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11:29 AM
Michael Aubin, COO, Metaserver, Inc.
Michael Aubin, COO, Metaserver, Inc.

Business Process Integration Keeps the M&A Ball Rolling

In addition to new customers and products, merging companies can also add an enormous headache for the IT department.

In addition to new customers and products, merging companies can also add an enormous headache for the IT department.

Your company sees the opportunity to buy out a competitor to increase your customer base and improve your products and services, but you're concerned about the case that will be presented to the board of directors. The word "synergy" gets tossed about in every planning meeting you attend. Uniting the work forces of both companies will create synergy, combining customer bases will produce synergy, and consolidating IT systems will generate still more synergy.

You don't want to be a naysayer, but you're worried that your company is understating the upcoming challenges. Successful mergers have become the exception rather than the rule. In fact, last fall Business Week published a report describing how 61percent of buyers during the past few years destroyed their own shareholders' wealth. The primary causes are the inability to retain the sales force and other key personnel, customer dissatisfaction and uncertainty, and inflated estimates of potential costs savings.

It's well known that the first few months after a merger are critical. From a technology perspective, you're worried that your company will fall into the trap of trying to tackle too much at once. Your investors will want to see return on investment very early on, but you have seen no project plans or time estimates to support the projected cost savings associated with system consolidation. When will this consolidation happen, and in the meantime what will you do about new business processes that will be critical to revenue?

It's possible to write custom code and create point-to-point solutions to tie existing applications together temporarily, but too many interfaces will cripple your flexibility to respond quickly to future requirements. Worse, you'll have to nothing to report to your investors while you frantically glue your systems together. You decide it's time to make the case for business-process integration (BPI).

The Integration Hot Seat

Although a comprehensive technical discussion is beyond the scope of this article, BPI solves the same problems as traditional integration technology, but in a simpler, faster and more affordable way. BPI is an off-the-shelf software package that is easy to learn and use. Much of this ease of use is due to a graphical-modeling environment that lets business experts design processes without writing code. The software also includes connectors for accessing and invoking functionality on different types of applications, and a runtime engine that orchestrates the interaction between the various business systems. For some specialized needs, organizations may require more complex integration tools, but BPI is usually more than adequate.

After the merger, it is likely that you will retire one system wherever two overlap, but you won't be able to do it overnight. While wrestling with these challenges, you will face a more pressing problem: making available new processes and services to enable the synergies you have promised your shareholders. It won't be acceptable to degrade your customer service because client and product information is maintained on incompatible systems.

Compliance initiatives also will require significant attention and detract from your ability to focus on revenue-generating activities. For example, you know that no merger in the securities industry is immune from the effects of the USA Patriot Act. Enacted in 2001, this far-reaching law requires broker-dealers and financial institutions to develop a plethora of procedures to safeguard against potentially suspicious activities. Suddenly the management teams in charge of risk and compliance will have to manage two sets of systems and data as they struggle to comply with anti-money laundering, suspicious-activity reporting, and know-your-customer processes. If it took your company a long time to automate these processes, then you won't relish the prospect of returning to a manual environment even if it is only for a few months.

If you try to plug these gaps with traditional integration tools, you'll have to put your consolidation efforts on hold. Traditional approaches to integration are complex and time-consuming. They involve writing custom programs, modifying systems and interfaces, and extensive regression testing. BPI software, by contrast, lets you rapidly automate new processes that involve incompatible systems and data sources. You achieve results more quickly because BPI is non-invasive. You don't modify any business applications; you use the software's connectors to access applications and execute functionality that already exists.

This approach of using the systems you have, without modifying them, can help you address technical and cultural issues. In reality, instead of generating the synergy promised in the board presentation, uniting the work forces of both companies is likely to create anxiety, resentment and frustration. Just as you won't have complete control over the new IT environment, you will not be able to handpick the people who support it.

You know that you may be gaining internal systems that have more capabilities than the ones you have today, but even these have strings attached. Your current employees like the systems they use now. Your developers won't want to support different technologies, and your business people will consider it a harbinger of impending job loss. Wherever systems overlap you will face this issue, as employees fear that their skills will no longer be needed and lobby to save their systems.

Fostering a Collaborative Culture

On a more positive note, you have a good notion of how the new business should look"you know what products and services you want to offer on your Web site and through other channels. This is a good scenario for BPI because business analysts play a critical role in BPI projects.

Instead of waiting for developers to code new processes from paper specifications, business experts use BPI software to build graphical models that describe the processes. For example, in situations where information for the same client exists in your existing systems as well as in the systems of the entity you are acquiring, your hedge-fund managers are going to want consolidated reports of the client's holdings. Your business experts can easily design a process that connects to your old and new systems and merges the results to create a single report, perhaps adding a business rule to organize the information in the particular format desired by the fund managers. Working directly with developers, who use connectors to access the functions, databases, or application programming interfaces that execute the steps in the process, business analysts will see their models quickly translated into executable programs. This capability is unique to BPI.

Although it is not a cultural silver bullet, this business and IT collaboration can go a long way toward creating an environment that fosters collaboration and cooperation. Your employees will be working together and will quickly see results. As more successful processes are rolled out, there is a greater chance that employees will remain focused on making contributions and demonstrating their value to the new organization.

Graphic caption: BPI graphical modeling tools allow analysts to design business processes without writing code. Connectors bind each step in the model to a business system that can execute the desired functionality. When a particular system is replaced, companies simply reconnect the affected steps in the model to the new systems or delete steps that are no longer needed.

When you're ready to retire systems, you won't need to discard your graphical models. The business processes will remain the same; the only differences will be the elimination of steps that are no longer required and, behind the scenes, the particular business applications that execute the steps in the processes. This is the beauty of BPI; you simply reconnect the affected steps in your model to the new database, function, or API that provides the needed business logic. By freeing you from modifying systems, BPI will allow you to pay close attention to the cultural issues upon which the success of the merger may hinge. You'll also have time to develop a carefully considered consolidation plan instead of trying to tackle everything at once. You'll be able to roll out important functionality in weeks instead of months, so you'll be able to demonstrate the ROI that will keep your investors happy. And who knows? Maybe your employees will like your new systems after all.

Michael Aubin is Chief Operating Officer of Metaserver, Inc.

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