The commercial agriculture sector generally has upward mobility, but the condition of crops can play a role in the quality of food products, hampering the industry as a whole. For instance, the USDA reports that crop cash receipts would drop in 2023, only achieving a forecasted $267 billion.
The agribusiness sector must do its due diligence to keep its supply chains at healthy levels. Integrating mergers and acquisitions (M&A) with enterprise resource planning software (ERP) and change management can produce a bigger market share, increase profitability for many producers, and provide support during the aforementioned difficult periods.
This guide for agribusinesses will provide information that can benefit your supply chain, institutional investors, and other businesses you partner with.
The Challenges Associated with Integrating Agribusiness M&A and ERP (Plus Solutions)
Implementing ERP software in agribusiness is fraught with challenges. The failure rate is already high, and that’s before incorporating M&A.
This section will explore why this failure rate occurs and what agribusinesses can do to mitigate it.
Challenge #1: Too Much Change at Once
Although integrating ERP and M&A simultaneously is appealing to many agriculture businesses, this is often the chief cause of failure for both.
One of these implementations is difficult enough to pull off successfully; combining them at once will almost assuredly cause a negative impact.
Implementing ERP and integrating agribusiness M&A often creates additional, unintended problems. For example, you could experience clashes in culture as the entities merge. The perception of one implementation versus the other could be poor.
A private equity firm might not pay enough attention to long-term operational changes and costs, causing obvious risk factors to be overlooked.
The concept of change fatigue is also at play, where too much change exhausts all parties.
Solution: Slower Integration and Change Management Solutions
Doing your due diligence is a must here. Before your agribusiness begins the simultaneous implementation, meet with advisory services and other stakeholders to discuss if this is the right option.
Perhaps the climate isn’t right, and select food ingredients would be impacted by the sudden implementation.
Whether you decide to integrate agribusiness M&A and ERP at once or separately and slowly, change management is critical. This framework manages your staff, preparing them for what’s to come and providing support when the changes occur.
Without people, your agriculture business fails. Change management is key to preventing turnover during high-stress periods.
Challenge #2: Misaligned ERP
A lack of alignment between your cooperative plans and the implementation of an ERP system also accelerates its failure. The ERP software must fully integrate within your agribusiness, and that means more than planning for the future but creating actionable implementation steps.
Solution: Implement Slowly and Thoroughly, Combine Cultures
It’s the gelling of several cultures into one melting pot that so often hinders ERP implementation. Even if you’ve determined the move has a high enterprise value for your agribusiness, that doesn’t mean a rush job is the solution.
A slow, methodical plan for how you’ll integrate various cultures is a must if you hope to avoid this stumbling block. Keep in mind that even with an action plan, unexpected issues can still arise.
Cultural adjustment isn’t something you can plan for with 100 percent accuracy due to the ever-changing nature of people.
Planning for ERP and M&A Implementation: Follow These Steps
Agribusinesses with M&A and ERP implementation can use these encompassing steps to lop in food business partners, supply chain vendors, and other market companies you’re associated with.
Step 1: Perform Strategic Planning
The implementation must have long-term, risk-mitigating planning designed to promote business transactions and merger unity.
Evaluate what your business goals will look like in the face of these ongoing changes, including the first half of the fiscal year, the quarters beyond that, and even several years in, if possible.
Determine the viable pain points both sides of the merger will have as they unite. Review your ongoing processes, deciding if they’re sufficient or must be retooled. As you edit your processes, consider where to fit in required staff training.
Step 2: Select Software
The ERP software you invest in is a driving factor toward success. With many software options at your disposal, you must carefully weigh your options. Consider factors such as pricing, scalability, features, integrations, ease of use, and support as you reach your decision.
Step 3: Plan Your Implementation
The most important step is creating the action plan. You’ve already decided what must happen for your agriculture business to succeed in this new state. Now, it’s about putting the pieces together and watching how they fall into place.
Expect setbacks. Companies new to M&A and ERP implementation might take these setbacks as a failure, but that’s not necessarily so. Monitor transaction activity, the middle market, acquisition rate, revenue, and other positive benchmarks.
If they continue in the right direction, a setback is only a minor blip.
Step 4: Management and Support
Implementation will not be seamless, so setting up support options will increase the value of this business decision. The support should include internal and external options for customers and staff.
Change Management Strategies for Agribusinesses
Let’s delve deeper into helpful change management strategies to drive your new merger further, reducing market volatility, increasing transactions, and maintaining acquisition levels at their standard rate and value.
Data Collection and Review
Collate data, including farm system analysis and current systems in place, to create a local assessment. Share this with farmers, investors, clients, and internal partners within your company.
Compiling this data allows you to determine the necessary strategies that will move change management forward.
Your agribusiness should partner with local farmers and the aforementioned partners to create initiatives together. These initiatives should support all parties involved to keep your food market moving positively forward.
Besides planning for the initiatives, organize a plan for launching them.
Communication During Implementation
Maintaining regular, open-ended communication during the implementation phase is critical to its success. Implementation of a change management plan sometimes has hiccups, so finding communication tools that suit both parties will help you overcome these small bumps faster.
Identify performance indicators in your change management plan, monitoring to see how well the plan lives up to the expectations.
About midway through the change management plan, double down on analytics gathering to determine its success. Alternatively, you can wait until the plan ends and then track data.
Agribusinesses often merge ERP and M&A to improve transactions, protect food partners like farmers, and future-proof their market during periods of instability and uncertainty.
Change management planning majorly assists during the bumpy transition, ensuring a secure food supply chain, high value, and uninterrupted service.
Take your agriculture business further with our services at Beyond.