Avnet Tries Buying Its Way to the Top - ' Quick Mergers Require Quick '
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The migration was fast, too, but carefully planned. "We allow people to take risks in terms of migration schedules, but mitigate those risks with rigorous testing," Phillips said. "For example, when we started the live migration of Memec America's systems onto Avnet America's platforms, it was actually the fifth migration run, following four practice runs to ensure things would go well."
Following the successful integration of Memec's operations in the fall, Avnet now runs two regional ERP systems—SAP in Asia and a custom-built mainframe-based system called Genesis in the Americas—and is moving toward a single SAP system in Europe. That's down from more than 10 systems around the world just a couple of years ago.
Avnet said it hopes to save $130 million a year by combining its operations with Memec, much of that from the efficiency of the merged regional systems. Phillips said the company is currently on track to deliver on that goal for fiscal 2007.
The experience gained through integrating Memec will also allow Avnet to write new chapters of the Cookbook with specific relevance to the Asian market. "With Memec, the Cookbook will expand and translate our experience to the region," said Avnet Chief Technology Officer Bill Chapman.
"For this deal, we took the Cookbook from the United States and gave our people in Asia processes and procedures and relationships they didn't have before. The Cookbook provided a baseline for our conversations. People weren't sitting around waiting for a leader. It worked well. Now we have the opportunity to make it even more effective."
Avnet prepares for growth by talking with its customers to identify possible acquisition candidates, and to learn more about the specifics of a given target. Memec, for instance, shared some major customers with Avnet, and Kamins's team interviewed those customers, under a nondisclosure agreement, about the fit between the two companies. "In the world of distribution, the customer is our boss," Kamins said. "We need to know what they think, and if they will come along after the deal."
Avnet got more than people and customers from Memec. It adopted the acquired company's practice of issuing a monthly performance scorecard to track IT performance, and learned from Memec's more sophisticated understanding of governance and regulatory issues.
"This kind of stuff shows the true value of the Cookbook," said Chapman, who came to Avnet from Motorola in 1999. It's not just a tool for answering questions that come up when integrating two companies, but a way of freeing managers to focus on larger issues, by nailing down routine procedures so they don't have to worry about them.
"In a normal company, you're trying to figure out how to manage things like reference information in different ERP systems," Chapman said. "Here, systems, even financial processes, are all documented. The Cookbook goes into the master plan for the business, and includes all sorts of different scenarios, all the way down to coordinating an open order—how to deal with it, whose responsibility it is. It's about merging organizations and back offices so you execute cleanly. That gives you time to look at things like differentiating applications that connect to a supplier or customer, and it helps usher new companies into the Avnet culture. With those things predefined, it frees you up to say, 'What did they do well? What can we keep?' It enables cultures to merge."
Story Guide:
Avnet Tries Buying Its Way to the Top
Fueling the Right Kind of Growth
Quick Mergers Require Quick Migrations
Relying on Mergers for Growth
What Makes a Good Merger Candidate?
Competitive Difference: How Avnet's Competition Does Mergers, or Not
Next page: Relying on mergers for growth.
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