous systems to evaluate and review during a merger or acquisition. Increasingly, applications are at the heart of a company’s processes and are crucial to growth and efficiency. By carefully reviewing your existing application portfolio’s functionality, cost benefits, workflows, and redundancies, your organization can prioritize which applications to modernize first and which apps to eliminate.

The steps to a successful modernization plan consist of the following:

1. Rationalization: Identify the existing applications and determine the primary purpose of each application.
2. Ranking: Create a simple scoring system that factors an application by variables including:
   1. Centrality to organizational mission.
   2. Functionality.
   3. Essential data.
   4. Total cost of ownership.
3. Create a roadmap: Once your team has ranked existing applications, work with IT leadership to identify core milestones and establish a realistic timeline. A vital step during this phase includes identifying key metrics to track after implementing modernization to measure its success or failure and maintain operating margins.
4. Select an expert partner: Whether working internally or outsourcing modernizing your applications, your organization should select a point person to oversee the modernization efforts for quality control and to ensure that the project stays on time and within budget.
5. Double-check compliance rules: Before pulling the trigger on modernizing the application portfolio, double-check any data security regulations your organization may be subject to that may demand that you archive certain types of data.
6. Execute: Last, but far from least, is the actual implementation of newly modernized apps. In your roadmap, you will want to prioritize mission-critical enterprise resource planning (ERP) applications first. After the initial migration, your team can plan similar timelines with secondary applications.
7. Refine: Interacting with a newly modernized application may reveal further refinements or integrations that can be made across future upgrades.

To learn more about the nuances and types of application modernization, read: Five paths to achieve the benefits of application modernization

Select a modernization partner

Modernizing one ERP application can be an overwhelming prospect, not to mention the entire application portfolio of two newly joined companies. Sorting through the morass of tool sprawl and outdated processes takes time and effort. An effective modernization partner relieves much of the burden from your IT team by guiding them through an established process.

CBTS has led hundreds of clients through thousands of digital transformation projects, from application modernization to cloud migration to disaster recovery and security. Our vetted approach can guide your organization toward digital maturity and help you achieve your business objectives.

Get in touch with our experts to learn more.