Unit4, a leader in enterprise cloud applications for people-centric organizations, has unveiled part one of its international research study "The Back Office in 2025." Conducted by Vanson Bourne, the report reveals concerns among senior IT and finance decision-makers in the Professional Services industry about the state of their finance systems. Although 58% of respondents' organizations have made acquisitions in the last five years, 86% of respondents are frustrated that mergers and acquisitions (M&A) have taken longer than expected.

M&A is now vital for Professional Services firms striving for sustainable growth in an uncertain economy. The research revealed 81% of respondents' organizations either have been acquired or acquired another company in the past five years. Yet, M&A often falls short of expectations when it comes to delivering value, with one in five firms taking over a year to integrate a new company, whereas the average was eight months.

"Every professional services firm is laser-focused on growth and extracting value wherever possible, which means M&A is a strategic weapon in building more robust business models," said Bryce Wolf, Director of Strategic Growth, Unit4. "Unfortunately, IT and finance systems are hindering their ability to assimilate acquisitions quickly to realize value. It is essential that Professional Services firms address this limitation by modernizing their core back-office systems to remain competitive into the future."

A range of issues are cited with the top three business concerns being inconsistencies with financial data, personnel changes and redundancies, as well as stakeholder misalignment. The primary technical challenges are the ability to effectively allocate IT talent and resources, incompatible finance systems and a lack of standardization of back-office processes. As a consequence of these obstacles, respondents said the top impacts facing their firms are:

• Increased cybersecurity risk

• Brand reputation damage

• Slower decision-making

• Increased employee turnover

The research highlights the value of improving core systems, especially in M&A. Respondents noted that demonstrating real-time financial insights, automation and scalability will enhance their firm's appeal to potential buyers. To streamline M&A, they identified key focus areas:

• A focus on clear and transparent communication

• Scalable & flexible cloud-based IT/business solutions

• Streamlined financial tools and systems

To reach this stage, the research suggests Professional Services firms must focus on key priorities, including consolidating data for more accurate financial reporting, integrating back-office systems to save time and money, and automating processes to accelerate year-end financial consolidation.

Further Reading

Read the blog post Unlocking M&A Success for Professional Services Firms.