After slowing in 2009, merger and acquisition (M&A) activity appears to be gaining steam in the consumer packaged goods (CPG) industry as evidenced by Kraft Foods' acquisition of Cadbury and Sara Lee's sale of its Ambi Pur brand to Procter & Gamble. However, as companies undergo M&A integration, many are taking on major business transformation programs to better align technology, personnel and processes with the organizations' business goals.

Many of the largest CPG companies grew to their current size largely through acquisition; however, the nature of today's M&As differs from what has historically occurred in the industry. After years of running multiple brands and business units, a number of companies are now trying to integrate acquisitions while consolidating and transforming their current holding companies. This set of parallel activities drives up the complexity of every merger and requires top-notch program management and execution to fully reap the fruits of M&A synergies.

Another characteristic of recent years is that many CPG companies have moved toward leaner business and technology organizations. This can be a challenge when undertaking large merger or business transformation projects that require many staff hours to enable process consolidation and optimization projects.

To achieve synergies while driving business innovation in processes, products and services, CPG companies use an ecosystem of service providers. However, many companies do not have an enterprise program office to orchestrate and manage multiple service providers.

Despite the extra help from service providers, many companies struggle to fully implement large technology projects. Often, many projects are completed late or over budget. For those projects that are completed, only a handful delivers on the promised business value. This inhibits the company from delivering on commitments made to its shareholders as part of its overall business transformation strategy.

The following figure illustrates a synergy savings model for a CPG company and the effects a three- and six-month delay would have on its business. Such delays would jeopardize the company's three-year project completion goal and cost the company tens of millions of dollars in lost savings.

Figure 1: Sample cumulative synergy savings model and the potential effects of delays in enabling it (source: HP)

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