While the COVID-19 pandemic has dominated the United States and world economies, engineering and construction activity, largely considered essential, has continued onward. Management teams at many firms are taking advantage of economic dislocations to pursue strategic mergers and acquisitions (M&A) to position their company for the emergent post-COVID economy.
According to PWC, total M&A for the construction & engineering sector declined about 17% in the last half of 2020 compared to the same period in 2019, which is expected given the sudden and steep economic contraction. While the data shows that M&A activity has slowed, it certainly hasn’t stopped. Companies that rely on acquisitions to fuel growth remain active and opportunistic. But while many have a strong record identifying mispriced assets and operational or geographic synergies, acquirers often skimp on their technological due diligence and then find themselves hampered by a hodgepodge of systems and processes when they try to integrate their operations.
After a merger or acquisition, the first task many construction companies face is implementing a new software to bring all offices onto a common platform, allowing for process standardization, reduction of the overall system footprint, and streamlined consolidated financials.
A delayed or inaccurate software implementation leads to immediate and urgent problems throughout the organization with a tangible impact on clients. For example, corporate finance departments utilizing distinct reporting and accounting systems are often hobbled. Seemingly simple questions like “what are our combined receivables?” become excessively difficult to answer.
Additionally, companies that are built through multiple mergers over time can remain beset by legacy systems. These outdated systems can lead to a torrent of help requests that are difficult to solve as IT departments slowly lose institutional knowledge of aged systems that are no longer deployed at other companies and are, in many cases, no longer supported by the original developers. In addition to the daunting task of moving and cleaning vast troves of data from these systems, employees also need to be taught new skills and be brought up to speed on new applications.
All in all, left unchecked, disparately sourced, patched-together systems become impossible to maintain and upgrade over time, ultimately leading to systems failure and potentially lost business.
With so much at stake operationally, strategically, and financially, a skillfully executed software implementation should be one of the first tasks construction companies tackle post-merger or acquisition. The effort, if well-managed, is likely worth it.
Tilson’s IT consulting practice specializes in helping companies design and deploy integrated enterprise software solutions to align business process, consolidate financials, and ultimately ensure that your employees’ and clients’ needs are getting met. We can partner with your organization to set the strategy for business process standardization, implement complex enterprise resource planning systems, develop system integrations, develop custom reports, and convert data from legacy platforms to new systems.
With sufficient planning and resources, these undertakings can be successful and generate long-tail benefits. Tilson has partnered with many companies that now realize the benefits of standardizing business processes that align with construction best practices and operating on one integrated system. The investment has allowed these companies to produce real-time, consolidated financial reports across all areas of the business, eliminate costs associated with legacy systems, increase efficiency by working with newly scrubbed and relevant data, and attract talent with state of the art, updated systems.
Learn more about Tilson’s comprehensive construction technology consulting services.
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As Principal Consultant of Project Standards and Process for the Construction Technology Consulting Division of Tilson, Jason is responsible for setting standards around process and project implementation methodology for Tilson’s construction consulting division. Jason also serves as a Senior Program Manager for many of the divisions most complex consulting engagements.