Ernst & Young recently published a report stating that IT Systems is not getting the attention it deserves in acquisition and merger deals. To neglect it in the valuation phase can be costly in the integration.
We at Agdiwo recommend working actively with application lifecycle management and continuous review of the application portfolio and digital workplace environment.
IT-maturity moves focus for IT department
With the maturity of IT departments comes the move of focus from hygiene factors such as stability, cost control, and risk mitigation. Instead, the IT department moves focus toward the business, creating value and cooperation, innovation, and agility. This movement is welcomed by the business and they also realize today that their IT-systems not only is a critical part of their organization but also an important player for enabling operational efficiency.
In the digital transformation we, at Agdiwo, still do not see that companies manage the life cycle of their applications and the digital workplace environment to the needed extent. Semi-annual Windows 10 releases, new MS Office versions, and application upgrades are neglected and down prioritized.
Third-party vendors are releasing updates in a pace that business application owners not can keep up with. It leaves the users with old browser versions, OS, Office versions, not updated firmware, which hurts productivity and frustrates the workforce.
Cloud hosting does not mean hands-off
Outsourcing, cloud hosting, and SaaS applications have released resources for the IT department. Moving from desktop applications and on-prem hosted applications to SaaS applications is one way of buying your way out application life cycle management. However, moving server workload and application hosting from on-prem data center to cloud hosting does not mean that everything is taken care of.
Management of security patches, OS versions, and application upgrades is not happening automatically because the hosting of the application is in the cloud. An ever-changing market and new releases of software, operating systems and office product creates a need for a controlled and structured way of managing updates.
IT system changes in the top of M&A integration costs
Ernst & Young recently reported that one of the top M&A integration costs is IT System changes. IT costs, such as licensing, consultant, and reconfiguration fees, round out the top three integration cost drivers. Still, the IT-costs are not likely considered in the company’s valuation to the extent of its importance, neither considered as one of the main obstacles for successful integration.
When companies such as E&Y now reports that IT costs are overlooked, we now hope that is an eye-opener for companies to implement continuous life cycle management of applications.
To not work actively with new releases and upgrades of a company’s software and applications will soon make your digital environment obsolete.
Frustration and lack of productivity will be the result. Ernst & Young recently reported that IT System changes are of the top cost drivers in M&A integration costs.