Building A Seamless Tech Stack At A Breakneck Pace: Lessons From Three Years Of M&As

Innovation Building A Seamless Tech Stack At A Breakneck Pace: Lessons From Three Years Of M&As Erik Shani Forbes Councils Member Forbes Technology Council COUNCIL POST Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based) Aug 16, 2022, 07:15am EDT | Share to Facebook Share to Twitter Share to Linkedin Erik is a seasoned executive in the data and technology space with close to 20 years of experience and serves as cofounder & CPO at Fyllo .

getty When tech companies grow through some combination of build and buy, the major challenge is transforming the resulting collection of technologies into something that feels viable. For me, M&A is a major part of how we’ve grown. In fact, over the past three years, our team has acquired and integrated four companies from around the globe.

That’s hard in any business, but in technology, every company we evaluate has different technologies, data structures, corporate and national cultures, development methodologies, teams and more that must be considered. But we’ve learned some things after a few long years of battling through those issues. One thing we learned is that you can’t do M&A at scale if you don’t have a well-defined process.

Without one, you’ll never get all the details right. Minor issues will bloom into major headaches; major issues will metastasize into expensive nightmares. At Fyllo, we’ve developed a framework we call “the four pillars of compatibility.

” In it, while evaluating a company for an M&A, we make sure there’s a fit with its technology, product, customers and culture. Let’s look at each of these four components in turn. MORE FOR YOU Google Issues Warning For 2 Billion Chrome Users Forget The MacBook Pro, Apple Has Bigger Plans Google Discounts Pixel 6, Nest & Pixel Buds In Limited-Time Sale Event 1.

Technology Fit The first question to ask is, “How well will the company’s tech stack work in concert with our existing tech stack?” We look hard at how that tech stack is hosted. Nearly everything today is in the cloud, but what types of clouds and what deals have been negotiated matter a lot. We’ll look into SOC, ISO and other aspects of compliance.

What coding languages are used? We expect to see programming languages and frameworks such as JavaScript, TypeScript and Node. js. What we don’t want to see are antique legacy code and ancient technology—that’s enough to make us back off quickly.

Furthermore, cloud-hosted solutions are preferable. It’s vital to understand how the tech process works. Is it approached with a Scrum, Kanban or waterfall methodology? How, specifically, does the company we’re evaluating execute? Will that process need to be modified, and if so, how extensive will that change be? Analysts predict that by 2030, more than 85 million jobs could go unfilled because there won’t be enough skilled people to take them.

If you’re acquiring to add talent, you’d better think carefully about how the change will impact retention. 2. Product Fit I’ve never seen a deal in which there wasn’t some product overlap.

Unless you’re spectacularly lucky, you’ll never see one either. Inevitably, some of what you’re buying will be things you already have, and that’s okay. But too much overlap is too much.

If the fit works, the next level is to think about extensibility. Strategically, how do the new product, features and capabilities extend your existing offerings? How significantly do they improve quality or speed to market? How much tailoring will be required to unlock that value? Interoperability and integration are part of tech stack compatibility, but you need to go deeper. Can the acquired technology integrate with your existing tech and third-party vendors? How complicated will the integration be? What will be the costs in time and money? Because every modern business is a data business, pay special attention to databases, data lakes and data warehouses.

3. Customer Fit No matter how much you like an acquisition, it doesn’t matter unless current and prospective customers think it’s great too. Will these new products allow you to work with clients you couldn’t work with before? If so, do you know enough about what those customers will need to be sure the features the acquired technology offers do what they should? There’s nothing more painful than realizing you guessed wrong—so don’t guess.

Make sure your team does their homework first. Good customer fit should also consider “stickiness. ” Will new technologies and capabilities really enhance your value to existing customers, or are you just hoping to cross-sell them something extra to buy? If it’s the latter, be careful.

The customers who trust you may buy the extra offering and regret it. Customers who aren’t sure how much they should trust you may lose faith. Lastly, how seamless can you make the experience for users? Sometimes, integration is easy and makes the most sense.

Other times, there are good reasons why users would like it better if they stay separate. 4. Culture Fit As the legendary management consultant Peter Drucker put it, “Culture eats strategy for breakfast.

” It doesn’t matter how great the integration works on paper if you can’t make it work in the real world. Integrating a tech stack is only half the battle. If you can’t get people to work together, it will all fall apart.

Tech has its own subcultures. At some companies, a coder is just a coder. In others, he or she is an important stakeholder who has to be consulted before something important changes.

Know what happens if you try to merge a very flat organization and a very hierarchical one? You’ll end up with half your team wanting to rebel and the other half not knowing what to do without being told. Even if the tech looks exactly like what you need, that kind of tricky cultural integration should make you think twice before you buy. In hindsight, our people-driven culture has given us a significant advantage in M&A.

We understood intuitively that the more global our organization became, the more cultural issues we’d run into. We knew that not everybody would speak the same language or work in the same time zone. We anticipated cultural differences in when and how people are expected to work and what business demands are considered in or out of bounds.

I’m not saying we’ve gotten cultures to fit perfectly from day one every time, but having strong people values has helped. If all of that sounds like a lot to consider, it is. But if you want to get tech M&A right, you need a process, and we couldn’t have grown this fast without ours.

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