M&As drive digital transformation to ensure better value creation for the benefit of customers and companies

Mergers and acquisitions (M&As) are a recognised and effective mechanism for the development of companies

Depending on the goals, M&As can strengthen the organisation’s market position, create new competitive advantages, help enter new sales markets, acquire missing competencies, radically change key business parameters and improve business structure.

The development of business processes, primarily digital transformation, has a significant impact on the effectiveness of M&As.The COVID-19 pandemic has accelerated digital transformation in ways not seen before. Beyond the surge in e-commerce and use of more online applications, digitalisation has become a priority for businesses seeking to continue operations or enable remote working.

Digital Transformation is crucial for Business Transformation

However, such digitalisation efforts in pockets of a business are unlikely to address the larger imperative of achieving sustainable growth and profitability. Where the business needs to transform to work better, a coherent and cohesive digital strategy is needed. In other words, digital transformation is the means to business transformation. Digital transformation of a business, as well as the dependence on technologies and digital technologies, occurs not only in the IT section of the company, but also in the non-technology sector company.

Digital transformation requires businesses to align their business models to meet customer demands and meet competition requirements. Digital Transformation has two main challenges to technological progression. On the one hand, a business needs to understand its fundamental principles as a pre-requirement for innovation. They also need to harmonise disparate systems in order to progress digital transformation.

Third-party expertise is key to effective strategy consulting

Third-party software specialists can help with this transition. The biggest challenge in building a digital transformation strategy is that it’s sometimes difficult for a business to see itself for what it is. This can lead to issues being swept under the carpet or it can lead to misidentified opportunities. A business might propose solutions that are less effective or outdated, simply because it isn’t aware of newer techniques or technology.

Third-party consultants bring a fresh perspective. They can look at businesses objectively, which makes them more apt to identify issues and opportunities. They’re also more likely to be up-to-date on the latest solutions, and they’re versed in implementing them. A third-party software specialist can bring their expertise and experience to the table and should be the first place a business looks to get effective strategy consulting.

M&As unlock value and promote growth

The outlook for digital transformations and M&As remains upbeat as companies across all sectors continue to view technology-related M&A as the preferred growth engine. Companies are using M&A to explore emerging technologies, with mature technology companies turning to transformative deals to unlock value in their portfolios. Successful digital transformation requires a strategic enterprise-wide approach, an innovative culture and a clear vision from the top management.

M&A’s offer the opportunity to quickly acquire the right technologies and talent for digital transformation. While there are complexities in a digital ecosystem, joining it can potentially create new assets that can be monetised. The pandemic highlighted that those slower in the digital journey may perform well in the short term, but will find themselves on the back foot, or out of the race soon enough and therefore should not become complacent.

Yet simply incorporating digital technology into business processes is not enough. For continued success, companies need to critically review their business strategy, and assess how gaps can be overcome by organic investments, strategic alliances, or tapping into the broader digital ecosystem. Now is a good time to do so. With the pandemic comes uncertainty, but also opportunities for a first-mover advantage.

About the Author

Lindsay Lucas is Managing Director at Software Solved. Since 1998, the Software Solved team have delivered over 1,000 successful software and data projects for some of the UK’s most innovative brands. Employing the brightest minds in tech, Software Solved are specialists in custom software and data solutions.

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