TechnologyAccounting SoftwareSoftwares: technology in a tangle

Softwares: technology in a tangle

Systems integration is never easy, but requires even greater due diligence during a merger

Many businesses have seen their IT infrastructures develop organically. The
process almost invariably involves the unstructured deployment of multiple
systems, many of which cannot be upsized to do a job that has grown beyond them,
and nearly all of which cannot communicate properly with each other.

Typically the organisations that are growing the quickest experience the
biggest problems in integrating disparate and often incompatible IT systems.
Problems can be particularly severe in the wake of acquisitions, when the
acquired company finds itself running parallel or incompatible systems across a
variety of core processes, including finance, reporting and email.

Dean Bubley, founder of business technology advisory Disruptive Analysis,
warns: ‘Technology integration is a very complex part of post-merger integration
and one that requires more due diligence than is often performed, particularly
given the complexity of entrenched systems such as enterprise resource planning
(ERP). Clearly it is a major issue, but one that is very difficult to quantify.
It is not just ERP systems, but also telecoms, network and outsourcing
arrangements that can create serious issues.’

Ton Dobbe, vice-president of product marketing at Unit 4 Agresso, echoes his
concerns. ‘Enterprise applications are a known factor,’ he says. ‘It’s quite
possible to investigate during due diligence how much effort application change
and systems integration will take. Therefore, IT systems should never be a valid
excuse for a failed merger or acquisition ­ but unfortunately they are.’

According to Dobbe, failure to adapt enterprise applications in the wake of a
merger frequently leaves the combined organisation suffering from information
starvation, making it impossible to compare the performance of various business
units and generate reliable management information. Such failures can also lead
to fraud as proper governance controls are missing.

Spreading the risk

And it’s not just large-scale systems such as ERP that can create integration

Even something as seemingly innocuous and humble as a spreadsheet can cause
headaches for finance professionals. Philip Howard, research director at Bloor
Research, warns that the uncontrolled use of spreadsheets poses ‘a greater
threat to your business than almost anything you can imagine’.

Howard condemns spreadsheets for being insecure, virtually impossible to
audit, expensive and prone to errors. He advises businesses to undertake a
fundamental review into the way that they actually use spreadsheets. Companies
that rely on spreadsheets for business decision-making are, according to Howard,
taking a dangerous gamble.

‘If you have a spreadsheet which has errors in it and you are making
decisions based on that which will affect the business, that can be expensive,’
Howard says. ‘If you are building complex models ­ risk analysis, for example,
or strategic planning models ­ or applications like planning and budgeting, or
just using spreadsheets to transfer data from one place to another, then very
serious risks can arise.’

To eliminate, or at least minimise, these dangers, organisations can replace
spreadsheets in some instances. For example, planning and budgeting tasks that
make use of spreadsheets can move to specialist software designed specifically
for such activities.
Howard recognises that spreadsheets are here to stay, so he advises adding
functionality to them, including better auditing and better security. He argues
that spreadsheets need to be treated as corporate resources and, like other
corporate resources, have proper development procedures applied to them,
including testing and debugging. The applications should also be served from a
central source to prevent multiple versions of the same document circulating

Clive Longbottom, service director at IT research company Quocirca, argues
that technology should be used to help clear up the mess that it is responsible
for creating in the first place. He advises businesses to investigate the value
of enterprise service bus (ESB) technology from companies such as Oracle/BEA,
IBM and Tibco. ESB is designed to manage access to applications and services and
to help integrate heterogeneous data sources.

‘You cannot avoid having incompatible systems,’ Longbottom says. ‘If you
deploy, for example, wall-to-wall Oracle and take data management to the last
degree, you are plotting a route to absolute disaster. If it all goes down, it
is the end of everything.

‘You need technology to enable and manage data access from multiple data
sources in different formats. The ESB is effectively a really big pipe that
sends data backwards and forwards at high speed. It checks for consistency,
deals with translations and movements and can aggregate data. Companies should
not try and solve the underlying problem. Rather, they should accept that
diverse data stores will have to co-exist.’

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