Managing SAP Carve-Out and Merger Projects

Are you planning an SAP carve-out or merger project? These complex projects require careful planning, effective communication, and the involvement of all affected parties. This article provides an overview of SAP carve-out and merge projects, including due diligence, transformation planning, consulting services, and case studies of successful transformations.

When a company sells a portion of its business to an external party, they may carry out a SAP carve-out project plan to extract specific company codes into an independent SAP system. On the other hand, an SAP merger project is used to standardize and centralize SAP systems for the merger of companies. The goal is to achieve business success with smart cost management while minimizing disruption and maintaining business continuity.

In this article, we will look at the key factors involved in SAP carve-out and merge projects and provide an overview of the consulting services available from experienced partners. We will also present case studies of successful SAP carve-outs and mergers to help readers understand how to achieve the best results in their projects.

SAP Carve-Out Projects

SAP carve-out projects involve extracting a part of an existing legal or organizational entity and transferring it into an independent SAP system. It involves creating an infrastructure that can support the business processes of the divested assets. Data ownership is a critical factor in a carve-out. Some of the key considerations for SAP carve-out projects include:

Understanding exactly what is being carved out and who the buyer is
Identifying the timeline for the carve-out, and whether it is a share or asset deal
Determining who is bearing the IT costs and who will be responsible for ongoing IT support
Assessing what the future landscape looks like post-carve-out and how it will affect business processes, workflows, and organizational culture
Ensuring business continuity and minimizing disruption to the operative business on the buyer’s side

There are different categories of SAP carve-outs, such as:

Equity carve-out, where the parent company sells a portion of a subsidiary through an initial public offering
Asset divestiture, where the parent company sells specific assets of a subsidiary or sells divisions of the company
Spin-offs, where the parent company creates a new company by separating a business unit or subsidiary from the parent company
Reorganization or company split, where the parent company splits or restructures a company into two or more entities

There are four best practice models for managing complex SAP carve-out requirements:

Simultaneous carve-outs, where several business units are being sold simultaneously
Large-scale carve-outs, where complex processes such as inventory management, production planning, or quality management are involved
Multicountry carve-outs, which occur when the carve-out is being executed in multiple countries, involve different languages, legal regulations, and localizations.
Greenfield carve-outs, used when neither the buyer nor the seller has any predefined SAP/ERP systems, can be set up as a new landscape by using the latest SAP technology stack.

During a carve-out project, it is important to consider the following areas:

Carve out a project plan: Establishing a solid plan is essential for successful project execution. A well-defined plan should include a transformation planning phase to identify the business, process, and IT support required to achieve the objectives of the carve-out.
Due diligence: Conducting due diligence on all aspects of the carve-out is essential. It is important to identify areas of risk, such as intellectual property, research, and development, finance, human resources, and legal and regulatory obligations.
Data separation: Accurately separating data is essential for the carve-out process. SAP Solution Manager can be used to define client-specific system analyses, ensuring that all client-dependent data is captured and transferred.
Production planning and control involve determining the required inventory levels, production capacity, and resources required to meet customer demand. Effective production planning and control can lead to cost savings and improve customer service levels.
Materials and warehouse management: Efficient materials and warehouse management can improve inventory accuracy, lead times, and operational efficiency. It includes material planning, inventory management, and warehouse space utilization.
Sales and distribution: Efficient sales and distribution processes are essential for maintaining business continuity. It involves order management, pricing, product delivery, and customer service.

Gambit Consulting offers expertise in SAP carve-out projects, ensuring the uninterrupted continuation of the operative business on the buyer’s side, with practice-proven process models and tools.

SAP Merge Projects

SAP merger projects involve standardizing and centralizing SAP systems on a single platform for the merger of companies. The goal is to achieve business synergies by consolidating processes, eliminating duplicate data, and streamlining workflows. Atos, a global corporation, has experience setting up and managing SAP merger projects. They offer an IT carve-out and M&A roadmap to help manage major changes in corporate structure. Atos acts as a trusted partner to manage client transfers and border security business separations.

SAP landscape transformation tools are used for client transfer, which supports productive environments by copying all client-dependent data. The data migration phase involves identifying data dependencies, mapping data, and executing data transfers. Other phases of an SAP merge project include:

Successfully navigating these technical phases requires more than sound architecture decisions — it demands coordinated expertise across functional, technical, and project management domains. Organizations undertaking SAP landscape transformations during mergers frequently benefit from engaging specialists who understand both the system-level complexities and the broader business objectives at stake. A structured approach to SAP consulting solutions for corporations can provide the governance frameworks, migration methodologies, and stakeholder alignment strategies that internal teams often lack the bandwidth to develop independently. With the right consulting partnership in place, due diligence efforts become far more systematic and far less prone to costly oversights.

ERP landscape analysis: analyzing the technological and functional integration of different SAP/ERP systems. This includes evaluating the functionality, data sets, interfaces, and similar components of the different systems.
Architecture design: This includes system analyses, designing a target architecture, obtaining stakeholder buy-in and approval, and performing a pilot test.
Roll-in/rollout: This involves configuring the target system and testing the platform.
Business change management: This is focused on the organizational change that accompanies the SAP merge project. It includes communication, training, and user support.
Post-merger integration: This involves integrating the two organizations’ business processes by defining common processes and workflows.

Consulting Services

When planning an SAP carve-out or merge project, the involvement of all affected parties is essential. Due diligence and transformation planning are the foundations of a successful transformation. Consulting services from experienced partners can help companies manage these processes and achieve the best results.

Gambit Consulting and Atos are two firms that offer consulting services for SAP carve-out and merge projects. Their services include support from project planning through due diligence and carve-out to carve-in (post-merger integration). They work closely with stakeholders to ensure that all aspects of the transformation are addressed, including IT, finance, human resources, and organizational change management.

Some of the key areas where consulting services can provide support include:

Due diligence: Conducting due diligence is critical to identifying areas of risk and developing a comprehensive plan for the carve-out or merge project.
Strategy development: Developing an effective strategy for the SAP carve-out or merge project is an important aspect of ensuring success.
Risk management: Identifying and mitigating risks is critical to the success of an SAP carve-out or merge project. A comprehensive risk management plan can help minimize the impact of potential issues.
Automation: Implementing automation can help streamline processes and reduce the risk of errors.
Organizational change management: Organizational change management focuses on the human aspect of the transformation, including communication, training, and user support.
IT support: IT support is essential to ensuring that the transformation is executed smoothly and without disruption to business processes.

Consulting services can help companies achieve successful transformations by providing best practices, process models, and tools that are applicable in specific industries. Moreover, they have experienced consultants who know how to tailor solutions to meet the unique needs of each client.

Case Studies

Successful SAP carve-outs and mergers involve various scenarios, including re-implementation based on an existing system pattern, re-implementation, and carve-out projects. Below are some case studies of successful SAP carve-outs and mergers:

Brownfield approach: Gambit Consulting carried out a carve-out project for a power generation company. They used the brownfield approach to re-implement the SAP system based on the existing business processes. The system went live within four months of the carve-out.
Greenfield approach: In another case, Gambit Consulting worked with a manufacturing company to establish an independent SAP system for a recently acquired subsidiary. They utilized the greenfield approach, creating a new landscape that served the needs of the subsidiary’s business.
Large-scale carve-out: Atos managed an IT carve-out for a sensor and border security business, establishing new IT systems and processes for the carved-out segment. The project involved complex data separation and migration as well as a large-scale IT implementation.
Multicountry carve-out: Atos executed a multicountry carve-out project for a leading chemical company, involving the separation of several business units across multiple countries. The project involved data separation, system analysis, and target architecture design.

These case studies show that successful SAP carve-out and merge projects require effective planning, communication, and collaboration between all affected parties. SAP carve-out and merge projects are complex processes that require careful planning and execution. Consulting services from firms like Gambit Consulting and Atos can help companies manage these processes and achieve the best results.

By involving all affected parties, conducting due diligence, and carefully planning the transformation, companies can successfully carry out SAP carve-out and merge projects and achieve their goals. Successful transformations can create business synergies, streamline workflows, and position organizations for sustainable growth.

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Laura Scott

Chief Executive Officer (CEO) at ZDS Europe at ZDS Europe

Laura Scott is the visionary founder of ZDS Europe, an IT partner dedicated to driving business success through innovative technology solutions. With a focus on comprehensive IT support, Laura has positioned ZDS Europe as a leader in providing specialized computer services that enable businesses to thrive.