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wipro.comProduct LifecycleManagement (PLM)A key enabler of M&A success

When one of theworld’slargestoil-fieldservicescompany incorporated in the US,with operations in over 80 countries, announced its decision toacquire a competitor, regulatorscame down with a heavy hand.They were concerned that themerger would create an unhealthymonopoly. It is clear that if theacquiring company wants to goahead with its plans, it needs todivest itself of certain partsof the business and avoid theregulatory logjam.A task like this is unimaginablewithout powerful Product Lifecycle Management (PLM) systems inplace. Apart from identifyingprocesses and products, whichmay have to be hived off, there arethree critical stumbling blocks thatmust be thought through using aPLM strategy for a successfulMerger and Acquisition (M&A).PLM processes andtechnology areincreasinglyhelping companieswith their mergerand acquisitiondynamics. If you areheading for anM&A, its time tounlock the value.Most often, large enterprises haveestablished PLM systems that actas the backbone of product information, integrated within its enterprise IT landscape. The dataconsolidation across these twoindependent PLM systems is thefirst major challenge. The consolidation calls for moving data fromone system to what is, most likely,a mismatched system. Securelymoving the data into a commonsystem can be tricky. Sometimes,it can be a problem large enoughto delay and derail an M&A.The second challenge is in product portfolio rationalization, whichtends to be problematic. Thiscrops up when both organizationshave major investments in strategic R&D. In addition to securingdata, PLM must cover R&Dlocations, prototypes, outsourcedelements,partners,patents,licenses and risk management. Animproper understanding of theR&D initiatives and productportfolios can result in inadvertently sunsetting perfectly legitimate and valuable research work.Finally, the third challenge is oftenencountered in organizations thathave a history of M&As. Theseorganizations have, at some point,opted for heavy customization ofPLM systems, which may notalways have been in line with bestpractices. The resulting confusionplaces hurdles before futureM&As for a unified product development platform.Divestitures reflect an interestingbusiness situation and manybusinesses would gain from thebroader problem it represents.While divestitures aren’t a part ofall M&A initiatives, the additionalproblem it presents is worth examining. In addition to resolving theabove problems, the acquiringcompany has to make its waythrough massive amounts of product data and processes to decidewhat to hive off, with one worriedeye on preventing a spill of valuable IP.The question organizations mustask themselves is: “Is my PLMgoing to sink or swim with thenext M&A?”1

PLM todetermineM&A successToday, PLM has a proven trackrecord of lowering productioncosts, accelerating innovation andnew product design, reducingengineering cycle times and helping meet release schedules. This iswhy the practice has seen adoption across numerous industriessuch as manufacturing, healthcare, pharmaceuticals, oil & gas,telecom, food & beverages, financial products and even education.With consistent recovery in theeconomy over the last five years,but a sluggish movement of revenues, each of these industries is acandidate for M&A as a pathto growth. Globally, businessesare estimated to have accumulated over US 6 trillion in cashreserves, a fact that is expected totrigger one of the largest series ofM&A activities.The post-merger integration andconsolidationfrompoorlyplanned M&As can be a painfullyslow and an inordinately difficultactivity. It can also be prohibitivelyexpensive. We’ve seen a largenumber of major M&As in therecent past – across manufacturing, healthcare, telecom, energy &utilities, medical devices – thatWhat are theoptions?If your organization is in line for anM&A, it must consider the optionsbefore it: Should it try to wed two PLMsystemswithintegrationpoints and hope that the sumof the two will be greater thanits parts?have become candidates to brewthe perfect storm around portfoliorationalization, unified engineering,streamlinedworkflows,consistent processes for productdevelopment and standardizationof components and suppliers.This is where PLM plays a vitalrole. It has a downstream impacton Enterprise Resource Planning(ERP), Manufacturing ExecutionSystems (MES), Customer Relationship Management (CRM), etc.,and upstream impact on MCADtools,andprototypingplatforms, configuration management systems, BOM tools, etc.Without a single source of truthlike a PLM, the result can bechaos.How clear is your PLM vision?Does the organization have a PLMstrategy that drives efficiencies inan M&A? A good PLM strategy willgive you access and control overprocesses, systems, people anddata for products from design toretirement. It will allow you tooptimize your portfolio confidently based on organizational capabilities and business priorities.Furthermore, it will ensure transparency and traceability. Selectively re-use components of the two systems tocreate a ‘best of breed’system? Should it opt to undertake acomplete PLM refresh, incorporating industry best practices and ‘best of breed’solutions?2

Opportunity fortransformationOnce your organization hasdecided on the options with thehighest ROI and lowest operational risk, it must narrow down on theframeworks and solutions forreliable data integration and management. These frameworks andsolutions must address:People: Expect resistance to thechange in processes broughtabout by an M&A. There will beusers who will want to retain thecomfort of existing practices. Oneway to overcome this challenge isto incorporate robust organization-wide change managementbuilt as a critical component of theoverall initiative.Systems: The challenge in mostM&As is to unify or rationalizemultiple PLM systems of whichsome may have been highlycustomized. Setting up a consistent governance system led byauthoritative stewardship is thekey to bringing the systems anarchy under control.Processes:Frameworksforprocess harmonization acrossdivisions/ product lines, complexproduct mix (ETO, CTO) andproduct configurations whilemeeting EHS and other reportingand regulatory requirements(Basel III, SOX, etc.) must beadopted. The framework must bedesigned to assist the organization absorb change as well assustain business capabilities in thenew environment.Data: In a typical M&A, bothorganizations will have uniqueproduct structures, supplier dataand the number of years for whichlegacy data is available. Themerged entity may need to meetcompletely fresh audit and compliance requirements, requiringappropriate solutions to deal withdata harmonization.It is evident that a successful M&Ahas a major dependency onflawlessrationalizationandintegration of processes, systems,people and data. Challenging as itsounds, this can be executed withclarity, and in perfect alignmentwith the strategic goals of theM&A, using a robust PLM strategy.3

About theauthorsAbusabah Vazhayil heads the PLM Consulting Services for Wiproglobally. He is responsible for providing consulting services andsolutioning of PLM programs at Wipro. With 24 years of industryexperience in PLM and hi-tech product design, he possess extensiveexperience in end to end implementation of PLM solutions for severalindustry leading clients.Rahul Bahl is a part of the PLM Consulting services team in Wipro. Withover 10 years of experience in PLM domain, including Pre-sales,Consulting, Project Management, end-to-end implementation of differentPLM applications, he has worked for customers across industriesincluding aerospace, industrial manufacturing, apparel and oil & gas.About WiproWipro Ltd. (NYSE:WIT) is a leading information technology, consultingand business process services company that delivers solutions to enableits clients do business better. Wipro delivers winning business outcomesthrough its deep industry experience and a 360 degree view of "Businessthrough Technology.” By combining digital strategy, customer centricdesign, advanced analytics and product engineering approach, Wiprohelps its clients create successful and adaptive businesses. A companyrecognized globally for its comprehensive portfolio of services, strongcommitment to sustainability and good corporate citizenship, Wipro hasa dedicated workforce of over 160,000, serving clients in 175 citiesacross 6 continents. For more information, please visit wipro.com orwrite to us at [email protected]

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