Key SAP HCM items during a merger or acquisition – Part 1

By Posted October 20th, 2012

Your organization has just decided to pull the trigger and purchase that up and coming competitor, and who’s responsible for consolidating the two SAP HCM environments?  Yes, it’s you. Congratulations – or some might say condolences – are in order for your new assignment.

All kidding aside, this is a situation that more and more of you will be facing in the coming weeks and months as companies will grow rapidly via the merger and acquisition route as we come out of this recession.  As the Program Manager responsible for consolidating the systems, you will be faced with a number of situations and issues that are completely different from the experiences and knowledge that you have gained in traditional implementations and upgrade projects.

The object of this two-part blog post is to help outline the key areas that you need to address in this situation.  Ultimately, you need to consolidate the SAP HCM environments, but don’t kid yourself – there is a lot more going on here than just moving data from System A to System B.  The following topic areas are things that you need to examine and potentially address during the journey to amalgamation in this first part of the blog:

  • Business consolidation planning and execution approach
  • Business process reengineering
  • System configuration implications and integration

Business Consolidation Planning and Execution Approach

This might seem self-explanatory, but don’t forget the old axiom “Fail to Plan – Plan to Fail”. Does your organization really know what it is trying to accomplish?  Is the scope of the consolidation clearly defined?  Will Finance and HR be going first or is it going to be a complete SAP ERP consolidation of all areas (like SD, PM, PP, MM, etc.)?  Be aware that the more functional and process scope included in the consolidation, the further HCM moves down the food chain.  Sorry to be blunt, but even today’s most progressive companies sometimes erroneously think that HR is just the payroll system and as long as everyone gets paid – it’s all good.  But many of us know that it is a little more complicated than that.

You need to come up with an approach that focuses on the key areas you need to address from a people, process and technology perspective. Once that strategy is defined, you need to create the tactical plan that you can successfully execute.  Ultimately, the team that you have is what is going to make this happen, and often organizations either don’t provide the resources or only give internal resources for a limited amount of time. As a result, you might have to look externally at getting experts and resources to assist in this endeavor.  So determine early on if you are going to do all the work in-house, or if you have plan to use an outside consulting firm. If you decide to use a consulting firm that has never worked with your company, be sure to consider the procurement and contract processes within your company.  Getting a new supplier introduced into your organization could add weeks to your start time and put your schedule at risk or drive up your cost by adding more resources.

Business Process Reengineering

Like it or not, one – if not both – of the companies will have to come up with new processes on how things are done.  The challenge usually is finding out exactly how they are done today, especially if it’s not well documented.  Be careful not to think that you have time to do a complete process reengineering program that could take months longer than your schedule.  Focus on high volume transactional processes first and deliver those to the business as quickly and effectively as possible.  Don’t get hung up on the system as the process design limitation.  If one company is doing a process manually and the other is doing the same process in a system, don’t assume that the system process is the best.  Do your homework and look at it holistically.  You would be amazed at how many manual processes work just fine during a merger period.  Design the most efficient process possible whether manual or systemic in nature.

Take this opportunity to improve things, but don’t get bogged down in trying to address everything while creating the “perfect” process for both organizations. If you do, it will be your downfall.  Make sure that the process works for everyone, even if it isn’t perfect.  Remember that you are operating two companies while trying to consolidate them into one as effectively as possible and that you are never going to make everyone happy.

SpinifexIT Solution Engineers understand HR operational processes and how to use our products to assess the current state and to make recommendations on how to standardize and improve the processes for both organizations.  We know that you have to take a “do it with them” not “do it to them” approach when doing process implementation and reengineering.

 Technology / Platform Consolidation

You might be thinking that this topic is redundant because the consolidation of the companies automatically means consolidation of technology.  Not necessarily.  If there are substantial differences in the technological footprints of the two firms, this could be a challenge to the HCM consolidation.   This area must be assessed in conjunction with the entire IT infrastructure model.

For example, this could be an impact area if one of the organizations is using ESS/MSS functionality and the other firm isn’t or, more commonly, both firms are using the functionality but to a different degree or in different processes.  When faced with this situation, it is imperative to understand the process alignment between companies and adapt the best level of functionality for the greatest number of users.  This could result in large organizational change management implications since employees and managers are often asked to do more.  Remember, since this area touches every employee (and manager), it is imperative the functionality operates flawlessly. If there are radical differences between the processes and look and feel of the portals, this should be addressed and corrected as early as possible.

In part two of this post, I will focus on the following areas:

  • HR Data Governance
  • Resource Assessment and Alignment
  • Technology / Platform Consolidation