The importance of master data management following mergers and acquisitions

Mergers and acquisitions can complicate existing master data issues. Learn why SAP ERP 6.0 deployments can make it difficult to reconcile conflicting MDM processes, and how SAP NetWeaver MDM programs can resolve this.

Effective Master Data Management with SAP NetWeaver MDM, Ch. 2

Table of contents:
Using SAP NetWeaver MDM with CRM, SCM and NetWeaver BI
Designing your SAP NetWeaver master data management strategy
The importance of master data management following mergers and acquisitions
Enterprise MDM: SAP MDM for reducing data silos and duplicate records

2.3 Case Study 2 — Impact of Mergers and Acquisitions

Companies often grow with mergers and acquisitions, which compounds the master data issues. Each of the merging companies will already have its own business processes, procedures, and business applications where customer and vendor records are maintained.

Let's now consider the example where Company CO1 (from Case Study 1) has recently merged with Company CO2. As already discussed, Company CO1 systems architecture has five applications. Now in addition, Company CO2 has one SAP ERP 6.0 application plus an SAP CRM and an SAP NetWeaver BI application.

Figure 2.2 shows the combined Company CO1 and Company CO2 system architectures.

Case Study 2 – Merger of comp Table 2.3 shows the applications and the organizational teams that initially maintain the customer and vendor data when the companies merge.

This excerpt from Effective Master Data Management with SAP NetWeaver MDM by Andy Walker and Jagadeeshwaran Ganapathy is reprinted here with permission from SAP Press; Copyright 2008. Download a pdf of this chapter.

Although Company CO2 has an integrated SAP landscape, it hasn't understood the real business value of maintaining its customer and vendor records accurately. SAP ERP 6.0 provides good open ways to interface customer and vendor records into the LFA1 (vendor) and KNA1 (customer) tables, with the use of the CREMAS and DEBMAS interfaces. These require data standards and validation processes to be in place to avoid duplicate and incomplete records.

Unfortunately, these data standards are also not established for Company CO2. At the time of the Company CO2 data conversion process, all existing legacy records were transferred into the SAP ERP 6.0 application. This included duplicate, out-of-date, and inactive customer and vendor records.

Table 2.3: Customer and Vendor Applications and Organizational Teams of the Merged CO1 and CO2 Company

Application	CO1 Application	CO1 Organization	CO2 Application	CO2 Organization
Supply Chain Management	Non-SAP	CO1 Supply chain management organization	SAP SCM	CO2 Supply chain management organization
Financial Accounting	SAP FI CO component (CO1 instance)	CO1 Financials (AP) team	SAP FI CO component (CO2 Instance)	CO2 Financials (AP) team
Customer Relationship Management	Non-SAP	CO1 Marketing and sales representatives	SAP CRM	CO2 Marketing and sales representatives
Sales and Distribution	Non-SAP	CO1 Customer services division	SAP SD component	CO2 Customer services division
Financial Accounting application	SAP FI CO component (CO1 Instance)	CO1 Financials (AR) team	SAP FI CO component (CO2 Instance)	CO2 Financials (AR) team
Business Intelligence	Non-SAP	CO1 Marketing organization	SAP NetWeaver BI	CO2 Financials team

SAP NetWeaver MDM and the Deployment of SAP ERP 6.0
It is invalid to assume that if a company has deployed an integrated SAP solution that it has also successfully tackled the master data issues. SAP ERP 6.0 deployments can be complex, and the quality of the master data can become a secondary issue for an implementation team when the pressures of an imminent go-live deadline approaches.

Your SAP NetWeaver MDM program should work closely with your major business deployment programs. Initially loading bad master data into a business application will severely impact the value of both the system and your SAP NetWeaver MDM program, and resolving the data issues after it has been created takes considerable effort.

The problems of managing the business partner master data processes and sharing the data across the systems are now compounded with the merger of Companies

CO1 and CO2. Let's now consider the customer and vendor record counts for the merged company as shown in Table 2.4.

Table 2.4: Customer and Vendor Record Counts of the Merged Company

Application Name	Vendor Active Records	Transactions in the Past Two Years	Customer Active Records	Transactions in the Past Two Years
CRM1			3000	1200
SCM1	4500	100
SD1			2000	1100
FI1	6000	950	2500	975
BI1	9000	1200	6500	1300
CRM2			12000	4000
SCM2	9000	3500
SD2			9500	3750
FI2	8000	3300	7500	3500
BI2	15000	4600	16000	4300
Totals	51500	14550	59000	20125

Your business leaders now have slightly different questions:

• Who are my most profitable customers in the combined company?
• How do I increase my revenue from my combined customers?
• Which customers are shared across the two companies?
• How do I improve my operational efficiency when dealing with a customer by reducing my business applications and integrating my organizational teams?
• What is my combined total credit risk with a customer following the merger?
• What is my total spending with a vendor in the combined company?
• Am I leveraging the scale of our company by understanding the global overview of my dealings with a vendor?
• Which vendors are shared across the two companies?
• What is my financial and trading risk information of a vendor following the merger?
• Am I trading with a "legitimate" vendor that has been authenticated in both organizations?
• Do I understand who I am dealing with and their financial health?
• What are the new combined company's potential strengths (and weaknesses) within the supply chain?
• How does the merger impact my procurement strategy?
• How do I implement purchasing controls across the two companies?
• Can I track issues such as health and safety status and diversity and inclusion?

Once again, it's back to the key master data questions. Before attempting to answer these important questions, you need to answer the following first:

• How many active vendors, customers, and business partners do the combined Company CO1 and Company CO2 have?
• How many active vendors, customers, and business partners are shared across Company CO1 and Company CO2?

Unfortunately, the questions are now even more difficult to answer. You can see from Table 2.4 that in total, there are 51,500 vendor records and 59,000 customer records set up in the various business applications across the two companies. However, there is no easy way to link the Company CO1 business partners to the Company CO2 business partners.

Adopting a new company data standard mandating that "All customers and vendors must be authenticated with a D&B D-U-N-S Number and be maintained with SAP NetWeaver MDM" would be a significant help for the newly merged Company CO1/CO2. The unique key, the D&B D-U-N-S Number, allows you to authenticate and to commonly identify vendors and customers across both sets of business applications. The D&B Corporate Linkage then enables you to aggregate your spend and revenue up to a Global Ultimate level. We'll return to these case studies in Chapter 4 when we describe how SAP NetWeaver MDM integrates the D&B services to your consuming systems.

Let's now consider how the master data silos issues further compound for large organizations.

You can download a pdf of this chapter. You can also visit SAP Press to purchase a copy of Effective Master Data Management with SAP NetWeaver MDM.

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