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Six steps for a successful professional services automation integration in M&A companies

Sunil Manaktala is a Customer Success Manager for FinancialForce. He is an expert at bringing the full benefits of IT to solve business issues while managing costs and risks.

Many companies turn to merger and acquisition (M&A) activities as a path to reignite growth, expand market share, diversify products, reduce risk and competition, and increase profits. While M&A activity can be a big accelerator for growth, it can also create a host of operational and software challenges. One of the biggest challenges? The interaction of key IT business systems. It can make your M&A a huge success or a failure. 

In this article we will address the integration of Professional Services Automation (PSA) applications but the steps can be used for any business application (i.e ERP) integration. The strategic decision of which PSA stays and which one retires is difficult. There are four possibilities of how the PSA decision can take place during a merger:

  1. The acquiring company decides to keep using their current PSA. 
  2. The acquiring company decides to use the new companies’ PSA.
  3. The acquiring company decides to implement a new PSA system. 
  4. The new joint company decides to keep using existing the PSA systems from both companies. 

There is an array of varying challenges with each of the above possibilities. From cost to maintenance to processes selection and more, the challenges can be minimized by taking the proper steps for the integration. 

Drawing insights from real world examples, let’s walk through the top six steps that can lead to a successful integration. In the following example, the acquiring company migrates the entire business and users to their current PSA system (the first possibility above).  

The top 6 steps for PSA integration are: 

Step 1: Form Integration Team

Form an integration team with members from all departments, including the executive sponsor, leadership members, project manager, IT, professional services, finance, and end users. The team is then responsible for defining the integration policies, guidelines, approach, and timeline. This is key so that all departments have input from the various roles. 

Here is a sample approach and timeline for the integration. This may be refined after Step 2.

Step 2: Review Business Processes

While most of the processes should be standard and common in an M&A, there can be processes that are different based on the nature of the merger. For example, the acquired company may have service offerings that are not configured in the PSA. 

Therefore, it is important in an M&A to identify the processes that are standard and unique. This will ensure that the stakeholders reach a consensus on the processes that will be supported by the PSA. 

Prepare a list of Selling, Booking, Project Delivery, Staffing and Billing processes, and map the processes into three categories

  • Standard – These are standard processes and are followed by both the companies. For example, both companies create projects from an opportunity.
  • Unique – Process unique to one organization. For example, one company bills on T&M basis and the second bills based on milestone completion and acceptance. The unique processes used by a company may be standardized and need to be used by both companies.
  • New – Identify new strategic or industry best practice processes that’s new to both companies but can bring value to the merged organization. For example, subscription services.

For each process identify the following:

  • Priority
  • Is it a gap? Is it a process or product capabilities gap?
  • Is configuration or customization needed to fill the gap
  • Effort to fill the gap
  • Decision for each process – use standard, fill gap?

Typically, in M&A the standard processes are much higher in number (over 90%). For unique processes the integration team decides if they need to be replicated in the installed PSA. The decision is based on several factors including priority and the effort required to implement the unique processes.

During this step also define the reporting, data migration and integration requirements. 

At the end of this step the project scope is defined and the project timeline can be firmed. 

Step 3 – Configure/Develop/Test

The next step is to configure and develop the processes and reports that are identified to be implemented during the business review process. The configuration may include additional security and access profiles and organizational setup. During this step the test scenarios and scripts are also documented. Training content is also modified or developed at this stage.

Once the configuration/development is complete it goes through unit and user acceptance testing. E2E system test and integration tests are also completed during this step.

Step 4 – Migrate Data

One of the most important steps in any M&A integration is the establishment of a strategy for data migration. It is likely that the two companies deal with the same master data (customers, contacts, work calendars etc.) and therefore direct migration from the acquired company would end up creating duplicates. To avoid such a situation, it is advisable to establish data standards for master data including consolidation and de-duplication. 

The migration may include alignment of migrated data to acquired companies standards i.e. resource roles, billing price, resource cost, utilization target etc.

Short term open projects can be completed on the acquired company’s PSA. Long term open projects and related data may be migrated to the acquiring company’s PSA. The open Opportunities may need to be migrated also.

Also a decision has to be made if any historic data needs to be migrated or can be archived. Many of our customers leave the historic information in the current PSA system and procure 5-10 licenses to access this information. This is a more cost effective solution as the company does not have to go through data clean-up and migration exercise and also save storage space in the target PSA environment. 

Step 5 – Train Users

During this step the end users are trained by role. The training can be instructor led training or recorded training. 

Step 6 – Go Live

The tested solution is deployed in production and the data is migrated. Users and their appropriate security permissions are configured. The production configuration is tested (smoke test) before making the system available to users. 

The project is transitioned to Support, and the usage is monitored. 

Your path to a successful integration

There are several other elements such as organizational change management, policy decisions and compliance requirements that also may affect the merger and the PSA integration that follows it. 

It is advisable to make the above process repeatable and scalable. It’s safe to assume that the large companies will go through several M&A activities. A company should document the standard business process, develop a center of excellence, and facilitate other activities that make merger integration much faster and more effective the next time around. Companies that employ this kind of mind set are more likely to have successful integration of the acquired companies.  

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