If “digital transformation” tops your list of buzzwords that elicit an eye roll, you’re certainly not alone. Its sheer ubiquity has stripped it of its imperative, which is both a shame and a problem. The digital transformation mandate has become such a business cliche that many institutionsfail to invest substantial time towards thinking deeply about what digital transformation can deliver when approached strategically. Instead, and understandably, many think of digital transformation as a bare necessity, something they must do to keep up. Keep up, indeed. But with what? It’s vague at best.
Step one for any digital transformation effort that is likely to deliver real value is to clearly identify your “why?” Many institutions skip this foundational step, focusing more on the “how” or “what” of their digitalization project, only to arrive at a disappointing destination where it’s unclear what their transformation has actually achieved. When you don’t define the “why” ahead of time, you risk turning a negative return on your investment – and that negative ROI doesn’t just undercut the value of digital transformation but also undercuts your ability to get buy-in for future transformation projects.
Making Your Data Landscape M&A-Ready
One use case that often highlights the importance of articulating your “why” for digital transformation is mergers, acquisitions, and divestitures.
When institutions take time to define their “why,” the value that digital transformation brings to an M&A often rises to the top. Datamigrations and carve-outs are among the most daunting tasks that come with executing an M&A. And a failure to digitally transform ahead of time makes these tasks all the more likely to leave you with more complicated processes to execute, excessive technical debt, and an unnecessary volume of datasets to either migrate or to carve out. Digital transformation helps create an environment where the data-related heavy lifting that comes with an M&A is primed to deliver value, not just extra baggage.
Mergers, acquisitions, and divestitures are incredibly complex processes – processes made all the more harrowing if your data hasn’t been actively maintained. And let’s be honest. Too many institutions are not being proactive stewards of their data. Data is left to accumulate and age in many cases, becoming increasingly unsorted and cumbersome over time. Redundant or irrelevant data gets carried over in an M&A, or data that pertained to a divested entity continues to hang around in your system because it was never carved out. The cycle of neglect fuels itself; the longer you wait to manage your data, the longer it will take to course-correct an issue that is getting more unwieldy by the day.
If you’ve been even peripherally close to an MA, you are probably keen never to repeat the mistake of scrambling at the eleventh hour to do the data housekeeping you should have been doing all along. The reality is that a reactionary rush-job may very likely lead to even more errors that carry over into your data migration process, which can result in technical debt, potential transition service agreement (TSA) penalties, and delays in achieving your final goals for the project.
Being proactive often seems unrewarding in the moment; in fact, we’re usuallyrequired to go to extraordinary lengths to convince our peers or leaders that a costly project that will yield long-term results is worth our immediate attention. The long-term value of aligning digital transformation with M&A readiness is indisputable, however, especially if you are in a sector where high levels of M&A activity area norm. If anything, M&As being the norm in your sector only further highlights just how important it is to digitally transform and get it right the first time to prevent data baggage and other problems from compounding over time.
With SAP’s 2027 deadline extension on S/4HANA migration, the clock is ticking on a five-year timeline to map out a successful digital transformation plan. At the risk of belaboring the point, the “why” here isn’t the deadline itself. Instead, a S/4HANA migration is a golden opportunity to assess your current data landscape and develop a proactive plan that will set your organization up for success when it comes to M&As and beyond.
Institutions undergoing a merger, acquisition, or divestiture will be well-positioned for success if they have invested in a predictable process for executing their data migration and carve-out needs – a software-driven, end-to-end, automated process that is reliable in its speed, efficiency, and success rate in delivering on your goals within your timetable. An M&A deserves nothing less.