Mergers and acquisitions (M&A) are a strategic way to scale operations, enter new markets, or boost competitiveness in the manufacturing sector. But while much of the attention focuses on commercial outcomes, the real success of an M&A deal often depends on a less visible factor: the smooth integration of IT systems.
IT integration is complex and frequently underestimated. Overlooking the challenges of aligning ERP systems, processes, and data can result in costly delays, disruption to operations, and lost value.
This article gives CIOs, CFOs, and IT leaders clear steps to plan, deliver, and refine IT integration efficiently and effectively.
Why IT Integration Is Critical to M&A Success
When two organisations merge, so do their people, processes, and systems. A well-executed IT integration can help unlock new efficiencies, create a single source of truth, and support strategic growth. However, if IT integration is poorly handled, it can lead to operational downtime, duplicated work, poor visibility, and compliance risks. Research shows between 70 and 90 percent of M&A deals fail to deliver their expected value, often because integration challenges derail the plan.
In the manufacturing sector, where operations, supply chain, and production processes are tightly linked to ERP and other core systems, the stakes are high. Overlapping or misaligned systems can lead to inventory inaccuracies, production delays, or increased costs. The ability to maintain supply chain visibility, accurate financial reporting, and production scheduling during and after the merger is critical.
Customers and suppliers also expect business continuity. If service levels dip or information becomes unreliable, relationships can become strained. IT integration issues can quickly erode trust and jeopardise long-term relationships if not handled carefully.
Start Early: IT Due Diligence Shouldn’t Be an Afterthought
IT due diligence should be part of the early-stage planning, not left until the ink is dry. Involve IT leaders and system experts from the outset to assess:
- Infrastructure compatibility and scalability: Understand whether both businesses’ IT infrastructures are cloud-based, on-premises, or hybrid; and whether they can be scaled to support the combined entity. Identify any significant gaps in capacity, performance, or resilience.
- ERP platforms and licensing models: Identify the ERP systems used by each party. Are they the same vendor? Are versions compatible? Licensing arrangements may need renegotiation or rationalisation. Overlapping systems could be consolidated or retired to reduce cost and complexity.
- Third-party integrations and customisations: Investigate the extent to which each ERP or business system has been customised or integrated with other tools (e.g., Finance, Logistics, WMS, CRM, HR & Payroll). Legacy integrations often pose risks when merging environments.
- Data quality and structure: Assess how data is captured, categorised, and maintained. Differences in naming conventions, taxonomy, and structure must be addressed to enable effective data consolidation and reporting.
- Security risks and compliance considerations: Evaluate the cybersecurity standards and regulatory compliance of both organisations. Identify any vulnerabilities that need to be addressed prior to integration.
This in-depth review will uncover potential red flags, hidden costs, or complexity that may impact the post-merger integration. It also gives you the chance to begin mapping out what a combined digital infrastructure could look like and whether investment will be needed to upgrade or rationalise systems.
It’s interesting to note that only 36% of IT decision-makers feel they have enough time to uncover an acquired company’s assets and protocols during due diligence.
Define a Clear Post-Merger IT Integration Strategy
Not all integrations are the same. Your strategy should reflect your wider business goals.
- Full integration brings everyone onto the same platform and processes. It delivers consistent reporting and governance but demands serious effort in data migration and change management.
- Separate systems with data bridges let the acquired firm stay on its stack while key data flows into a central hub. This is faster to stand up, although it can leave silos in place.
- Best‑of‑breed consolidation picks the strongest systems from each side, then retires the rest. It modernises the estate but takes time to roll out.
Each model has trade-offs in terms of cost, complexity, and timeline. Define your approach based on:
- Business priorities and critical timelines: For instance, supply chain continuity may need to be preserved from day one, while back-office integration could follow later.
- The maturity and quality of existing systems: Retaining or consolidating high-performing systems can avoid unnecessary investment, while identifying underperforming platforms can help build a case for change.
- Capacity for change across both organisations: Consider how much change the business can absorb. Resourcing, training, and stakeholder engagement will influence how quickly integration can progress.
You’ll also need to map and align business processes, identify functional gaps, and manage change effectively across teams. This is where a comprehensive blueprint and roadmap are critical. They ensure clarity regarding which functions will be integrated, the timeline for integration, and the methodology employed.
Common Integration Pitfalls
From our experience supporting manufacturers through post-merger transitions, we often see similar issues arise:
- Underestimating data migration: Legacy systems may contain incomplete, inconsistent, or duplicated data. Attempting to merge this data without cleansing and mapping it carefully can lead to system errors, reporting issues, or compliance breaches. Data migration should be treated as a separate project, with rigorous testing, validation, and stakeholder sign-off at each phase.
- Failing to align business processes: Merging systems without addressing underlying process differences will only create inefficiencies. Invest time in mapping and comparing key processes, such as order-to-cash, procure-to-pay, and inventory management. Where possible, standardise and simplify to enable a smooth integration.
- Overlooking cultural integration: Even the best systems will fail if people don’t understand or adopt them. Cultural differences in how teams approach technology, process ownership, and communication can undermine integration. Strong leadership, change champions, and open communication are vital.
- Lack of ownership: A post-merger integration requires clear governance. Assign accountable project sponsors and integration leads. Define roles, responsibilities, and escalation paths. Without this, projects stall, and integration decisions become bottlenecks.
What to Prioritise in the First 100 Days of a Merger & Acquisition
Once the deal is closed, the first 100 days are critical. Use this time to stabilise operations, build momentum, and establish confidence. Focus on:
- Ensuring business continuity across core operations: Monitor production, logistics, and customer fulfilment processes closely. Have contingency plans in place for unexpected disruptions.
- Communicating the integration plan clearly to all stakeholders: Internal teams need clarity on timelines, expectations, and the rationale behind key decisions. External partners, such as suppliers and customers, should be kept informed and reassured.
- Aligning user roles, permissions, and data access: Security and compliance are critical. Ensure that access controls reflect new organisational structures and reporting lines.
- Stabilising critical systems and interfaces: Address any integration errors or data inconsistencies quickly. Monitor system performance, user feedback, and transaction integrity closely.
- Gathering feedback and measuring impact: Use KPIs and regular reviews to assess what’s working and where improvements are needed. Early course corrections can save significant time and cost later.
Summary: Make IT Integration a Strategic Asset
Effective IT integration and planning doesn’t just support a merger – they accelerate its success. By starting early, creating a clear strategy, and avoiding common pitfalls, CIOs and IT leaders can ensure a smoother transition, better systems, and a stronger foundation for future growth.
At Optimum PPS, we specialise in helping manufacturers navigate complex ERP and digital transformation projects – including during mergers and acquisitions. Whether you need support with IT due diligence, integration planning, or post-merger optimisation, we’re here to help.
Planning an acquisition or already mid-integration? Contact us today to discuss how we can support your journey.