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5 Key Questions for Success in CRM During Mergers and Acquisitions

Today's blog post is written by Brian Kasic, Principal Consultant at Sonoma Partners.

Mergers and acquisitions are times of tremendous change within companies. In many cases, the newly formed company will result in multiple CRM systems. It is critical to think through what will be done with those applications moving forward as you simultaneously define business processes going forward, review data, and look at best practices. And if you aren’t doing those things, you should be!

During M&A consolidations, people, processes, and systems are all being reevaluated. This becomes an optimal time to take a fresh look at your CRM strategy.

It is the strategy that guides the future decisions regarding CRM.  Let’s say both parties involved in the merger or acquisition have a CRM system. Which CRM system “wins”?

I’d like to outline a few of the top questions I believe are worth asking during this M&A time period to help define your CRM strategy:

Which company has more business processes utilizing CRM?

To answer this, take a look at which elements of employee’s day-to-day activities rely most heavily on CRM business processes and how they will be impacted with the newly formed company. If we don’t consolidate processes at this stage in the M&A activity, it becomes increasingly more difficult to have a single cohesive system. If a CRM system is selected that is not familiar to all end users, those users on the new application will have to adapt to a new system including how they find and enter data. This leads to the need for additional training. If the newly formed organization sticks with multiple systems, disparate systems can be very damaging to the overall customer relationship as well as the processes that those systems support. I usually recommend consolidating into the CRM system that has the most mature business processes because of all the work that has already gone into making it the more mature CRM.

Is there a cost savings to the company, choosing one system over the other?

Selecting the option with the better licensing model can provide long term cost savings in a big way. Consolidating the new organization into a single system increases the number of users and may provide better pricing structure options. Determine the renewal timing for your licensing agreement and if there are any licensing structures that make more sense with one CRM platform over the other. Licensing models can range from read-only to full-use licenses. Check all of your options to help optimize the cost of licenses. Storage costs and support models are other factors that should be assessed as you are going through the licensing assessment.

In addition to hard costs associated with the software, you also want to determine the time needed to adjust any of your business processes to either fit into the new consolidated CRM platform or development effort needed to change the software to exactly meet those business requirements. Since time is money, understanding how long the transition will take is often a major contributor to the overall decision making process.

How much data cleansing/consolidation is needed?

Determining how much data exists, how much redundant data exists, and how much bad data exists will be a large indicator to how complex the consolidation activities will be. Remember, keeping the CRM applications separate after the M&A activity is a viable option, but you need to identify a plan to ensure a holistic view of your customer is available. Typically when we see companies approach their CRM strategy with multiple CRM applications, they eventually decide on a CRM consolidation project at some point.

What other systems are impacted from the CRM system being decommissioned?

Enterprise resource planning, financial systems, customer satisfaction applications, collaboration, and marketing systems are the most common systems that integrate with a CRM platform. If one company’s CRM system is decommissioned, other system connections will need to be built into the remaining CRM application. Each of these integration points will have a time and cost component associated with switching systems.

Will you be moving from on-premise to online or vice versa?

Moving from one environment to another is an entire project in itself. If you find your company in this situation, work with your partners and CRM vendor to sort out the nitty gritty details. The primary positives to being online are the infrastructure benefits and routine updates that come with the cloud. In addition, the vendors are providing functionality faster and in some cases only in their cloud offerings. Keep in mind that with an online solution, you are often subject to the maintenance schedule dictated by the CRM vendor which may not fit into your M&A schedule of activities.    

We talk a lot about approaches you can take to make a smart, analytical assessment to choose the right CRM platform for your organization. Some things you always want to consider include your current technology environment, your preferences for a cloud-based vs. on-premise deployment, and your organization’s history and bias towards a specific CRM platform. But you don’t have to do this alone. An experienced CRM consulting firm, like Sonoma Partners, can objectively help you take a look at the CRM systems currently being used to assess the quality of the code, the complexity to migrate data from one to another, the amount of customization, and the impact on the end user.  

Even though there are many moving parts during M&A activity, this time period is a perfect opportunity to define and reevaluate your CRM strategy.  Develop your CRM roadmap to identify what CRM system or systems you are going to stand behind and use to grow your new organization.

At its core, M&As are about reducing redundancies so that more efficiencies can be obtained. By merging CRM systems, you can rest assured that you can achieve real business benefits from your CRM that will make the new organization formed a success.

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Topics: CRM Best Practices