Changing HRMS Software: Mergers & Acquisitions

Mergers and acquisitions are a common part of business today as companies align and separate to increase profits. But what happens from an operational HRMS perspective with mergers and acquisitions? What if there is a conflict of HRMS? Changing HRMS software is not easy. Even if you are on the same software application and version, there are still different configurations and data to combine into one database. Is it better to combine into one system or instead to keep the HRMS separate?

Advantages of Combining into One HRMS

Most companies want to be able to report on their total population from one source system, using one set of staff and one reporting toolset. By bringing in the acquisitions or mergers into one core system, it becomes ‘business as usual’.

Often the HRMS feeds employee job and demographic data into other systems, such as expense or travel systems. As the management chain between the original and merged or acquired company starts to mingle, it will become difficult if the new managers are not integrated into these downstream systems via the core HRMS. Changing HRMS will only make this integration more difficult.

As well, longer term, one set of HRMS licensing fees will provide cost savings.

Advantages of Keeping the HRMS Separate

Often the configuration of an HRMS reflects the process needs of HR. If you keep the acquired company ‘as is’ in the HRMS, it often means that business can continue as usual which gives you more time to sort out how to bring aboard this new population. Changing HRMS a period of rapid business change may cause HR processes to fail.

An acquired company often has many interfaces from its current HRMS. To rebuild or replace these interfaces will often take much time and effort, so leaving the current system in place allows other essential processes, e.g. payroll, to continue while integration plans can be worked through.

Cost structures such as licensing can also drive the decision. If an acquired company has 11 months remaining on a software contract but would generate new costs to come onto the core HRMS, it may make sense to the keep the systems separate until those costs are up for renewal.

Tips to Make It Work:

• It is necessary to build a project team consisting of HRMS resources from both the original as well as merging or acquired companies, to ensure that full systems knowledge is available.

• As mergers and acquisitions can often cause staff concerns of job loss, it is essential to keep the business case numbers driven and quantifiable.