Two ERP systems after an acquisition: What next?

4 min read

After an acquisition, the parent company and the acquired business need to keep operating while management decides what to do with their ERP systems. Both systems can remain in place for the time being, be connected via interfaces or be consolidated on a shared platform. The right solution depends on business processes, the data required and the timeline. An early assessment helps prevent important functions from being overlooked during integration.

Three options for systems after an acquisition

Parallel operation: Both companies initially continue to use their existing ERP systems. This creates time for an assessment and can also be suitable over the longer term if the companies operate largely independently. For shared reporting, however, it must be clear who provides which data and how differences are reconciled. Licence, operating and maintenance costs for both systems must be included in the calculation. An agreed review date prevents the arrangement from continuing without being reassessed.

Integration: Both systems remain in place and exchange selected data via interfaces. This can make sense if the subsidiary is to retain its own processes while the group still needs shared information regularly. The companies need to clarify in advance which system is the authoritative source for a record, how changes are transferred and who handles errors. An interface can also serve as an interim solution until a later migration is ready.

Migration: The acquired company moves to a shared target system. This can be appropriate if its requirements can be met there and shared operation justifies the effort involved. Before a decision is made, business teams need to assess which functions, historical data and open transactions should be transferred. Any changes to the target system and the cost of the changeover must also be included in the comparison.

Four questions to answer before deciding

Management should work out the answers with the people responsible at both companies:

1. How independently should the acquired company operate in future?
2. Which processes and specialist functions are important for delivering its services?
3. What data does the group need for management and financial reporting and by when?
4. What one-off and ongoing costs will arise for operation, interfaces and a possible migration?

The assessment should also cover contracts and their terms, existing interfaces, responsibilities and the state of the master data. If the review is possible before the purchase, it can form part of due diligence. After the purchase, it provides the basis for a robust integration plan.

Agree clear rules for master data and interfaces

Customers, suppliers and products may have different names or duplicate records in the two systems. Each type of shared data therefore needs an agreement: where is it maintained, who is allowed to change it and how are discrepancies resolved? When systems are connected, it must also be clear which data is transferred, in which direction and how often.

Migration also involves open orders, inventory and balances. In its data migration documentation, Microsoft lists field mapping, data quality checks and the allocation of responsibilities as tasks. The guidance relates to Dynamics 365 and the questions are also useful when comparing other ERP projects.

Prepare the changeover with business teams

People in sales, purchasing, production and accounting know the processes the system needs to support. Their review shows, for example, whether an order can be processed from receipt through to invoicing in the chosen target process. IT adds its perspective on interfaces, permissions and operation. Microsoft identifies the involvement of process owners as well as testing and training in its implementation strategy.

Before a system change, data migration and critical workflows should be tested with representative data. A changeover plan sets out who decides what and when, how long systems may be unavailable for the transfer and how to proceed if serious problems arise. The business owners sign off the results before go-live. A new interface also needs testing and an arrangement for ongoing support.

Frequently asked questions

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