Engaging Enterprise Architects in Acquisitions

Posted August 12, 2020 in Business & Enterprise Architecture
Engaging Enterprise Architects in Acquisitions

Engaging enterprise architecture (EA) in the acquisition process allows the acquisition team to plan, execute, and evaluate acquisitions within a strategic planning framework that improves acquisition performance without compromising organizational performance. Specifically, using the EA capability improves acquisition performance through the following:

  • Speed (time to capability). The ability to reuse current capabilities in-house will allow the company to get its products, services, and solutions to market and make them orderable faster.

  • Reduced integration cost (reuse). The ability to support the integration of new business models and technologies with current operational capabilities will eliminate the need for redundant capabilities.

  • Reverse integration. The ability to identify business or operational capabilities in the target company will allow them to be scaled inside the acquirer.

Long-term organizational performance and sustainability of the acquisition program are impacted through the following:

  • Reduced business and IT complexity. Through ongoing documentation of the current state of the enterprise, redundant and unused assets are identified and eliminated (e.g., through simplification/reduced redundancy of processes), thus sustaining a flexible organization.

  • Fewer simultaneous projects. The rapid integration process means that the acquirer can avoid the additional challenge of running a large number of acquisition integration processes in parallel.

  • Synchronization with other transformation initiatives. The EA team orchestrates parallel integration processes with other transformative initiatives, enabling the firm to evolve as a coherent whole.

Based on our research and understanding of the opportunity EA has in the acquisition process, we propose two different ways the EA capability can contribute to an acquisition: direct and indirect (see Figure 1). Direct engagement refers to the particular tasks the EA team performs in the acquisition project, forming an integrated component of the acquisition capability. Indirect engagement refers to tasks in the acquisition project facilitated by input delivered by EA. This distinction between modes of engagement is important, since each mode entails different requirements from the EA capability and different managerial efforts in order for the engagement to succeed.

Figure 1 — Contribution of the EA capability to acquisition outcome.

Figure 1 — Contribution of the EA capability to acquisition outcome.

Direct engagement in the acquisition process happens when the EA team is considered the best-positioned group within the acquirer to analyze the actual implementation of the tasks necessary to combine the organizations and to identify possible difficulties. Therefore, the tasks assigned to the EA team are typically associated with the design of operational, systems, and technical capabilities that would support the envisioned business scenario to the extent possible and support the most effective path of migration.

EA can also assist in the acquisition process indirectly by providing resources used by the acquisition team in a number of tasks. Members of the acquisition team may use the enterprise reference model, capability heatmaps, and the EA health metrics dashboard to guide work. Commonly, within these activities, members of the acquisition team need the means to express their vision for how they want the organization to work post-acquisition.

The two modes of engaging EA in the acquisition process place fundamentally different requirements on the EA capability. Indirect engagement corresponds well to a description purpose of EA. This represents a relatively basic use of EA, and we argue that most organizations with an EA capability would start with the description of enterprise capabilities. Therefore, it is likely that most organizations actively pursuing EA could fulfill the demands of the indirect engagement of EA.

Direct engagement corresponds well to the design and evaluation purposes of EA. To be able to complete these purposes, the EA team needs a profound understanding of not only the technical aspect of EA, but also of the strategic business objectives that the firm seeks to achieve. Without such an understanding, the EA team cannot be given the responsibility to complete tasks such as investigating the potential of reverse integration, developing the to-be state definition, and completing a progression analysis.

Direct engagement of EA in the acquisition process also requires that members of the acquisition team be able to understand and express ideas about the future business strategy in terms of capability maps. Absent this understanding of the EA approach to business modeling, there would be limited use of these capability maps, even if the EA team maintained an updated enterprise reference model.

In our experiences collaborating closely with EA practitioners and leaders in various industries and geograph­ies, we have typically found that EA is primarily a technical capability and engaged in a constrained fashion. In most firms, the EA team does not possess the necessary critical business knowledge and, therefore, is not able to contribute to the acquisition process through direct engagement. At some pioneering firms, however, the reformation of EA has explicitly aimed to build a business strategy competence in the EA team by giving enterprise architect roles the responsibility for business and operations architectures. Such efforts can develop an EA team that transcends technological and business domains, enabling direct engagement in the acquisition process.

[For more from the authors on this topic, see “Digital Transformation, Strategic Acquisitions, and the Role of EA.”]

About The Author
Stefan Henningsson
Stefan Henningsson is a Cutter Consortium Senior Consultant. He is a Professor at Copenhagen Business School, Denmark, where he researches strategic management of IT resources, including how companies such as Cisco Systems, SAP, Carlsberg, Danske Bank, Maersk Lines, and many ­others manage their acquisition-based growth strategies. Dr. Henningsson has published more than 100 peer-refereed academic papers in leading academic journals as well as… Read More
Gustav Toppenberg
Gustav Normark Toppenberg is a Senior Consultant with Cutter Consortium and a member of Arthur D. Little's AMP open consulting network. He is an enterprise transformation executive with 20+ years' experience. Mr. Toppenberg's background includes building and leading transformational efforts for both small and global companies with a focus on business, data, and digital domains. His professional experience includes executive roles in enterprise… Read More