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Prioritizing the order-to-cash process in merger integrations

Accelerating revenue growth potential

Order-to-cash best practices for merger integration can help prevent revenue leakage, negative customer experiences, and inefficient cost structure.

In pursuit of growth: Order-to-cash processes in merger integration

The value from most mergers derives from leveraging the combined scale and capabilities of two companies to sell products to new markets and customers. Achieving this is hardly guaranteed. Making the order-to-cash process a priority in planning can help prevent three common threats to achieving anticipated growth from merger integration.

Revenue leakage: Inability to access order management systems and sell products of the combined company can frustrate sales talent, creating two problems: lost cross-sell opportunities and increased retention challenges.

Negative customer experiences: Operating with different customer relationship management (CRM) systems, supply chains, and customer fulfillment models can cause confusion for third-party distributors and end customers around product delivery, support, and logistics. Such negative experiences can harm existing customer relationships and make it harder to attract new customers.

Inefficient cost structure: Keeping disparate systems, processes, and distribution models may lead to an ineffective cost structure that makes it harder to achieve cost synergy targets for the deal. Order-to-cash best practices in merger integration will help leaders think through key functions, processes, and systems across both acquirer and target.

Confronting the merger integration challenges of the order-to-cash process

Despite the importance of the order-to-cash process and its impact on a deal's revenue growth potential, acquirers too frequently put it on the back burner due to the complexity and challenges involved. We see three major challenges integration leaders struggle with most.

Challenge #1: Picking the right order-to-cash integration approach. Merging companies can have vastly different order-to-cash structures. Do you focus on all business processes involved or a select few to enable product ordering? Should order-to-cash business processes be integrated right after Day One or do you wait for rest of the supply chain integration and IT infrastructure to come together first? What are the trade-offs to prioritize up front? These types of factors increase the complexity of order-to-cash integration.

Challenge #2: Varying objectives across functions. Leaders across key functions such as sales, operations, and IT must be aligned on the end-state vision. IT and operations time and resources will be needed to change processes, update ERP systems, and conduct training. Implementation can be distracting: Leaders such as CIOs and COOs may push back entirely or end up compromising their functional integration priorities.

Challenge #3: Limited information to plan effectively. Planning for and executing on an order-to-cash integration strategy can be daunting. To plan rapidly and execute accurately, a deep understanding of the target’s current state is required even before legal Day One. This can challenging for integration leaders in a pre-close regulatory environment where both sides are wary of sharing information, thereby contributing to loss of momentum which is rarely regained post Day One.

At the root of these challenges lies a common theme: The cross-functional nature of order-to-cash management makes it especially difficult to successfully integrate. Leaders from the commercial, finance, and operations functions should work in tandem to ensure an effective integration. If order-to-cash is de-prioritized, loss of momentum could lead to missed operational efficiencies and cost-reduction opportunities from integrating order to cash processes. Furthermore, the new company's approach to market could suffer and the lost potential of new or broader sales could result in missed synergy targets.

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Three types of order-to-cash integration models
  Integrated back office model Fully integrated model Quick wins models
Approach Integrates only back office supporting order-to-cash processes, including revenue recognition, sales reporting, and accounts payable capabilities
Aggressively intergrates the other company's order management, demand planning, and finance activities in to the chosen model
Manual processes used to link disparate order-to-cash processes in the short term
Keeps customer facing order-to-cash activities (e.g. pricing approvals, order) and supply chain of the two merging companies separate Uses existing order-to-cash process from one of the merging companies Requires significant planning prior to Day One; additional integration will be needed in the longer term
Considerations Least complex to plan and implement
Moderately complex and longest to implement Most complex and requires planning prior to Day One
Model best used when
Integration priority is: Business visibility and financial reporting Operational excellence and cost take-out Quick revenue uplift through joint go-to-market participation
Customer and channel overlap is: Low Medium High

Five focus areas for successful order-to-cash execution

By focusing on five key areas, organizations can surmount the challenges associated with order-to-cash integration and position the new company for sustained growth.

Manage the ordering process and customer experience: Bridge gaps in how products are accessed by each company's sales organizations and distributors; ensure that CRM system information can be shared and customer service is prepared to support a broader product offering.

Forecast demand and ensure product availability: Begin product planning before Day One; take into account additional forecasts for the new company's product or service offering by building mechanisms for collaboration among commercial, finance, and operations organizations.

Prepare for distribution model implications: Leverage existing distribution and logistics channels to fulfill cross-selling orders instead of waiting for fully integrated distribution models. Apprise sales of new distribution models and provide guidance on how to communicate to customers regarding product delivery.

Prioritize data migration: In the absence of integrated ERP systems, be prepared for significant effort to set up systems with your salesforce and customer data. To speed up and facilitate data migration, focus first on a subset of data by restricting cross-selling to a smaller population of products and customers.

Align back-office functions: Engage back-office teams (finance, IT, HR) in order-to-cash planning and execution to understand the impact on their operations and systems. This can minimize disruption to business-as-usual activities.

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The future of the deal

Throughout the M&A life cycle, Deloitte’s Total M&A Solution provides cognitive enablers and accelerators to bring the power of automation, analytics, and machine learning to M&A transactions. The integrated set of innovative accelerators and enablers offers solutions that can be tailored to each client’s transaction journey—and helps map the path ahead. The end result is smarter insights, increased confidence about the future, and a better experience for every transaction team.

Case study: Realizing revenue upside on Day One

A US-based medical device company entered into a merger with another manufacturer of medical devices to create a high-growth market leader. Due to overlapping sales territories and significant channel conflict, management was focused on optimizing revenue and minimizing any revenue dis-synergies. Since the merger was predicated on revenue growth prospects, the company leadership made a conscience choice and launched a focused order-to-cash integration program across its commercial, supply chain, and back-office functions in advance of Day One.

The order-to-cash team adopted a similar model to the quick wins model with small-scale integration of order management systems with high-touch customer service support to coordinate product delivery to end customers. Since launching this right after Day One was critical in maintaining the merger momentum, integration of supply chain and other back-office processes was not addressed as part of order-to-cash integration. Taking a “speed to revenue capture” approach allowed the commercial organization of the two companies to rapidly deploy sales reps in open territories and accounts where there was opportunity to cross-sell products. Shortly after Day One, the merged entities went to market together and stabilized their salesforce accelerating the deal’s revenue growth potential.

Acquirers driven by revenue synergies may have to make similar choices and be clear about the trade-offs as accelerated order-to-cash integration can be resources intensive and tasking on organizations already going through significant change in a merger environment.


Cashing in on order-to-cash: Accelerating the deal's revenue growth potential can help you identify the key challenges, establish a plan that reflects order-to-cash best practices, and prepare for growth.

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