Imagine an organization “MEGA” with multiple divisions, specialized in variety of product groups. The distribution channel for these products is well spread across continents. Top management, from the perspective of consolidating company’s global position, in their business domain, decided to acquire another company “MICRO”
Typically a acquisition goes thro’ 2 important merging modes
Once the acquisition made, the first dead-line (always a tight one), that is expected from the shareholders, is the integration of financial reporting. With MDM already in place, the companies has the flexibility of absorbing / mapping the classification / taxonomy of data objects for the new company into its data structure and provide a more accurate and reliable reporting on corporate finance.
Defining the strategy for carrying these activities takes lots of efforts and often detailed pre-merge analysis is done by management consultants, before hand.
While there is no systematic solution to the first, the merging of processes within the system imposes lots of limitations and attract discomfort at all the levels in the organization. With the MDM in place, lots of challenges raised by such organizational changes can be addressed at ease.
On closing the deal with MICRO stakeholders and management body, MEGA needed to quickly absorb the new business line into its mainstream. It decided to ~
Case 1 – Company MEGA has Service Oriented Architecture having recently upgraded their SAP to WAS platform and chosen XI as their ongoing middleware but doesn’t have MDM / equivalent master data governance tool.
– Using the right customer master number from among the new & existing records
– Having consistent sales area assignment to customer & relevant material master
– Assigning right product hierarchy, material groups to new material master record
– Choosing pricing master for purchasing items common across organization
– Pulling out reliable reports by product groups, regions and business partners
Case 2 – Company MEGA has both SOA and an MDM in place, to manage their primary master data objects material, customer, vendor.
– Cleansing and de-duplication of material / business partner master data
– Mapping material master to global product hierarchy
– Re-aligning the material groups for new material data records
– Defining new rules for extension and interface to new enterprise entities
– Feeding the maps for the duplicates master data (from among existing and new system) to BW, in order to get accurate reporting
Service oriented architecture helped merging system landscape and acted as an enabler for connecting the systems / applications and globalize business processes to next level.
However, beyond a certain point, lack of master data consolidation and process to manage it acts as a ‘showstopper’ for further stream-lining your business processes.
If you build a robust data creation process, using Composite Application (GP CAF in SAP term), the newly acquired business can be easily integrated & absorbed, by making back-end connections between CAF and data points for the new system and extending the data management process to the new business. This will not only shrink cycle time for setting up new masters, but will save you time and money for implementing it to acquired business.
When you acquire an organization, it is highly likely that you have common customers, vendors and material masters. As I mentioned in my earlier article, it is critical for this newly formed business to have the credit limits re-defined as well as have it closely monitored.
This not only makes your merging activity ‘on time’ ‘on budget’ but also help in long-run by reducing the recurring cost of maintenance and hyper-care of the new environment!