Words Of Wisdom From Deloitte: Why M&A Loves The Cloud

Estelle Lagorce

Consider this. You want to acquire a division of a company that is up for sale. It fits perfectly with your business. The price is right, and all the negotiations have gone well.

But then the question arises: How do you keep the new division running while you integrate it into the wider business? The seller is offering a transition service agreement (TSA). But there are severe financial penalties if you don’t exit on time. Now what? Time to think about cloud computing.

You see, according to a recent article by Deloitte in the Wall Street Journal, cloud computing can turn a potential deal breaker into a deal maker.

In the article, Deloitte reckons that a cloud-based ERP solution can be operational in four to seven months for a midsize company and roughly double that for a large international.

It’s way faster than trying to implement an on-premises solution. And it’s less risky, because no hardware is needed, and there is minimal configuration. Consequently, you can significantly accelerate your exit from a TSA and minimize the chance of financial penalties.

But that isn’t to say that cloud computing is a universal panacea that will suit every situation. In the article, Deloitte cautions that choosing a cloud-based ERP solution requires the same due diligence as every other aspect of M&A. Every vendor has its own strengths and weaknesses, as well as different approaches to managing and enhancing its product.

However, here are six key things to think about:

  • Buy to exit the TSA and add other functions later
  • Think about using a two-tier ERP strategy, particularly if you do not plan to fully integrate the acquisition
  • Keep it simple by adopting standard process flows where you can
  • Thoroughly check out the different pricing structures vendors use
  • Evaluate carefully whether third-party add-ons will be needed
  • Decouple ERP from other infrastructure investments

Follow these nuggets of wisdom, and you could significantly smooth your path to a successful acquisition.

View the full Deloitte article: M&A Loves the Cloud. Read about one company’s experience: Indivior: Connecting The Business With A Digital Core To Run Live.

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About Estelle Lagorce

Estelle Lagorce is Senior Director, Global Partner Marketing, at SAP. She leads the global planning, successful implementation and business impact of integrated marketing programs with top global Strategic Partner across priority regions and countries (demand generation, thought leadership).