We have acquired several software companies over the last few years. What specific challenges should I be mindful of as we integrate the products?

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Integrating software companies and their respective products to develop a unified platform offering can be a daunting task. This is especially true if the product teams have different operating models, architectures, or even cybersecurity protocols. If not planned well, it may also lead to confusion with existing customers and potential margin erosion. In addition to the many things an acquiring company should focus on when integrating a business, here are four specific areas that software companies should include in their integration plan to address these issues:Align engineering and R&D functions through a unified operating model. With every software company comes a passionate and invested team of engineers with unique ways of working and a strong vision and roadmap for their product. Engineering teams may be co-located or globally dispersed across multiple time zones, with heavy investments in virtual collaboration technology. Differences in operating model are typically driven by the maturity of products as well as the maturity and standardization of engineering processes. If not managed well, the clash of working cultures may impact team morale and retention rates, especially in a market with high demand for engineering talent. Leadership must collaborate early in the integration process to define the vision for the integrated platform. A pivotal early decision is defining the new operating model. Will the teams stay autonomous or will they be fully integrated? What is the plan for remote resources or virtual offices? What resources will be shared across product lines? What are the new product lines? Operating model decisions should best reflect the rationale for product acquisition and protect the unique strengths of both teams. For example, if the objective of the acquisition is to expand the presence in a new industry, tight integration of teams may not be necessary. However, if the objective is to integrate product lines and develop a comprehensive portfolio, the teams need to effectively work together towards a common platform vision. Integration and alignment of working styles in this case are critical.Identify top talent (esp. engineers) and make efforts to motivate and retain them. Any change in operating model may create unrest among the engineers leading to attrition. Identify top talent early, based on their specializations and commitments to the company – and make every effort to motivate and retain them. Expanded roles and responsibilities, personal outreach from executives, and public recognition of their talents help confirm an engineer’s value and influence their decision to stay. It is also important to review skillset requirements in the new integrated organization. Read more on how digital leaders are reinventing skillsets to guarantee success.Proactively engage existing customer base about changes to the portfolio and benefits thereof. When consolidating product lines across multiple acquisitions, margin erosion can a big issue, especially if conversion to a completely new pricing model is necessary. Sales and marketing teams must be proactive in informing customers of changes in the product portfolio and address any potential fears of exiting products going out of support. Teams must directly reach out to customers, explain the new product strategy, highlight benefits to them with any impact on the current product roadmap, and relay contract terms changes if needed. With a strong go-to-market commitment and formal communications plan in place, companies can leverage the full potential of product synergies and retain their combined customer base.Standardize architecture, security and data privacy protocols. Technical differences in product architecture, security and data privacy protocols can lengthen development times and potentially risk roll-out. Defining a standard reference architecture is critical to ensure effective integration of existing and potential new software acquisitions. Software companies are increasingly collecting data about customers, software usage and behavioral patterns to innovate their products and make them “smart”. With the increasing risk of cyber-attacks and data theft, stricter compliance and government-mandated laws across geographies will impose additional controls when integrating cross-border software products. Companies must, therefore, be prepared to invest in standardizing architectures and security protocols for the integrated platform or risk irrecoverable data – and– financial losses and brand impact. For more information on planning for an integration, visit our website.