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Perspectives

Three ways cloud computing enables mergers & acquisitions

Deloitte on Cloud Blog

Über-mergers will be the focus of enterprises over the next three to five years. The Global 2000 wants to leverage their stock value as a currency to make key acquisitions that will take them to the next level.

November 27, 2018

A blog post by David Linthicum, managing director, chief cloud strategy officer, Deloitte Consulting LLP

Über-mergers will be the focus of enterprises over the next three to five years. The Global 2000 wants to leverage their stock value as a currency to make key acquisitions that will take them to the next level.

Unfortunately, many of these acquisitions may not work out as planned. It’s difficult to bring together the IT systems of both companies, and synergy can take years, not months to achieve. Both the customers and investors can become underwhelmed by the progress, and the company often pays the price by falling short of expectations.

Enter the use of cloud computing and its ability to more easily merge IT systems. Cloud-based resources can be allocated as needed, and public cloud-based systems can easily work and play well with each other.

The amount of time it takes to merge and integrate systems to support an acquisition varies, depending upon the type of companies pushed together. However, the core capabilities of leveraging the cloud include:

  • The ability to exchange data intra-cloud. It’s faster and easier because cloud providers leverage the same cloud-native databases, middleware, and database ops solutions. Traditional approaches to inter-datacenter integration are much more problematic, and often takes more time and money when compared to the cloud computing-based alternative.
  • The ability to merge security systems together using a common platform. When the cloud-native security system exists on the same public cloud provider, it’s just a matter of integrating directory services, and thus identity and access management solutions. Security can be synced within weeks. Traditional legacy security integration can take as much as a year, not including planning.
  • The ability to deal with common data semantics. With the same notions of a customer, inventory, product, etc., there is no misunderstanding of what data is the single source of truth between the merged companies. This requires some understanding of the metadata, and perhaps some common MDM solutions. The public cloud again provides an effective common platform for all of these integration efforts.

There are many more benefits to M&A in the cloud than can be listed here. You’ll find that it’s a matter of understanding where your enterprise is at, where the company you want to acquire is at, and the potential use of the public cloud platform as a point of integration between both IT systems.

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