2015 is shaping up to be one of the heaviest deal-making years to date. The first quarter of 2015 was the strongest opening three-month period for worldwide mergers and acquisitions since 2007. What’s behind this uptick in M&A activity? The economy isn’t in recession but it isn’t booming either. Organic growth is a tall order in this environment, so companies are looking to grow through M&A.
But it’s no secret that most—between 70 and 90%—of these deals turn out to be duds. There are plenty of factors, but one that’s often overlooked is ERP (enterprise resource planning) complexity. The typical large international organization has an alphabet soup of ERP platforms and software across business units and geographies, which creates major (but often unseen) inefficiencies. Can you imagine what happens when you combine two messy ERP environments? Yep, one giant ERP mess. This mess hampers data-based decision making, cross-enterprise communication, human capital alignment, and operational performance.
APQC’s 2014 research found that 76% of companies think their current ERP environment is unacceptable. Now, we are wondering if the high level of M&A activity this year has finally spurred senior executives to take ERP simplification seriously.
It’s really difficult to mandate a single ERP standard across an organization. But are companies ready to at least simplify the environment? To say, move from 25 ERP systems to 5 ERP systems? We suspect this would be a major improvement for any organization, whether or not they are planning to make a deal.
We urge you to health check your ERP environment by taking our survey. The survey takes less than ten minutes to complete. As a thank you, you’ll receive a free copy of our 2014 report, ERP Consolidation: The Rationale is Growing Stronger right away. You’ll also get a free copy of the new report as soon as it is complete. We truly value your input, so please contact me directly if you have any questions.