Mergers and Conquering the Unique Technological Challenges

Completing a merger is one of the most challenging events for any financial services company. Companies must combine processes and resources to form a single entity. Mergers are a great way for companies to gain diversity in services, talent and build market share. But in order for a merger to be successful, they must be looked at strategically to strengthen and maintain their place in the market.

When considering your merger strategy, you must take into consideration how the merger impacts the existing technological assets of each company. Successful mergers will work to maintain the unique advantages of each company while finding building opportunities from combining processes and resources.

Potential Technological Issues

Consolidating processes and resources can reveal governance and technological challenges that must be addressed.

Consolidating Technologies

It is always recommended for companies to have extensive documentation of their servers, networks, data centers, and other products. It is common for mergers to run into an issue of compatibility and redundancy where systems may fail to integrate completely, security processes are jeopardized, and spikes in operation costs from running more hardware than is needed.

Issues with Compliance

Since 2008, the Financial Industry has experienced increased federal regulation with the passing of the Dodd-Frank Act. The act enforces policies that encourage greater transparency between consumers and financial institutions[1].

Many mergers occur between companies who are looking to gain a greater foothold into a market. For example, smaller companies with an innovative product may want to merge with a larger company who has greater access to consumers and infrastructure. It is likely for companies with similar products and services may have achieved their mandatory levels of compliance. For companies who service different products using different processes there may be a lack of compliance, putting the success of the merger at risk.

The Advantage of Software Engineers in Mergers

Identifying and implementing software solutions for complete technological integration can greatly impact the success of the merger. Bringing in software engineers can provide the technical expertise needed to ensure that systems operate optimally and safely.

Most companies allocate their existing IT teams to ensuring that systems and services continue without disruption. When systems merge, security and accuracy issues may arise that are beyond the technical knowledge of most IT workers.

For example, companies that depend on the accuracy of their data systems for analytical modeling and services are highly vulnerable during and after a merger. Software engineers can not only mend existing structures to solve potential issues, they are also equipped with the tools and knowledge to develop customized solutions for full technological compatibility.

3 Elements to System Integration Success

There are three important elements that software engineers consider when integrating independent systems.

1. Assessing System Requirements

In order for system to integrate seamlessly, there must be a full understanding of all technologies utilized within the system and how they work together. Software engineers work closely with the IT departments of the companies to evaluate technological gaps and requirements. The evaluation can be broken down into four components for analysis:

  • System: Hardware, Software and Databases
  • Enterprise Platforms
  • Operations: Technology used for specific services and products
  • 3rd Party Platforms: licensed software and vendor services

2. Prioritizing Initiatives

Depending on the industry sector and business, specific system vulnerabilities may hold a higher priority than others. For example, in banking and insurance, overseeing data security risks are a high priority. If there are multiple data flows that are jeopardized from the merger, software engineers will need to evaluate the time commitment and urgency of the issues to restore services as safely as possible.

3. Assessing the Sequence of Solutions

Software engineers must assess business operations that are continued during the merger and how the sequence of integration is affected. The goal of assessing the integration sequence is to ensure that solutions are implemented as effectively as possible.

The evaluation also takes into consideration how to work around projected market climates and business seasons. Banks and credit unions, see a tremendous spike in activity around the last few months of every year. Prioritizing tasks around a highly active market climate will ensure that the system integration doesn’t interfere with day-to-day tasks.

As the Financial Industry becomes more technologically dependent, mergers become increasingly challenging. Systems are processing more value as services and products are digitized for a larger market. Software engineers have the expertise needed to ensure that integrations occur safely and smoothly, protecting the investment.

Tiempo Development offers a full-suite of software development services. Our software engineers have extensive experience with database optimization, software and application development. To learn more about software development and how it can bring additional value to your business, Read our Case Studies today!

[1] Gary G. “Dodd-Frank Act” U.S. Commodity Futures Trading Commission. http://www.cftc.gov/LawRegulation/DoddFrankAct/index.htm