SAP Solution BriefSAP ServicesSystem Landscape Optimization Group

Realizing Mergers, Acquisitions, and Divestitures at the IT Level

BenefitsSolutionObjectives Quick Facts

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Objectives

Benefiting from a smooth adaptation of your system landscapeChanging markets and challenging business situations call for new ways to cut costs and optimize business operations. Companies are seeking to improve business value via mergers, acquisitions, and divestitures, which require the full adaptation of the IT landscape to reflect the new organizational structure.

Increasing globalization and the need for market agility mean that companies must constantly adapt their portfolios to ensure sustainability and growth. Whether they are pursuing market leadership, hoping to lever-age synergies across an installed base, or looking for economies of scale, many firms engage in mergers, acquisitions, and divesti-tures to foster growth and realize benefits and gains to shareholders. As a result, companies search for ways to quickly and cost-effectively adapt their IT landscapes. Enterprises that adopt a more proactive and market-oriented strategy may decide to:

• Acquire a new business • Divest a business unit or a company • Reorganize internally and prepare for divestment by, for example:

– Setting up a business unit as a separate legal entity

– Moving production to another factory • Introduce shared-service centers

To execute such demanding business scenarios, firms need to implement a global enterprise strategy and realize transformation objectives at the IT level.

Benefiting from a smooth adaptation of your system landscape

Benefits Quick FactsSolution

Improving business value through suitable IT integrationIT plays a major role in realizing mergers and acquisitions (M&A) and divestitures. M&A projects offer numerous rewards but also involve financial risk. While a well-planned and suitable approach to IT integration im-proves business value, poor IT integration can lead to operational malfunction. For example, disrupting daily business can cause production outages or delayed orders. Ultimately, suc-cess depends on a firm’s ability to meet all predefined business needs and handle the IT implementation effectively.

During the planning of an M&A or divestiture project, the overall adaptation and alignment of the IT landscape is a key priority for busi-

ness operations. To decide on the best IT approach, you need to understand the IT options. A premerger assessment helps you fully understand all IT requirements, such as process-relevant limitations, business data–related issues, and the integration-driven factors that may jeopardize the successful integration of the acquired business units. The assessment estimates costs, realistically defines planned objectives, clearly assigns resources, and details a plan for all IT activi-ties. This preparatory work helps you choose the right strategy, which can range from a complete merge of the buyer’s and seller’s systems to the migration of selected data into the target landscape.

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Improving business value through suitable IT integration

Minimizing risk during IT project realization

Project phases within merger and acquisition scenarios

Optimizing your company’s business processes

Overview of IT integration scenarios

Complementing projects with information lifecycle management

Solution BenefitsObjectives Quick Facts

Minimizing risk during IT project realizationWhen you realize an IT integration project, it’s essential to involve all functional departments to ensure seamless interaction with IT and support a smooth integration of the affected business unit and applications, such as con-trolling, sales and distribution, and production (see Figure on the next page).

The target scenario will integrate the entire business into the new corporate structure, requiring extensive efforts to harmonize data and business structures, including the local chart of accounts, customer numbers, prod-uct hierarchies, and fiscal year changes. In light of a redefined corporate target structure, controlling areas, company codes, plants, and sales organizations need to be changed or reallocated in your SAP system.

If your group plans to divest a company – or part of one – you have to evaluate different IT divestment strategies. Depending on the divestment scenario, you may need to carve out organizational structures and the as-signed business data at the level of plant or company code. At the project outset, you need to identify split requirements and to select and transfer all related quantities and values. The System Landscape Optimization group from SAP® Consulting – with its broad service portfolio covering many business scenarios and enabling you to safeguard all historical data – can help you select the best approach.

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BenefitsSolutionObjectives Quick Facts

Improving business value through suitable IT integration

Minimizing risk during IT project realization

Project phases within merger and acquisition scenarios

Optimizing your company’s business processes

Overview of IT integration scenarios

Complementing projects with information lifecycle management

Project phases within merger and acquisition scenarios

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BenefitsSolutionObjectives Quick Facts

Improving business value through suitable IT integration

Minimizing risk during IT project realization

Project phases within merger and acquisition scenarios

Optimizing your company’s business processes

Overview of IT integration scenarios

Complementing projects with information lifecycle management

Due diligence

Analysis Preparation

Blueprint Mirror to IT

Consolidate RestructureHarmonize and unify

Integration planning

Acquired business Existing company structure

IT landscape

Realization

Optimizing your company’s business processesThe complexity of integrating a new acquisi-tion requires a suitable IT solution (see Figure on the next page). Postmerger integrations offer different options, comprising a client transfer (resulting in a multiclient system), a client system merge (resulting in one central system), and the transfer of selective business objects (such as sales or purchase orders). By combining different data migration tech-nologies with standardized methodologies and best practices, SAP experts can help realize your integration objectives. They can help you create a flexible multiclient system landscape by transferring clients from multiple source systems into a dedicated target system. In fact, a client transfer project may help your

firm simplify its landscape. The client transfer approach can also be a preparatory step for establishing a single-client system with stan-dardized and uniform business processes containing all historical data from all the selected source systems.

For divestiture projects, the System Land-scape Optimization group also supports various scenarios. By starting with a strategy assessment, the project team can select the most suitable IT approach. Depending on your business scenario, the SAP experts can deliver standardized services – for example, to transfer a company code or apply a tailored solution such as splitting a business area.

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BenefitsSolutionObjectives Quick Facts

Improving business value through suitable IT integration

Minimizing risk during IT project realization

Project phases within merger and acquisition scenarios

Optimizing your company’s business processes

Overview of IT integration scenarios

Complementing projects with information lifecycle management

Overview of IT integration scenarios

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Corporation before IT integration

Corporation Acquired business

Company A

System 1

Company B

System 2

Company C

System 3

Corporation after successful IT integration

New system x

BenefitsSolutionObjectives Quick Facts

Improving business value through suitable IT integration

Minimizing risk during IT project realization

Project phases within merger and acquisition scenarios

Optimizing your company’s business processes

Overview of IT integration scenarios

Complementing projects with information lifecycle management

Company code split

Client and company code transfer

Harmonization of naming rulesPlant reallocation

Client 100

Client 100 Client 200 Client 300

Client 200 Client 300

0700

0700 0800 09000710

0800 1900

Complementing projects with information lifecycle managementIn a traditional integration project, an optimal level of data quality needs to be achieved to ensure process continuity. However, many M&A-related projects not only result in greater system complexity but can also inherit un-structured data from legacy systems. Run-ning legacy systems poses higher risks in the areas of hardware incompatibility and system reliability.

In addition, legacy systems often demand more administrative effort and resources. One of the main reasons for this is that governments and tax agencies mandate that certain data be retained for a specific duration. In order to proactively reduce total

cost of ownership and minimize risk, the Sys-tem Landscape Optimization group provides proven services for implementing the SAP NetWeaver® Information Lifecycle Management component. On the basis of a well-defined archiving solution, companies can benefit from improvements through the introduction of retention rules and data policies. The sys-tem decommissioning component of SAP NetWeaver Information Lifecycle Manage-ment not only helps you extract auditing- relevant data prior to system retirement, but it also supports on-demand reporting – via its business warehouse functionality – from the decommissioned system.

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BenefitsSolutionObjectives Quick Facts

Improving business value through suitable IT integration

Minimizing risk during IT project realization

Project phases within merger and acquisition scenarios

Optimizing your company’s business processes

Overview of IT integration scenarios

Complementing projects with information lifecycle management

Leveraging SAP experience during M&A-related IT projectsOver the last 18 years, the System Landscape Optimization group has engaged in over 10,000 migration, harmonization, and con- solidation projects worldwide. During the course of these projects, the group has provided a high degree of standardization combined with flexible adaptation to meet firms’ special needs. For all services, the SAP experts use proven methodologies and software-based technologies.

For the multifaceted demands of M&A and divestiture projects, no “one size fits all” approach exists. An up-front strategy assessment is key to meet all transformation requirements. The System Landscape Optimization group offers a comprehensive service suite for addressing customers’

SAP transformation requirements. Multiple feasibility checks, an in-depth performance analysis, and an initial assessment help create a reliable estimate of effort, cost, and downtime requirements at an early project stage. Prior to the productive con- version, each project includes multiple test conversions to help ensure data security, consistency, and integrity.

For recurring, less-complex transformation needs, you can also use the group’s standard SAP Landscape Transformation software – providing a highly standardized set of solu-tions for the SAP ERP application, enabling firms to plan, analyze, sequence, and realize projects on their own.

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Leveraging SAP experience during M&A-related IT projects

BenefitsSolutionObjectives Quick Facts

SummaryEver-changing markets and volatile economic conditions demand corporate action and business flexibility. Business challenges often prompt firms to initiate mergers, acquisitions, and divestitures to enhance market position and increase business value. Firms have to fully adapt the IT landscape to reflect a new organizational structure. The services provided by the System Landscape Optimization group from SAP® Consulting help you integrate a new acquisition or divest parts of your company. Objectives

• Integrate new acquisition and simplify existing system landscape

• Execute different IT divestment scenarios quickly and cost-effectively

• Meet legal and business requirements regarding data retention

Solution • Initial assessment of individual technical integration or divestiture approach

• Proven methodologies, software-based technologies, and standardized methods

• Scenario-based and comprehensive services for acquisitions and divestitures

Benefits • Sustained, undisrupted business opera-tions via experienced know-how of SAP experts during realization phase

• Reduced maintenance and project costs thanks to intelligent use of services and careful design of target landscape

• Minimized risk and ensured legal compli-ance via System Landscape Optimization group’s offerings

Learn moreTo learn more, call your SAP representative or visit us on the Web at www.service.sap.com/slo.

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