By: Mukund Rao, Chief Business Officer - Banking Financial Services & Insurance, LTIMindtree

Value creation sits at the heart of most mergers. While this largely serves financial or stakeholder purposes, M&A can also accelerate digital maturity and drive much faster and smoother value creation from the process. With newly enhanced solutions, cross-selling of acquired services, and ample opportunity to simplify operations, digital underpins nearly every element of the new entity. Thus, making a success of the digital merger is a must.

The first half of 2021 alone saw a record-breaking $2.8 trillion in M&A, an increase of 131% year-on-year, according to a recent Global Mergers & Acquisitions Review. Interestingly, while the traditional larger entity acquiring a disruptor – American Experience and Kabbage, or JPMorgan Chase and Nutmeg, for example – has been a trend for some time now, we are now seeing similarly sized organizations merge – BB&T and SunTrust, PNC and BBVA, CIT, and FCB, and a few others that have seen a few speculative articles. These pose, in equal measure, larger challenges and opportunities than (arguably) simpler acquisitions. And this goes double for the underpinning digital infrastructure.

To say bringing together two disparate and completely unrelated full-stack operating ecosystems is a challenge is an understatement. Customer and employee experience, service interoperability, IT infrastructure and cloud, and outsourced vs. in-house functions, to name a few, must all be re-visited, cut, and stitched together, without causing service interruption.

Deciding the digital strategy and priorities, through both merger and post-merger, can therefore be the difference between a successful union, and one that elongates and frustrates employees and clients alike.

At Mindtree, we help customers think through such decisions with a digital transformation lens, focusing on three core areas: the data foundation, customer experience, and organizational agility through evolved operating models.

1. Getting the data foundation right

Mergers and acquisitions usually have a lot of focus on the infrastructure and application landscape to embrace the best-of-breed solutions. Yet, the data strategy is an often-missed area. Aligning the right data strategy in terms of data acquisition, processing, and retention for the merged entity, data governance protocols, data infrastructure, and the insights framework are critical for the merged entity.

To succeed with data, merging organizations must focus on the following:

• Business and data strategy alignment: aligning the data needs and availability requirements with the overall business goals and strategy.
• Balance between standards and flexibility: ensuring balance on foundational elements while bringing the two ecosystems together.
• Existing capability inventory: considering existing capabilities beyond the application inventory to align with a best-of-breed capability matrix.
• Technical debt reduction: cost optimization and debt reduction as a key step in setting up the new data organization.
• Drive the need for democratized insights: with an eye to reduce cost per insight, given that there is always a business stickiness to the way teams consume insights and reports.
• Aligning with the data governance strategy and execution: aligning data governance with data stewardship to bring the two setups together on data and insights.

Getting the data foundation right is critical for driving the core priorities of M&A vis-a-vis customer base acquisition and loyalty, brand elevation, and creating overall value.

2. Maintaining or enhancing customer and employee experiences

Customer experience is the new battleground. An important focus for the merged firm will be minimizing customer attrition and improving the experience.

Drawing baseline performance indicators, benchmarking, and agreeing to which of the newly combined services across every line of business (along with service providers and partners) make the cut must be important and quickly outlined.

Mergers bring a wealth of customer and performance data. Analytics of this newly combined pool bring an improved understanding of service performances and customer journeys – a vital component in setting benchmarks and performance indicators: which services or environments have high bounce rates? Which product offerings are over or underperforming? Where is each service losing customer interest and why? What common factors are contributing towards customer attrition?

Areas that the organization is not particularly strong in are also brought to light and can be addressed by further investment or other strategies.

As with customer experience, firms must factor employee concerns around changes in culture, experience, and the overall business structure. Quickly identifying best practices and ensuring that they deliver the same standard, if not enhanced employee experience across all divisions and functions, is vital.

3. Evolving the operating model for organizational agility

The amount of change involved in a merger dictates that the new organization’s operating model be redefined. Defining this combined model is crucial. At the highest level, there are five key tenets to hit: guiding principles, organization alignment, process engineering, talent management, and technology refresh.

• Guiding principles: the essence of the merger that needs to be translated to overall operations; they help the combined entity redefine its mission, vision, and value for its organization to create a common purpose and identity.
• Organization alignment: defining teams, business units, capabilities, and governance within the combined entity to enable agility in achieving the common purpose.
• Process engineering: rewiring the individual companies’ processes to drive agility and scale to support the merged business.
• Talent management: a key tenet to any business’ operations, this includes hiring, retaining, and upskilling the workforce to drive digital transformation.
• Technology refresh: this is required to provide enhanced experiences across business units and clients, to reduce technology debt, and future-proof the firm. Technology refresh is equally important for enhancing client as well as employee experiences – both of which are central to a successful merger.

Through careful planning, organizations can implement each of the above tenets to frame their combined operating model. This is a key step in enabling the combined entity to achieve a smooth transition.

Concluding remarks:

There are significant digital opportunities and considerations to manage during a merger. The opportunity to reinvent, transform, and provide a seamless transition is key. Yet, it requires a considered approach, centered (at a minimum) on each of the above core focus areas.

By getting the data foundation right, merging organizations can ensure their data strategy is aligned. From the front end, managing customer and employee experiences throughout the merger process is crucial. Achieving organizational agility through evolved operating models is necessary to ensure a smooth transition.

Thinking through these considerations improves the odds of a successful merger, and safeguards the future success of the combined entity, allowing for smoother and faster benefit realization. It is a catalyst to the accelerate transformation and win consistently in the experience battleground.