Why EA is the Secret Weapon For Successful M&A

Mergers and acquisitions are a vital way for businesses to grow and maintain their competitive advantage. Carefully chosen and managed acquisitions provide organizations with new technology, talent, skills, and knowledge that they wouldn’t have been able to access otherwise.

Yet for all the potential that successful M&A can provide, it is estimated that half or more deals fail to deliver their promised benefits (as high as 70-75%, according to The M&A Failure Trap). Considering the millions of dollars that can go into these deals, the data suggests they frequently amount to a costly mistake.

Why Do So Many M&A Deals Fail?

Merging organizations is a complex process, ranging from identifying a potential target to integrating that target’s technology, people, and culture with the business acquiring them. Organizations need to carry out deep analysis to decide which parts to grow and which to prune. But without the right information, this can be difficult. Combine this with the pressure to get these deals through, and businesses are racing to expand and acquire assets without regard to what happens afterwards.

In the pre-merger stage, insufficient due diligence can fail to spot risks, hindering the entire process and preventing full value from being realized. Considering how vital it is to carefully manage this stage and ensure the IT landscape of both acquirer and acquiree is adequately documented, it is shocking that many choose to carry out this work manually in spreadsheets rather than a dedicated, live data-driven EA (Enterprise Architecture) tool.

Post-merger integration is just as crucial. Important decisions need to be made about how the organizations’ technology stacks, people, and processes interconnect. This requires an accurate map of each organization’s IT landscape and how technology aligns with business processes. Without this accuracy, systems do not talk to each other, leading to wasted spend on multiple platforms that do the same thing. That’s not to mention the shadow IT that can lurk in the background, eating away at valuable funds without being accounted for.

How EA Provides Critical Visibility Over IT, People, and Processes

Enterprise Architecture provides exactly the view of the IT landscape that is needed. An EA tool can visualize the operating model for each organization in an M&A deal, documenting business capabilities, value streams, and how these are realized using people, processes, information, and IT, along with the associated costs. This makes it easy to see the value that can be added by data assets and applications, as well as spot problems and opportunities. With an application list aligned with business capabilities, you can make effective decisions about what applications to keep, combine, or rationalize.

A good Enterprise Architecture platform also models connections and data flows between applications, helping organizations understand where critical integrations are needed to ensure business continuity. You can see how things will be affected by the new merged architecture, such as if a subject matter expert leaves or an application is retired. Once the merger is complete, you can build a roadmap of issues to address, as well as create a plan for changes to meet strategic objectives.

How Ardoq’s Data-Driven EA Platform Lays the Foundation for Successful M&A

Ardoq’s data-driven EA platform makes it easy to map how two entities fit together to ensure successful M&A execution.

To build a picture of your IT landscape, you can import data from spreadsheets, other platforms, or source directly from across the business using automated surveys. This map is automatically visualized, ready to be filtered and analyzed. When the data changes, the visualizations do too, with no further input needed.

Having modeled the current state of the organization, you can plan the future state once the two systems are combined, determine a roadmap for future developments, and analyze the impact of different changes in technology, processes, or personnel.

With a full understanding of what the two unmerged organizations look like, as well as how things should look once integrated, you can make informed, data-led decisions about how to combine the two entities, improving transparency, measuring cost, and reducing risk — all ways to increase your chance of M&A success.

How We Helped Fast Food Chains Jack in the Box and Del Taco Merge and Identify $600k in Savings

In 2022, North American fast food chain Jack in the Box needed to make key decisions about its recent acquisition of fellow chain Del Taco, such as what capabilities to keep separate for each brand and what to combine.

They used Ardoq’s Surveys to engage with business owners and source key information to build their understanding of the organizations’ IT landscapes and business capabilities. Once they’d gathered this information, Ardoq’s pre-made best practice Solutions provided a quick way to kick off key initiatives such as Application Rationalization and Application Lifecycle Management.

Using our platform, the EA team created both high-level business visualizations for executives and detailed pictures for the IT team, minimizing the time spent between creating a story and telling it. They also visualized the impact changes in staff would have on their business capabilities, technologies, and skills.

As a result, Jack in the Box identified $600k in potential savings through Application Rationalization between the two organizations. The new visualized architecture has also resulted in greater business engagement.

Read or watch the full story by clicking the image below.

How Leading UK Grocery Chain Asda Divested From Walmart Without Disrupting Business As Usual

British supermarket chain Asda divested from Walmart in 2021 after more than 20 years together. The organization was faced with the monumental task of separating its systems and services from the US retail giant. This required the two to continue providing services to each other while gradually establishing independent operations.

Through Ardoq, Asda built a comprehensive and accurate view across the entire IT landscape, helping them understand the interconnectedness of their systems. By crowdsourcing data and engaging the business using Ardoq’s Surveys and Broadcasts features, they defined applications, described integrations, and visualized these connections while promoting collaboration across departments. This helped them plot a course from their current state to the desired future state, as well as ensure that data stayed up-to-date.

The result has been not just a successful divestiture for Asda, but also a foundation for agility and innovation that it can continue to build on in the future.

Watch the full webinar or read the story.