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Integrate your mergers & acquisitions

Overview

Mergers and acquisitions are a tried and true practice to bring about rapid growth, new customers, new markets, and increased valuation. When handled appropriately, the combination of two or more businesses can have a multiplier effect resonating from the innovation, technology, and market presence of each to growth faster and larger than would otherwise be possible. This strategy is especially ubiquitous in the education (edtech), financial (fintech), and digital health technology industries. As an example, in the edtech sector alone, GlobalData PLC recently published that 218 M&A deals were reported in 2020, 327 in 2021, and 44 as of Q1 2022 (see K12 Software). There is no denying that aggressive M&A activity is part of every major enterprise growth strategy, and that understanding how to properly capitalize on the benefits that come inorganic growth will be a major factor in company success.

The Pain

Often, when working through the opportunity of an M&A deal, the business elements align perfectly, but the technical integration is complex and less easily addressed. To understand why, we first need to recognize that for most M&A deals, there are some basic business requirements that must be feasible in order for an ROI to be realized. Here are two of the most important:

  • Reduced Total Cost of Ownership - When a company is acquired, so are its technical components, infrastructure, and total cost of ownership (TCO) burdens. Ideally, this TCO can be merged with the existing portfolio TCO in a non-linear way. In other words, there are opportunities to share costs, not simply add the two TCOs together. This sharing actually reduces the TCO burden per product overall and may even reduce the overall TCO percentage of revenue across the board, despite raising the actual TCO value for the company.

  • Stable R&D Spend - While M&A deals will increase revenue, they will also increase R&D spend initially as the entire development team of the newly acquired company is absorbed into the organization. This increase in R&D spend must not exceed the established target percentage of R&D as a function of revenue in the long term, otherwise the growth trajectory of the business actually slows, it does not accelerate.

Here is where the challenge begins to show itself as a technical issue. In order for any of the above goals to be realized, the technologies need to be on a trajectory that merges their common components and allows them to share data. Otherwise the burden of maintaining and continuing to advance competitive feature development will actually increase R&D spend, increase TCO, and detrimentally slow sales and overall growth.

The Technical Challenge

In a perfect world, the cost of this integration is accounted for in the M&A deal itself; however, this is easier said than done. While all M&A deals require technical due diligence, it is a far cry from the hand-on engineering overview that is required to truly understand the scope of integration. Typically, the actual due diligence is handled by a third party which has no context for what the integration activity will actually entail. This is by design. It is discouraged, and often contractually required, that the acquiring company not engage in any integration-based solutioning until the deal is completed as a safety mechanism to protect both parties in case the deal falls through.

So at the end of the day, if you are a CTO, VP, Architect, or Senior Engineer tasked with integration after an acquisition, you’re left with these challenges:

  • How do you merge Identity and Access across these product in order create a seamless experience?

  • How do you ensure that technical components between these solutions have a secure way to communicate with each so that you can identify common services between the various solutions and pull them out as single services that serve multiple products, thereby reducing long-term TCO?

  • How do you share data between solutions in realtime to avoid complex and brittle point-to-point architectures that are expensive to maintain?

  • And finally how do you bring all of these capabilities into a single pane view where all resources can collaborate, ultimately increasing efficiency and reducing R&D spend.

Solution

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Core EOS provides a foundational platform upon which you can build your business, your products, and your growth.

  • SSO is a modern and secure OpenID Connect provider, bringing Multi-factor authentication, passwordless magic links, social logins, and even self-service customer federated SSO to every product in your portfolio with exciting new features such as biometric login, web3, and webAuthN already on our roadmap.

  • Machine-to-machine (M2M) authentication & authorization allows your technical components to communicate identity and even machine roles and permissions for secure automation and interoperability.

  • User management includes everything you need to manage the unique pool of users representing your customers, partners, and employees. This includes advanced security around profiles that puts the user in the driver seat to manage who can see their personal information and when.

  • Permission management allows you to quickly and easily define fine-grained permissions and organize them into roles for every product in your portfolio.

  • Product access combines user management with permission management and finally solves the problem of determining which user has access to what customer, what products that customer has licensed, which of the licensed products a user should be able to access, and what permissions the user has once they gain access. This is literally 1000’s of hours of development that you no longer need to take on as an organization.

  • Data mapping and streaming (Q4 2022) completes the foundation by providing the means for each product to publish and subscribe to all data in your ecosystem, sharing information in real time. These streams are cataloged and searchable inside Core EOS as part of our Data Stream Storefront.

All of this functionality is provided through a single user experience, the Core Enterprise Operating System (EOS), giving you a single pane of glass view of your world.

Logical Architecture Example

Here’s one possible way our technologies can work together. In this example, you can see the breadth of functionality provided by Core EOS identified as distinct services.

This example relies on four (4) interfaces made available through Core EOS for integration:

  1. The Core EOS, SSO enabled user interface portal - All users from admin to simple B2C users can access self service screens. The interface is adaptive, providing only the functionality to which the user has access.

  2. OpenID Connect (OIDC) - The magic of Core EOS is that it works seamlessly with any OIDC client library. All of the information regarding the user’s organizations, products, permissions and roles are provided through the OIDC token.

  3. Full REST API - Core provides a robust API that allows deep integrations. Everything we built at United Effects was built API-first.

  4. REST and Native Data Stream Interfaces (coming Q4 2022) - Core’s data stream capabilities are built on NATS.io, enabling integrating solutions to use native client libraries which are available in all major software stacks.

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Next Steps

We believe Core EOS can help your technology integration strategy. Let us show you how this works. Schedule a demo today.

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