Debunking Myths: Retaining Disparate ERP Systems during Mergers & Acquisitions can Save Money

Debunking Myths: Retaining Disparate ERP Systems during Mergers & Acquisitions can Save Money

September Blog Series: Debunking Myths

Insights from: Connie Keasler (Inside Sales Representative)

ERP Myth for Mergers and Acquisitions 

Many manufacturers believe they will save money during an acquisition of a company, which currently uses an outdated ERP system, by leaving that old system in place instead of replacing it. The truth is that doing so can significantly impact the new entity in many ways.

Inefficiencies caused by outdated software can impact shipping, order completion, and ultimately customer satisfaction, which may result in declining sales. This is especially troublesome if a company was acquired because it offered penetration into a new market.

Even if one of the joined companies may be considered world class, the outdated system inefficiencies of the other company can systematically reduce performance.  As a result, customers originally drawn to the world-class company may take their business elsewhere.

Example:

Company A and Company B recently merged. Company A has a high ISO rating, but Company B does not because its outdated ERP software does not track the data necessary for compliance and designations. Quite often, older ERP software requires manipulation and additional software to retrieve such data, which results in slower responses. When the necessary data is finally accessed, it only reflects information from the time of its retrieval and presents skewed analysis. This newly formed entity may now lose customers who want to deal with a highly rated and compliant company.

 "C" level executives can be negatively impacted by disparate ERP systems

The CFO is responsible for correct and timely consolidated financial information, and disparate ERP systems can provide huge hurtles for them.

Many CFO's have to jump through hoops in order to get the data they need from different ERP systems, and this difficulty can present a manufacturing company with audit woes. Multi-million dollar adjustments to operating income can result from the inability to locate or re-create account reconciliations from prior years.

Investing in a successful future for newly merged and acquired companies

According to the blog post "Why Should You Consider a Modern ERP Solution?" from ERP Software Blog in the Microsoft Dynamics Community, companies replacing outdated ERP systems with Microsoft Dynamics ERP software can experience some or all of these benefits:

Reduced cost of operating capital – Fast and easily accessible information across all aspects of a business drives profitability and optimized operations.

Reduced cost of labor – All sectors of a business have real-time data at their fingertips, which reduces operational and administrative costs.

Reduced cost of inventory – Enhanced coordination between manufacturing and other entities results in an average 22% decline in inventory costs.

Improved realization of new market opportunities – Businesses have increased potential in new markets due to the ERP system's multiple language and currency capabilities.

For More Information:

Reference Article: Why Should You Consider a Modern ERP Solution?

Mergers & Acquisitions Solution Sheet

Microsoft ERP Software – Discrete Solutions

Debunking Myths: Quick Mergers & Acquisitions are Better

On Demand Events:

Hear Microsoft discuss the future technology behind its ERP solutions in our upcoming webcast: Your ERP System Does THAT?​


ERP, business trends, Microsoft Dynamics AX ERP, Business Advice, erp trends, m&A activity, mergers and acquisitions, Microsoft Dynamics ERP