Economies of scale presuppose merging the Operational Models


But each enterprise wants to keep its way of working, which is best adapted to its products.

Everyone wants to keep working as they did before the merger, which doesn't allow the expected synergy to occur.

Generating synergy requires a common Operation Model to be defined quickly, which is quite able of respecting each person's specificities.

We analyze the essential Business Objects and Processes: a large part is common, which should enable us to generate economies of scale.

  1. Converge towards a same Operational Model

    If each Enterprise continues to apply its own Models, the merger does not really happen: it is simply a financial operation that consists in adding up 2 distinct operating accounts.

    To achieve a successful merger, not only do the Product Models have to converge, but the Operation Models ( Production, Distribution, human Resources management or enterprise management) have to be identical too.

    We cannot merge 2 branches or 2 back offices, if each one works with its own methods and its own IT applications.
    We cannot merge the Transformation teams if each one is working on its own Architecture.
    This merger of Processes is difficult because it requires many people to change their work methods: not only employees but also partners and customers.

    But the most difficult and costly is to merge the information systems: many mergers stumble over the difficulty of integrating one enterprise's data into the Model of the other, of introducing the original functionalities of the other enterprise into the Model of the first one.
  2. What target Model do we choose?

    If we decide to only keep one Operation Model for both Enterprises, the difficult question is to choose the target Model.
    There are three scenarios:

    • We blend the Solutions coming from each Enterprise to obtain a mixed Model
      • It is a way of not upsetting anyone and balancing the efforts
      • But the result is, in general, a patchwork of unrelated Solutions that will be difficult to evolve
    • We favor the Model of one of the 2 enterprises which becomes the common Model: the other Enterprise has to migrate to this new model
      • It is the quickest way to succeed with the merger
      • But the Enterprise that has to migrate may feel penalized
    • We build a new Model and we wait for it to be available before gradually migrating to it
      • We build something new, when the merger takes place, and no one is favored
      • But we have to wait for the new Model to be ready

    Our recommendation is:

    • Never blend: the result is too complex; if we choose to do it nonetheless for political reasons, select the best Solutions and do not seek to respect a balance in order not to vex anyone.
    • Prefer the second scenario to go quickly: select one of the 2 information systems so that we do not have to interface the Solutions coming from 2 different worlds. Again, the criterion of choice here is to choose the best system and not the one from the biggest enterprise.
    • As a second step, rebuild a modern Model for all concerned. But experience has shown that, after the efforts of merging, it is very difficult to mobilize the troops for another deep change.

    Among the main criteria for choosing a Solution:

    • Is there an Architecture or a Foundation around which we can make the Model grow?
    • Are the Processes efficient?
    • What is the quality of the customer information?
    • Is the technology obsolete?
    • Are the performance and quality of service of a good quality?
    • Is the Solution able to evolve quickly?
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