Episode 53 Transcript

M&A Integration and Change Management Best Practices w/ Ingo Roemer

    Brent Trimble: Welcome to the Professional Services Pursuit, a podcast featuring expert advice and insights on the professional services industry.I'm Brent Trimble, and today, I'm joined by our guest, Ingo Roemer.Ingo is the chief operating officer and senior solution architect at Solvit.Solvit is a firm with expertise at implementing, integrating, customizing both CRM and professional services cloud solutions, such as Kantata and Salesforce.Today, our discussion is going to be around merger and acquisition change management, and we're going to use Ingo's experience and dig into some of the best practices, common pitfalls from things like data integration, analytics, and where to focus first. Ingo, thanks for joining us.

    Ingo Roemer: Yeah, thank you, Brent.Appreciate it.Glad to be here.

    Brent Trimble: We thought this would be really relevant because as we canvas our partners, certainly our clients, our prospects, many of our listeners will generate growth and scale through M& A activity; services firms, hybrids, consultancies, system integrators, everyone in between.They'll often reach a certain size, look out at the landscape, acquire another firm, merge with another firm, partner, however that dimension occurs and then bring them in to the fold.

    Global M & A activity, I looked at some stats from Bain and McKinsey and so forth, and it's certainly down. There’s some softness in the economy, a little bit of bumpiness, down anywhere between 30% and 40% year to date, but we know that oscillates and changes over time. We've certainly been in discussions with lots of clients who are either contemplating an acquisition, mid - acquisition, maybe they're being acquired, or they’re post-acquisition.

    So we thought it would be great to get your insight on that whole process as it pertains to professional services.But before we do, it would be great for you to tell us a little bit about yourself, your background, and your firm, Solvit.

    Ingo Roemer: Yeah, sure, Brent.Thank you.My background actually is I graduated out of college with an engineering degree, and I got started in the space science industry, working on rocket and satellite systems for some of the space agencies like NASA and ESA.That was back in the late ‘80s.

    Eventually, I started a firm, went out on my own, and started selling, of all things, internet access back in the day.This was in the early ‘90s.I opened up a co - location business and whatnot and grew the business over the years.After about five years, I sold it in 2000 to a telecom out of Canada.

    At that point, I took a break from tech and believe it or not, opened up a couple of restaurants with my brother and completely went in a different direction for a while, ultimately getting pulled back into tech when some new project came out from the local university here and pulled in as a project manager.

    I started using Salesforce at the time to help manage some portions of the project, and that was back about 13 years ago back in 2010. I adopted Salesforce as an interesting platform to utilize for business management, business development, things like that, project management.

    That knowledge and experience dovetailed with something that a good friend of mine was doing, Peter Rozek.Peter had started this company called Sadhana Consulting, which was a Salesforce implementation company.We're mid-2000s, if you will. He and I are friends. He approaches me eventually and says he'd like to try to grow this business a little bit more and expand on it.At that point, he'd been an implementation partner. He'd been in the Salesforce ecosystem for about 20 years.I came on board with my business development background and my tech experience, if you will to help grow the business.

    Fast forward to today, we went through a rebranding process.Sadhana, we thought, was a little too obscure and too common in some circles.So we decided to change the name, and we went through a whole rebranding marketing exercise, which by the way is an effort, to say the least.

    We're about a year and a half into it now, and Solvit was the name that they developed. So here we are, Solvit. We rolled out the name a couple of months ago. We have continued to be a Salesforce implementation partner. We're based just north of Boston, and we've turned into also a PSA implementation partner, specifically with Kantata. That came about through us ourselves looking for our own organization for PSA solution and vetting numerous packages, we ended up selecting Kantata—back then, it was called Kimble—as the platform for us to use internally.

    When the folks at Kantata found out what we did, they approached us about becoming a partner.This was back in 2016. We decided to take it on as a service line within our organization and specialize in its implementation.We use it internally ourselves and have done so since 2016, and we have been an implementation partner since 2016.

    Brent Trimble: That's, great. And for our listeners, you and I have actually had the opportunity to work a couple of times together, collaborating with some clients. And I think, additionally, a background in the food service restaurant industry is extremely useful and relevant to professional services. There's no greater pressure, ability to multitask, ability to balance client expectations with delivery than that business.So that's a great--

    Ingo Roemer: I was thinking that when I started this career path, Brent, so that's a good point.

    Brent Trimble: It really is.It's interesting, I've scaled some teams over the years, and I remember this one firm in particular in a digital transformation context and a lot of the resumes I saw, if I saw that a potential analyst or entry level team member had done some summers waiting tables, cooking, mixing drinks, that's usually some good grit. They know how to deal with clients, so that’s a great insight there.

    But pivoting over, the firm does a lot of SI work analysis, evaluation, and then ultimately, helping clients with maybe their Salesforce implementation or PSA like Kantata.But one of the reasons we reached out was you have extensive experience in pre -, during, and post - M & A activity.We see a lot of that even though M & A activity is a little bit down at the macro level.We certainly see quite a bit of that globally.But the first part of the question would be, when do you get engaged typically ? It could be in all three phases, and I'd love to hear a little bit about that and why clients reach out to you. Then I'd love to talk about some themes that potentially emerge in that process.

    Ingo Roemer: You're right. We have seen and done, and we’re in the middle of doing a number of projects right now with companies that have made recent acquisitions and are looking to pull these new acquisitions into the fold. What we are seeing is a couple things. Starting early is usually the best place to be. In other words, understanding early on what you're going to be doing with this newly acquired company and how you're going to bring them into the fold, and getting a lay of the land. In other words, here's what we look like today, and this is how we're working today.

    In most cases, what they're doing is they're bringing in a PSA solution into the organization, if you will, to the parent organization and deploying it.But at the same time, they are incorporating this acquisition or sometimes multiple acquisitions simultaneously.Understanding all the moving parts early on is important.

    Historically, we've seen customers come to us, and they have already headed down a path before we've gotten involved, let's say, from an analysis point of view. What I mean by analysis, meaning we haven't worked with them to understand their processes as they exist today and what the roadmap will look like in the future.When they've come to us, they've got this clear picture in their minds of how things are going to work.

    The challenge can be numerous in that case because they don't necessarily know how the PSA application works. So they've designed a solution and with all good intention.Then when they finally present that to us, we have to do a rewrite sometimes because certain things might not work the same way that they expect it, or they have maybe not thought of taking advantage of other functionality that's built into the system that could help them streamline their processes.

    Even though we haven't gotten to them in the beginning, we have to do a slight rewrite. Hopefully, they've got the time to do this, and they are willing to spend the extra effort.If we can get to them sooner, and we're seeing this recently, more so with these recent acquisitions, and that is a CFO will come to us saying, we need to redo our processes. We know we want to get into the system. We want to do complete breakdown of our current operational model, how it looks like today, what's the roadmap look like in the future with these new clients, if you will.This new organization is coming into our organization.

    That’s the best place to be.That's when we can come up with a complete rewrite, potentially, of their functional design on how they're going to be doing delivery management and so on and so forth.If we can get started early, wonderful.If it's something that they come to us, and they've already got this plan in place, we might have to take a look underneath the hood a little bit here and maybe do a little bit of mechanics to re - engineer it to fit better with the application they're going to be rolling out.

    Brent Trimble: What's the impetus usually for that reach out? Let's think about it.I guess probably the most common would be—and you tell me if I'm wrong here—but the most common would be a firm reaches a certain scale or size. They then acquire maybe a smaller firm that does a specific capability that they don't have and they want to build and scale, or an adjacent firm; it could be a firm that does work that's very similar to theirs, maybe in a different market that they want to penetrate, geography and so forth. At what stage of consideration are they bringing you in, or what's maybe the pain or the impetus that forces that reach out, and therefore you have work to either go through and do that reconstruction and refactoring ?

    Ingo Roemer: Usually, it's the systems and the processes become disconnected. So what ends up happening is people start pulling data offline and start working on it in spreadsheets and in other mediums that they feel that they have maybe better control. Then, your record of truth starts to disintegrate. Initially, your system was your record of truth, and now you've got multiple spreadsheets in different areas; could be in finance, could be in operations, project management, whatever it might be.At that point, hopefully somebody or some people in the organization will realize that we've got to bring this all back together, and we've got to find a better way to pull this in and re - engineer ourselves.

    That's a major pain point that we find because it takes more time to manage it that way. Revenue leakage is huge. Typically, they don't have a clean view of their overall project profitability margins and things of that nature.Believe it or not, it's mostly finance that drives that requirement. So we'll see a lot of times, it's finance asking the tough questions about the revenue, about the margins, about the costs, and so on and so forth. They raised a flag that then turns around, and the CFO ultimately will reach out to us saying, we’ve got a challenge here. Go to the professional services organization. Guys, we’ve got to tighten up the ship, and we need some help. I would say there’s multiple pain points potentially that are driving that.

    The other thing that you see too is you have a very solid organization with very good processes in place.But like you said, Brent, they bring in this new group, and this new group might have some very interesting either service items that they're delivering or processes in place that they may want to incorporate into their existing system. Or potentially, they've got completely standalone data in a different org, for example, two Salesforce orgs.This sits on a Salesforce platform.

    The primary company is making the acquisition.What we end up seeing is this new organization is coming in, and they've got their own Salesforce org, and this data that's in the system obviously has to be merged back into this new parent system.So a lot of times, clients will reach out to us and start the process, hopefully early enough to realize we've got to get the data level set first before we can actually roll out a solution, or we’ve got to get the data level set or re-engineered in order to incorporate this new group into our existing solution. I would like to think it's simple, as there's three or four classic scenarios, but it's as diverse as the different companies that we work with.It's rather interesting.

    Brent Trimble: We've all lived through that. Our brand went through a merger some time ago, and there were disparate systems. We're all in the same business but doing different things.In service companies, SI, embedded service, management consultancy, marketing services, of course, deal flow is really everything; engagements coming in, conversations, moving them through the pipeline.I think by default to your description, organizations come together and suddenly they devolve into spreadsheets because they’re more comfortable with that.They have more control.I think the notion is usually first, before operations, maybe bringing client relationship, CRM data together.Would you agree with that ? You usually start there.With that, probably correct assumption, because they're scaling with deals or scaling with relationships, what's the order, the sequence you recommend, of action to give leaders that big picture, that array of here's our comprehensive deal flow. We know these brands are now going to mold into one, or the tuck-ins are now being acquired. We need to get this data looking together. What are the steps you recommend leaders take as they go through this journey of pairing technology? Then of course, technology is just a conduit. It's really about getting to the data.

    Ingo Roemer: Yeah, it totally is, Brent.At the leadership level, understanding the amount of effort it's going to take, the cost ultimately, and the duration of a project like this and what the final outcome is going to look like, what that roadmap will be, I think the critical areas that they're going to want to see, and then they're going to want to be able to measure the results as they go through this process and ensure that they’re on track to get to that end point.

    So the first thing, let's assume that this organization is looking overall to deploy a PSA solution. They've made a number of acquisitions, and they want to basically have this picture in their mind of what the future will look like.The best place to start is they have to bring all the data in -house.We have to go ahead get on a single system.If we use Salesforce as the example, Salesforce is a mature platform.It’s out there.You're almost certain to see most clients will have it. What you’ve got to do is bring that data in to that one house, if you will, under that one roof.

    You have to come up with a plan for that.So you have sales activity that is in flight.You have KPIs that you're measuring within your own org, and this acquisition is probably doing in their own org. You've got to build out a very clear and succinct plan to get that data out of the system, translated correctly, and back into the new system.It's not going to be a one-to-one relationship. That transformation is going to be critical and understanding the necessary de-duping that you might have to do. It's very likely when you are acquiring these organizations that they're doing similar work and therefore may be crossing paths with similar clients or leads or opportunities that your own sales folks are dealing with.

    You’ve got to be very clear about cleaning up this data and getting it all under that one roof, and don't underestimate the level of effort that it's going to take for that.Merging a couple of orgs, two or three orgs, can take several months, if not more, of effort to get it done.It has to be very well mapped out.The plan has to be very clear, and the timing has to be right.You don't want to be doing it end of year.You don't want to be doing this maybe during quarter end when financial reporting is critical and important.The timing is critical.

    Once that first step is taken into effect, you can at the same time, in parallel, be planning that PSA deployment and what that's going to look like. That starts really at the functional level. You don't have to put hands on the keyboard yet.You have to come up with a functional design of how that final outcome is going to look.It may be a matter of incorporating obviously what the parent organization has and what the acquired organizations have, or some sort of blend thereof, getting that part of that functional design document in place in order to then have that sense of, okay, here's the plan. Here's what the duration is going to be.Here's the schedule, and then here's the effort it's going to take and what we're going to do as far as the steps go to get us there.

    Pitfalls that people run into is having the right teams working on this is critical.You need business leaders.You need representatives from the various areas like finance, professional services, operations, things like that, and IT.But you need to think at a high level in terms of business and business processes and requirements.Don't get hung up on necessarily integrations, which can be a rabbit hole and a distraction. Really think high level first, and then work your way down in the plan.

    Brent Trimble: You mentioned the maturity of Salesforce as a CRM.And of course it, wouldn't necessarily have to be Salesforce, but let's say it's another mature--

    Ingo Roemer: It could be Dynamics.It could be Sugar.

    Brent Trimble: Exactly, a mature CRM.The ambition, of course, after M & A, is to get this data synchronized and harmonized as quickly as possible.Practically, what kind of time investment ? Say this is a firm of a couple hundred folks, maybe they've acquired a firm of 100 folks, and to give folks a real practical, realistic view of time, this is I'm sure months versus weeks.But what's a good barometer to measure and evaluate how much time and effort it's really going to take ?

    Ingo Roemer: The first question would be, how mature is the org ? They've had it for five, 10, 15 years. The older the org, the more data, the more potential customizations they will have in it. We have tools available that help us identify customizations, metadata, configurations, and things like that, that'll allow us to see quickly just how customized potentially this solution is or this CRM platform is.

    We can then turn around create some estimates.But if you were to look at an organization, let's say it's like 200 users that you're bringing in, and it's a 10 - year - old platform, and they're using it fully. In other words, they're going right from quote to cash, so to speak.They're tracking their accounts, their leads, their accounts or contacts or opportunities, closing deals, could be generating contracts out of there, could be storing files and things of that nature. If they're doing that sort of thing, you're going to look at probably anywhere from 12 to 16 weeks’ worth of effort to get the data out and in a format that can go into the acquiring organization’s system.

    I think the important thing is, get on it quick.Also, don't let perfect get in the way of good enough. The important thing will be to get an early start on it and spend the right amount of effort to make it happen correctly. A lot of folks try to cut it short, Brent, you know what I mean? They try to skim along and whatnot.

    The final thing that I would say, too, is when you're doing a migration like the org migration, this is just a little tip, plan on keeping that org, believe it or not, around for like a year, even after you've basically migrated off of it, even if it's just maintaining a single license, so you can go back and potentially pull subsequent data out of it if you had to.

    Brent Trimble: That's a good tip, and there's currency to be mined even in old data.

    Ingo Roemer: Totally.

    Brent Trimble: You mentioned a few of the pitfalls, but do you have a standard go - to five or six or three to four that you really counsel these clients in that post M & A activity or that merging of data platforms and systems that really are relevant in just about every use case?

    Ingo Roemer: Yeah, I think so, Brent.There's a number of areas, and if I just were to rattle them off, in order, probably, number one is understanding the processes. What does the process roadmap look like today internally? How are things running today? With the acquisition in place, what's the roadmap look like in the future, and how are these new processes going to be adopted ? Number two would be to know your systems and data.Have a good understanding of your systems as well as the organization that you're acquiring and their systems. They probably have their own ERP, their own finance, their own CRM, and getting a good overall map of how those systems are working within those organizations is critical.

    Reporting, I think, is another thing, believe it or not, that you should put high on your list of things to keep an eye on.How are you going to report on the data once you start collecting it ? Once you get a PSA solution in place, the data is phenomenal.It's rich. It tells you so much, and you want to make sure that you have a plan in place and reserve time to ensure that you're capturing that data, whether it's through a product like Power BI Tableau or through the Salesforce reporting mechanisms. That to me is a really important one.

    Have the right team in place, and that would be from both sides.People need to work together.This is done by a village.It's not done by an individual. Make sure you have a good team that's representative of all the different areas within the organizations; finance, operations, professional services, and whatnot.Not too big of a team; we don't need to make this some sort of an epic event where we need 35, 40 people on the team. The best teams I've found in the largest organizations tend to run around six to eight individuals, believe it or not.Make sure that they're empowered to make decisions. In other words, they understand the process, they understand the roadmap, and they basically can make decisions on the fly as necessary.

    Time is critical.This is number five.Give yourself a reasonable time to execute.Lots of folks underestimate the amount of time and effort it takes to internally do this.There's work obviously from my team that has to happen. But from a client's point of view, there is quite a bit of work that needs to happen.Generally, the ratio is, believe it or not, 30 to 70. 30 % of the work typically falls on my team, 70 % falls on your team; things like change management, UAT, training, things of that nature.There's a lot of things that need to happen and don't underestimate that.

    I'll just give you an example. 500 seats, you typically would look at-- so 500 PSA seats, you'd be looking at about 18 to 24 weeks from start to finish for an implementation.That's not including merging actually to Salesforce orgs, for example. That is just strictly doing your PSA implementation. A complicated Salesforce merge could take anywhere from 12 to 16 weeks.

    Finally, number six, I would recommend to have a plan.Have a very clear plan, and work the plan.I know it's cliche, but it's critical.Basically, it's an agile process, but nevertheless, we do a waterfall type of plan every time when we do these implementations. There are schedules, there's deliverables, there's milestones, and you'll see that.You'll iterate through it as you go. Ultimately, you want to follow this plan. I think your leadership will want to see that plan. It’s something that translates very quickly and easily to leadership into seeing what the progress is.

    Those are the six key items that we look for when we're working with clients. It's the same approach that we do every single time when we walk in the door.Every client is new.Their positions and their needs are new.Whenever we jump into it, those are always the key areas that we apply to them.

    Brent Trimble: Those are great insights, and appreciate that.The alternate view, and you've had the business, and the firm has been working with clients like this for quite some time, would be clients that engage incorrectly or maybe an example post-merge motion that went awry, something where they didn't follow those steps and then the result was lots of data in different places and messy and fragmented.Do you have any example of one of those ?

    Ingo Roemer: Yes.What we had with this is, so we have an organization and they have made numerous acquisitions.The organization basically did two things.They wanted to approach it more from a technical side, so basically a bottom - up design versus a top - down design.

    That was the first problem.No matter what we tried to do to dissuade them from doing it that way, they absolutely were adamant that they had to.Based on their resources and their availability of resources, they felt that bottom - up was the solution.That was the first red flag and you know you're going to be in trouble.

    The second one was the organizations that were going to be brought into this new system were not brought in early enough to get exposure to functionally how things will look after it's built. In other words, this acquiring organization built, or was planning on building it, and basically handing the keys over to these new acquisitions, and the acquisitions weren't having any say functionally in what they were expecting to see.

    These other organizations are successful companies that are doing well and running well and have very bright people who want to be involved in this type of thing.They weren't involved. When it came to going to a pilot release, some fireworks started to fly, and what we found was that the company doing the acquisitions got caught by surprise by the companies that they had acquired and the strong responses that they got. It didn't go well, let's just say that. It was avoidable from day one. When we sit there and we give you a plan, it's based on experience on how it works and how it works for most folks.

    On the backside, where we've seen some organizations who have approached it the correct way, a couple of options we've seen.We've seen the ones who already made the acquisitions, they’re already are running, and they need to go ahead and create rationalized process to do service delivery. They realize they're running independently, but they do have a vision of what the future can look like, and they're open minded to meeting early and coming up with a solution. That's critical.In other words, they're open to the fact that saying yes, we've got five silos.They all are operating.It's a little bit difficult. It's a little bit kludgy, but it's working. We do know we need to rationalize this and put everybody under a single roof. The first thing that we’ll come back to them with is, can we sit down and before we even talk about the PSA, can we map out what your operational processes are going to look like in the future?

    Nothing sounds better than when they say, yeah, let's do that. Let's put in the time and effort, and put that design together and make sure that we're all in agreement before we get into the system and build. Nothing is worse than building it, turning it on, and omebody goes, this is not at all what I was expecting. That sets everybody back.

    Those are the two bookends of the extreme front that we've seen. Now, what we are starting to see subsequently, ironically enough, is people even being more thoughtful in saying, we're interested in the PSA solution.But even before we get into the PSA solution and looking for a PSA solution, would you guys help us to map out and suggest how we can refine our processes to do better service delivery ? That is even better because what ends up happening is we can not only chat with them early on and talk almost technology agnostically and come up with a design.Obviously, to be honest with you, we were thinking about Kantata all along, because Kantata is really, to me, the top of the heap.And that is, we're discussing things like revenue recognition, resource utilization, all of the various things that you want to see in a professional services firm and deliver on.

    Those are fairly new.Seven years ago when I started this, nobody was approaching it from that point of view.In fact, they were almost looking at it as if they were purchasing Microsoft Word and dropping it into Windows, and it was going to be as simple as that, and that would be the end of it.I'm excited to see the landscape is changing, and people are willing to put in the effort, and honestly, spend the money up front to get a good design.

    Brent Trimble: No, that's outstanding, and failure to plan is to plan to fail. But just to recap, the top five things companies can consider post M&A is obviously planning, thorough planning, have that in place, great stakeholder involvement. I think that a couple of examples you brought up where it was very technology-driven, not persona or business-leader driven. And then of course, when folks are mandated to use a platform and it arrives on their desk, and they say this doesn't meet my needs, a really rigorous functional design, understanding inventory, deep dive of where data resides today, and ensure that hygiene is done before that merge and then a PSA brought in, and then biting off sequentially less early and building rather than going the full - blown rollout where we're trying to accomplish everything. Those are really good insights. Anything else as we wrap, any other considerations to leave with our guests, either PSA, M&A, or restaurateur experience?

    Ingo Roemer: I’ve got a couple of good cocktail recipes.If you want those, I can send those over.The other thing that in this post - COVID era of remote workers is honestly, it doubles the effort, in my opinion, for doing these types of things because communications, as much as we've got Zoom and we've got Teams and Slack and all these mechanisms to communicate with, it's still isn't as good as in person face - to - face.In fact, what we're trying to do now, and we're starting to see this with clients, is they're open to having those initial discovery sessions in person. I highly recommend, if you can swing it, do it. It's worth the effort.You get a lot more done.You get to read the body language, and it starts off your project rather quickly.It's tough to do it remote. We've been doing it for years now, but if you can avoid it, I'd try to at least when you're doing those initial discovery sessions and then that initial design work, try to do it in person.

    Brent Trimble: Oh, absolutely.There's really no substitute for that interaction. Well, this has been a great discussion and I think packed with really relevant, practical steps and guidelines for those clients contemplating a merger, maybe going through one, or prepping for that inevitability and things to consider as they go through that process.

    For listeners again today, we've been joined by Ingo Roemer, the Chief Operating Officer and Senior Solution Architect at Solvit. Thank you again for your time today.

    Ingo Roemer: Yeah.Thank you, Brent.Appreciate it.

    Brent Trimble: Yeah, it's been great. And for our listeners, of course, we always like to hear from you. If you have any follow-up questions for myself or Ingo, please reach out to us at podcast@kantata.com.