Recession, inflation and supply chain issues force organizations to shift from CapEx to OpEx spending. Organizations want to optimize their digital footprint, extract more value from existing businesses, and modernize in preparation for future expansion.
In a market with high capital costs, this requires a streamlined digitization approach, with a focus on cost efficiency. This involves leveraging technology and digital tools to automate processes, reduce manual labor, and improve efficiency. Using this approach, organizations can reduce costs and improve profitability.
Merger and Acquisition or M&A is the primary inorganic tool for addressing growth issues in the professional services domain among both private and public corporations. The market for professional services has recently seen an increase in activity from private equity groups. The rationale for acquisitions in this industry can be summarized into three generic strategies:
- Capitalize on excess demand for emerging technology skills
- Maximize growth opportunities in new verticals or new geographies
- Take advantage of growth opportunities at the intersection of digital & traditional service
Adapting, Anticipating and Innovating After M&A Deals
After a Merger & Acquisition (M&A) deal closes, business leaders typically realize that both enterprises have multiple, disparate time tracking systems and other applications that are in use to carry out their work processes and revenue models. These disparate systems’ redundant features result in higher costs, operational inefficiencies, revenue leaks, compliance issues, siloed data, and low insight into how much time resources spend on projects.
Thus, real-time visibility into key metrics and enterprise integration are the main obstacles to a successful M&A implementation.
Therefore, as a first step, it is essential to quickly integrate systems into a unified time tracking platform to drive insight-based decisions. The use of a robust, unified time tracking system has been shown to significantly increase productivity and profitability in professional services organizations. An AI/ML-powered time intelligence platform will provide your service organization with a single source of truth for data, enabling you to boost employee productivity and project profitability.
As an added bonus, the accurate time data that such a system provides promotes a better employee experience in hybrid digital enterprises.
How Disparate Systems Are Preventing PSOs From Capitalizing On M&A Benefits
As large services organizations grow through M&As, managing multiple legacy systems and data governance can become challenging. As they operate across multiple global locations and serve a multitude of clients with complex internal structures, operations, regulatory compliance, privacy and security inefficiencies can become commonplace.
That’s why a cloud-first unified time tracking platform is a must-have.
According to MGI research, an estimated 42% of companies experience some form of revenue leakage, and further research conducted by EY suggests that every company loses 1% to 5% of realized EBITA to leakage annually. These losses reflect the complexity of managing project costs, resources, and compliance, which is magnified when companies are saddled with multiple siloed manual platforms post an M&A activity.
But, M&As offer the perfect opportunity for companies to replace their legacy platforms with a robust, unified AI-powered time intelligence solution. These systems use advanced timesheet validations, which make it easy to spot revenue leakages. They allow managers to gain real-time project visibility, which promotes timely billing and eliminates billing errors.
Clunky Employee Experience
Employees quickly become frustrated when they have to use many systems as it makes daily tasks more complicated. Plus, switching between multiple job data platforms increases their risk of making mistakes.
For professional services organizations going through multiple M&As, traditional employee experience approaches no longer meet the evolving needs of their modern workforces. Hence, it’s imperative that these organizations switch to unified time tracking technology. These intuitive tools not only replace disparate systems, but also manual processes used to capture time and project data, such as spreadsheets and homegrown apps.
Incorrect Estimates of Project Bids
Large professional services organizations that have recently expanded through M&As often have trouble making accurate project estimates. In fact, beyond inaccurate budgeting, their projects sometimes fail completely due to constant and uncontrolled development and timeline changes. To top that disparate legacy systems contribute to the chaos and act as a barrier to accurate project bidding.
So, how can estimates be made more accurate?
By empowering team leaders to be more vigilant during the planning, forecasting and execution stages. This can be done by giving them a unified window for viewing whether work is financially viable across the delivery pipeline or not.
There’s no getting around the fact that maintaining redundant systems increases costs. Take, for example, the case of a global professional services enterprise that, through M&As, grew to over 100k employees. Across their global operations, these 100k employees used more than 20 time tracking systems to support their many payroll applications, rule engines, and even legacy ERP systems.
Having your time data split across different systems that work in silos severely restricts your ability to track all of that data. For example, an organization had no single platform to unify all data coming in from multiple departments, which hampered employee productivity and ultimately blunted the positive impact of their M&A.
How Unified Time Tracking Improves Results Post M&A
The goals of and expectations from an M&A activity are almost always the same: reduce costs, increase efficiency, shorten time-to-value, automate manual processes, enhance business intelligence, and more.
In short, a merger or acquisition is supposed to provide additional value to shareholders, who expect quick wins.
But history is littered with failed mergers such as Microsoft and Nokia, Google and Motorola, and Time Warner and AOL. A Deloitte survey found that 75% of acquisitions had low performance results post-merger.
Why do mergers fail so often, or at least not succeed as easily as expected?
Because from an operational standpoint, they present many challenges. After the deal is inked and the excitement wanes, you’re left with the difficult task of uniting multiple sales forces, various marketing teams, separate finance departments and at least two (usually more) ERP platforms.
One keystone solution to improve results post-M&A is implementing a robust, unified, cloud-based time tracking system. These systems provide many benefits to companies that have just undergone M&A, as outlined below.
Time Tracking Platforms Provide Better and Faster Results than Unifying CRM, ERP Alone
Post M&A, most organizations start by trying to unify ERP & CRM systems, believing that this offers the most value. However, unifying these systems is complicated and usually takes about two years to provide any ROI. There are several reasons why streamlining multiple systems takes so long.
One reason is that in-house IT teams are relied upon to combine ERP platforms into one, which adds to the extra cost.
Another reason is that resources can’t focus on crucial tasks because they’re still using homegrown software that necessitates frequent interactions with development and installation teams.
In fact, the Total Cost of Ownership (TCO) of homegrown systems is sometimes two to three times the initial estimate. Also, like any other software, internally developed ERP platforms require ongoing, and often time-consuming, maintenance by a dedicated team to minimize future costs.
So what can you do?
A better option is to start by investing in a cloud-based time tracking platform that provides ROI from day one. These systems support built-in integrations to ERP, CRM, HCM, and others, and cover multiple use cases, such as billing, costing, payroll, labor compliance, and data security.
And, as your organization grows, and requirements change, this sort of system will already have many of the technologies needed to meet those requirements, saving additional investment. Since these software-as-a-service (SaaS) systems can be installed and configured within a few days, companies experience zero downtime.
Time Tracking Platforms Serve Multiple Use Cases, Saving Time And Effort
As a business leader spearheading an M&A deal, you may find that the technology landscape of your company is very complex, with disparate time tracking systems, multiple ERPs, and homegrown systems having to adhere to the regional compliance requirements across your global enterprise.
This is where an off-the-shelf, fully configurable, global, scalable, centralized cloud-based time tracking platform can help. This sort of system can address all of those use cases and more, while being easy to implement and maintain.
Time Tracking Platforms Help Avoid Band-Aiding With Multiple Systems
Post M&A, enterprises sometimes fall into a “band-aiding” state, where they’ll patch existing disjointed and monolithic legacy systems to keep things working, even if they are working inefficiently.
But, pretty soon, the cost of upkeep, as well as lowered productivity, makes moving to an intelligent platform, powered by artificial intelligence (AI) and machine learning (ML), the only sensible route. Implementing a plug-n-play, digitized ecosystem has benefits across the value chain; it eliminates redundancies, needless double work and payments for out-of-date software.
Time Tracking Platforms with AI-Powered Timesheets Improve Morale and Accelerate Time-To-Revenue
Studies indicate that your business can bring in an average of 2.5x less revenue than a similar business if yours doesn’t have a highly engaged workforce. The challenge is how to build engagement with a global workforce where employees hold a remote/hybrid working mindset.
A great way to promote employee engagement is by giving them valuable work to do. But, you can’t do that unless you have the visibility into how they’re spending their time. Another way you can reduce employee anxiety and save their time for more meaningful tasks is by making timesheets easier to fill and complete.
You can achieve both objectives by implementing an intelligent, AI/ML-powered time tracking platform to empower your organization with a single source of truth for data, enabling you to boost employee productivity and project profitability. Also, providing accurate project time tracking data puts your business in a win-win position and helps you succeed in the hybrid digital workplace by ensuring a better employee experience.
Time Tracking Platforms Improve Compliance For Both Projects & Payroll
As professional services organizations grow through M&As and expand their global footprint, they often struggle to adhere to the compliance and labor laws at various locations.
But, the consequences of non-compliance can be severe.
According to the Economy Policy Institute, $3.24 billion in stolen wages was recovered for workers from 2017 to 2020 by the U.S. Department of Labor, state agencies, and class action litigation. They estimate that the cost of non-compliance is more than twice that of compliance costs.
Imagine if there was a single dashboard through which you could orchestrate compliance across all jurisdictions that you have business operations in. Cloud-based time tracking platforms with built-in compliance provide such a dashboard, and take the hassle out of compliance management for work, overtime, minimum wages, and time off.
They offer the following advantages:
- A global statutory default pay rules library
- Built-in compliance for working time directives, time off, schedules and pay
- Real-time monitoring for statutory updates, plus continuous over-the-air updates
- Built-in change management for compliance updates
- A dedicated team of legal experts to monitor the ongoing, changing labor landscape and other statutory compliances
Consider government regulations like the Fair Labor Standards Act (FLSA) that require meticulous record-keeping to track activities, and extensive documentation to prove compliance. Using a time tracking platform with built-in compliance means required time data is always handy and pay rules are automatically enforced, so services or consulting firms can feel confident that they’re always fully compliant.
Time Tracking Platforms’ Pre-Built Integrations Simplify Work
Imagine having a scalable, cloud-based platform that serves as the single source of truth for all of your time data. Now, imagine if this platform could integrate with all of your project management, HR, payroll, accounting, ERP, HCM, and CRM systems. Such a system would save you time as well as cost and prevent the inevitable errors associated with duplicate data entry and siloed systems.
But you don’t need to imagine, since time tracking systems with these kinds of built-in integrations exist. They simplify work processes and can make the retention of key legacy systems manageable.
Use M&As to Initiate Digital Transformation Backed by Accurate Time Tracking and Increase Profits
Time is the key resource in today’s service-oriented economy, which is why more and more professional services organizations are viewing M&As as an avenue for faster growth, and as a way to multiply time as a resource.
Post M&A, tracking project hours and reducing timesheet errors remain the priority for these organizations. Yet many of them face significant challenges due to their siloed legacy systems and the inaccuracy of manual timesheets.
That’s where a time intelligence platform comes in.
On the surface, it appears that unifying your ERP and CRM is the best strategy to address these issues and improve your ROI, but in fact, investing in a cloud-based time tracking platform is a better bet for faster results.
If you are still on the fence, then consider the following advantages of time tracking platforms:
- They provide a unified, seamless, secure, scalable and robust platform for time and project costing to help you better manage compliance globally and bring all employees under a unified platform.
- They eliminate unnecessary operational costs and help employees focus on productive tasks.
- They prevent revenue leaks and tighten up project delivery.
- They mitigate the risk of unwanted labor disputes, litigations, and fines.
- They reduce time-to-revenue.
- They support leaders beyond the M&A process, with real-time visibility into what growth they can expect.
- They provide AI-powered actionable insights that help business leaders make faster and better business decisions.
- They provide billing accuracy, so that enterprises can uncover profits they didn’t know they were missing.
- They provide project costing accuracy, so that businesses can avoid making expensive mistakes.
In today’s digital world, M&As are gaining traction in creating robust digital ecosystems. That’s why it has become crucial for organizations to quickly develop an enterprise-wide digital acceleration strategy to enable sustainable value creation while solving existing challenges. Therefore, as a first step, shifting to a modern, unified, secure, scalable, and cloud-first time tracking platform empowers organizations with a single source of truth for time data, increases operational efficiency, shortens billing cycles, stops revenue leakage, and ensures project completion on time and within budget.