With Mergers, Acquisitions and Divestments at record levels, the speed and effectiveness of data migration has come under the spotlight.
With traditional models for data migration recognised to be high risk, time consuming and can potentially derail the deal, Don Valentine, Commercial Director at Absoft explains the need for a different approach – one that not only de-risks the process but adds value by reducing the time to migrate and delivering fast access to high quality, transaction level data.
2021 shattered Merger & Acquisition (M&A) records – with M&A volume hitting over $5.8 trillion globally.
The costs can be very significant, yet many companies still fail to undertake the data due diligence required to safeguard the M&A objective. Finding, storing and migrating valuable data is key, before, during, and post M&A activity. Individuals need access to data during the due diligence process; they need to migrate data to the core business to minimise IT costs while also ensuring the acquired operation continues to operate seamlessly.
Completion of the IT integration will be part of the Sales & Purchase Agreement (SPA) and delays could have market facing implications. Companies are justifiably wary of IT-related disruption, especially any downtime to essential systems that could compromise asset safety, production or efficiency.
So, how can the buyer achieve the essential due diligence while meeting the seller’s need to safeguard non-deal related data, such as HR, financial history and sensitive commercial information?
The buyer’s CIO needs early access to the new system, to provide confidence in the ability to operate effectively after the transition – any concerns regarding data quality or system obsolescence need to be flagged and addressed early in the process.
To date, processes for managing finding, storing and managing data pre, during and post M&A activity have focused on the needs of the selling company. The seller provided an extract of the SAP system holding the data relevant to the agreed assets and shared that with the buyer. The buyer then had to create configuration and software to receive the data; then transform the data, and then application data migration to provide operational support for key functions such as supplier management.
This approach is fraught with risk. Not only is the buyer left blind to data issues until far too late but the entire process is time consuming. Data loss, errors and mis-mapping are commonplace – yet only discovered far too late in the process, generally after the M&A has been completed, leaving the buyer’s IT team to wrestle with inaccuracy and system obsolescence.
Under agreement between buyer, seller and data migration expert, the seller provides the entire technical core which is then subjected to a dedicated extract utility. Configuration is based on the agreed key deal assets, ensuring the extraction utility automatically undertakes SAP table downloads of only the data related to these assets – removing any risks associated with inappropriate data access. The process is quicker and delivers better quality assurance.
By embracing a different approach to data migration, organisations can not only assure data integrity and minimise the downtime associated with data migration but also reduce the entire timescale. By cutting the data due diligence and migration process from nine months to three, the M&A SPA can be significantly shorter, reducing the costs associated with the transaction while enabling the buyer to confidently embark upon new strategic plans.