SAP Solution Brief

SAP Services
System Landscape Optimization

REALIZING MERGERS, ACQUISITIONS,

AND DIVESTITURES AT IT LEVEL
BENEFITING FROM A SMOOTH ADAPTATION OF YOUR SYSTEM LANDSCAPE

Changing markets and challenging business situations

call for new ways to cut
costs and optimize business
operations. Companies
are seeking to improve
business value via mergers,
acquisitions, and divestitures, which require the
full adaptation of the IT
landscape to reflect the new
organizational structure.

Increasing globalization and the need for

market agility demand that companies
constantly adapt their portfolios to ensure
sustainability and growth. Whether they
are pursuing market leadership, hoping
to leverage synergies across an installed
base, or looking for economies of scale,
many companies engage in mergers,
acquisitions, and divestitures to foster
growth and the promise of huge benefits
and gains to shareholders. As a result,
many companies are searching for ways
to quickly and cost-effectively adapt their
current IT landscapes. When an enterprise adopts a more proactive and marketoriented strategy, several business scenarios may arise:
Acquisition of a new business
Divestment of a business unit or a
company
Internal reorganization for divestment
preparation such as:
Setting up a business unit as a
separate legal entity
Moving production to another
factory
Introduction of shared-service centers
In order to execute such demanding
business objectives, companies need to
implement a global enterprise strategy.
It is extremely important to provide visibility into the impact of a merger, acquisition, or divestiture on the enterprises
IT system landscape. Furthermore, it is
important to create awareness of all the
necessary changes to organizational
structures and processes. Each change
scenario implies tremendous business
changes and technical adaptations. Moreover, data security, legal compliance,

and operational efficiency are critical

success factors for changing business
transactions.

Improving Business Value Through

Suitable IT Integration
IT plays a major role when it comes to
the realization of mergers and acquisitions
(M&A) and divestitures. M&A projects
offer numerous rewards but also involve
possible financial risk. While a wellplanned and suitable approach to IT integration improves business value for a
company, poor IT integration can lead to
operational malfunctions. For example,
disruption to daily business can cause
production outages or delays in order
processing. Ultimately, success depends
on your companys ability to meet all
predefined business requirements and
handle the IT implementation effectively.
During the planning of an M&A or divestiture project, the overall adaptation and
alignment of the IT landscape is a key priority for the companys business operations. In order to qualify and decide on the
best IT approach, you need to understand
your IT options. A premerger assessment
can help you come to the right decision.
Furthermore, it will help business to fully
understand all IT requirements such as
data-related business rules, processrelevant limitations, master-data management issues, and the integration-driven
factors that may jeopardize successful
data integration. Moreover, the assessment presents an estimate of costs, a
realistic definition of planned objectives,
a clear assignment of resources, and a
detailed plan entailing all IT activities.

Based on this preparatory work, you are

then in a good position to determine
the best strategy for your company.
However, different strategies require
different solutions. The most common
approaches for postmerger integration
are the complete merge of the buyers
and sellers system or the migration of
selected data from the acquired companys system landscape into the target
landscape. In the case of divestiture
projects, strategy options for the best
fit include single-system, two-system,
and reporting solutions.

Minimizing Risk During IT Project

Realization
During the realization phase of an IT
integration project, the involvement of
all functional departments is essential
to ensure seamless interaction with IT
and to support a smooth integration of
all applications currently in use, such
as controlling, sales and distribution,
and production.
To achieve your target scenario, your
company will need to fully integrate
the recently acquired business into
your overall corporate structure. This
challenging undertaking might require
numerous efforts to harmonize data,
including the local chart of accounts,
customer numbers, product hierarchies,
and changes to your fiscal year. In light
of a redefined corporate target structure,
controlling areas, company codes, plants,
and sales organizations need to be
changed or reallocated in your SAP
software system.
In case your group is planning to divest
a company or part of one you need

Scenario for Realizing

Mergers and Acquisitions
Due Diligence
Analysis
Preparation
Integration Planning
Blueprint
Mirror to IT

Acquired
business

Existing company structure

Realization
Consolidate
Restructure
Harmonize and Unify
IT Landscape

Figure 1: Scenario for Realizing Mergers and

Acquisitions

to understand and estimate different IT

divestment strategies. Depending on
your current divestment scenario, you
may need to carve out data at the plant
or company code level. At the outset
of the project, you need to identify and
select all relevant master and transaction
data to meet your split requirements and
to transfer related quantities and values
such as those for stocks and assets. The
System Landscape Optimization group
from SAP Consulting with its broad
service portfolio covering numerous
business situations and enabling you to
safeguard all historical data can help
you select the best approach to the
divestiture.

Optimizing Your Companys

Business Processes
The complexity of integrating a newly
acquired business requires a suitable
solution at the IT level. For postmerger
integrations, different options may apply.
Those options comprise a client transfer (resulting in a multiclient system), a
client system merge (resulting in one
central system), and the transfer of selective business objects (objects that
embody data for particular business
transactions such as sales orders). By
using different data migration technologies in combination with standardized
methodologies and best practices, SAP
experts can help to realize your integration objectives. The SAP experts can help
you create a flexible multiclient system
landscape by transferring clients from
multiple source systems into a dedicated
target system. In fact, a client transfer
project may be the answer to your companys requirements for simplification.
Moreover, this approach can be seen as
a preparatory step toward establishing
a single-client system with standardized
and uniform business processes containing all historical data from all the source
systems.
For projects relating to divestitures,
the System Landscape Optimization
group can support various scenarios.
By starting with an assessment of the
divestiture strategy, the project team
can select the most suitable IT approach.
Depending on your business scenario,
the SAP experts can deliver a fully
automated service for example, to
transfer a company code or apply a
tailored solution such as splitting a
business area.

Complementing Projects with

Information Lifecycle Management
In a traditional integration project, an
optimal level of data quality needs to be
achieved to ensure process continuity.
However, many M&A-related projects
not only result in greater system complexity but can also inherit unstructured
data from legacy systems. Running legacy systems poses higher risks in the
areas of hardware incompatibility and
system reliability.
In addition, legacy systems often demand
more administrative effort and resources.
One of the main reasons for this is that
governments and tax agencies mandate
that certain data be retained for a specific
duration. In order to proactively reduce
total cost of ownership and minimize risk,
the System Landscape Optimization
group provides a uniform methodology
and technology for implementing the
SAP NetWeaver Information Lifecycle
Management component. On the basis
of a well-defined archiving solution, companies can benefit from improvements
through the introduction of retention
rules and data policies. The system
decommissioning component of SAP
NetWeaver Information Lifecycle Management not only helps you to extract
auditing-relevant data prior to system
retirement but also supports on-demand
reporting via its business warehouse
functionality from the decommissioned
system.

Leveraging SAP Experience

During M&A-Related IT Projects
Over the last 14 years, the System Landscape Optimization group has engaged

Corporation

Acquired business

Company A

Company B

Company C

Client 100

Client 200

Client 300

0700

0800

1900

System 1

System 2

System 3

Company code split

Company code transfer

Harmonization of naming rules

Plant reallocation

Corporation after successful IT integration

Client 100
0700

Client 200

Client 300

0800

0900

0710

New system X
Figure 2: Corporate Landscape Before and After IT Integration

in more than 2,500 migration, harmonization, and consolidation projects

worldwide. During these projects, the
group has provided a high degree of
standardization combined with flexible
adaptation to meet companies special
requirements. For all the services the
SAP team delivers, its experts use
proven methodologies, tool-based
technologies, and standardized methods to deliver the best solution.
For the multifaceted demands of M&A
and divestiture projects, there is no
one size fits all approach. An up-front
strategy assessment is the ultimate key
to meet all customer requirements. The
clear picture of the transformation initiative that results from the assessment
helps cover all IT-related problem areas
and enables the System Landscape
Optimization groups experts to operate

on a flexible and secure technological

platform.
The System Landscape Optimization
group offers a full range of service
offerings addressing customers transformation requirements. The dedicated
team of experts from SAP Consulting
will set up a design catalog to characterize your future business scenario.
Multiple feasibility checks, an in-depth
performance analysis, and an initial
assessment help ensure that a project
can be completed on time and within
budget.

Find Out More

To learn more about the System Landscape Optimization group, call your SAP
representative today or visit us on the
Web at www.sap.com/services/slo.

QUICK FACTS

www.sap.com /contactsap

Summary
Ever-changing markets and volatile economic conditions demand corporate action and
business flexibility. In response to the challenging business environment, companies often
initiate mergers, acquisitions, and divestitures to help enhance market position and increase
overall business value. It is essential to fully adapt the IT landscape in order to reflect a
companys new organizational structure. The services provided by the System Landscape
Optimization group of experts from SAP Consulting help you to integrate a new acquisition
or divest parts of your company.
Business Challenges
Integrate new acquisition and simplify existing system landscape
Meet legal and business requirements regarding data retention
Execute different IT divestment scenarios quickly and cost-effectively
Key Features
Initial assessment of individual technical integration or approach to divestiture
Proven methodologies, tool-based technologies, and standardized methods
Scenario-based and comprehensive services for acquisitions and divestitures
Business Benets
Sustained, undisrupted business operations due to experience and know-how of SAP
experts throughout realization phase
Reduced maintenance and project costs thanks to intelligent use of services and careful
design of target landscape
Minimized risk and ensured legal compliance via System Landscape Optimization
groups service offerings
For More Information
To learn more about the System Landscape Optimization group, call your SAP representative today or visit us on the Web at www.sap.com/services/slo.

50 096 943 (09/09)

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