The risk and resilience industry has witnessed a significant wave of mergers and acquisitions, with larger companies absorbing smaller, standalone firms. While these deals often promise increased resources and capabilities, they can also lead to unintended consequences for customers, especially those building or managing Governance, Risk, and Compliance (GRC) programs. The aftermath of these mergers can include discontinued support, inconsistent user experiences, increased costs, and heightened regulatory risks.

Customer Satisfaction Takes a Hit

According to a PwC report on post-merger integration, up to 50% of companies acknowledge a decline in customer satisfaction, with industries like risk and resilience seeing customer churn increase by as much as 15% due to disruptions in service continuity and trust erosion (PwC, 2023). This decline underscores the challenges customers encounter when companies undergo significant changes. Often, the focus shifts from meeting customer needs to managing internal integration efforts, which can detract from the overall customer experience as these processes demand substantial time, energy, and attention (Harvard Business Review, n.d.).

The Looming Threat of Program Failure in GRC

For organizations looking to build or expand their GRC programs, the impact of a merger or acquisition can be particularly severe. When a larger company absorbs a smaller, specialized GRC provider, the acquired product may be retired or integrated into a broader, less focused solution. This can lead to the failure of GRC programs that rely on the unique capabilities of the original product. Additionally, regulatory changes and evolving compliance requirements can make it challenging to maintain the integrity of GRC programs when the underlying software is no longer supported or updated.

  • Regulatory and Compliance Risks: Companies face significant risks when their GRC software is sunset. They must quickly transition to a new platform or risk falling out of compliance with regulatory requirements. This transition can be fraught with challenges, including data migration issues, loss of historical data, and the need for extensive retraining of staff.

The Adverse Effect on Total Cost of Ownership

Mergers and acquisitions often result in increased total cost of ownership (TCO) for customers, particularly in the risk and resilience industry. The integration of disparate systems can lead to higher operational costs, as companies must invest in new technologies, retrain employees, and manage the complexities of a merged IT environment.

  • Increased Costs: Integrating various systems can incur significant additional expenses. Companies may need to invest in new technologies, employee training, and ongoing support to manage the complexities of the merged systems. These costs can add up quickly, impacting the overall budget and potentially leading to higher prices for customers or reduced service levels.
  • Operational Inefficiencies: The process of merging different systems and processes can create a challenging environment for both companies and their customers. Inconsistent interfaces and system redundancies can result in operational inefficiencies that further drive up costs.

What Happens When a Product Is Retired?

When a product is phased out as part of a merger or acquisition, customers face a difficult decision: either transition to a new platform or continue using unsupported software. Both options carry significant risks and costs.

  • Transition Costs: Moving to a new platform can be expensive, requiring investments in new software licenses, data migration, and staff training. Additionally, the transition process can disrupt business operations and lead to a temporary decline in productivity.
  • Risk of Unsupported Software: Continuing to use unsupported software exposes companies to a range of risks, including security vulnerabilities, lack of compliance with regulatory standards, and potential legal liabilities. In the GRC space, these risks are particularly acute, as organizations must demonstrate ongoing compliance with a complex and evolving regulatory landscape.

Regulatory and GRC Concerns

The risk and resilience industry is highly regulated, and companies must navigate a complex web of requirements related to data protection, operational resilience, and compliance. Mergers and acquisitions can exacerbate these challenges by introducing new regulatory risks.

  • Compliance Gaps: When companies merge, they may struggle to integrate their GRC systems effectively, leading to compliance gaps and increased regulatory scrutiny. Failure to maintain a robust GRC program can result in significant penalties, reputational damage, and loss of business.
  • Regulatory Challenges: In some cases, the merged entity may find itself subject to new regulatory requirements that were not applicable before the merger. This can create additional compliance burdens and increase the risk of regulatory enforcement actions.

CLDigital: Your Trusted Partner in Navigating Industry Challenges

While mergers and acquisitions in the risk and resilience industry can lead to growth and new opportunities, they also pose significant risks for customers, particularly those with established or emerging GRC programs. These changes can result in reduced customer support, inconsistent service, increased complexity, and heightened regulatory risks, leaving customers feeling undervalued and neglected. At CLDigital, we understand these challenges and have made it our mission to provide a stable and supportive environment for our clients.

We have worked with many leading organizations to help them transition away from consolidated solutions that no longer offer adequate customer support or regulatory compliance. Our clients appreciate our dedicated vendor support and customer success team, which ensures they receive the attention and assistance they need. Additionally, our platform’s ease of IT administration and self-service capabilities means that customers can manage their systems without the need for developers, reducing both costs and complications.

In fact, Info-Tech, a large IT research and advisory group, recently announced the results of their Emotional Footprint survey, and CLDigital ranked highest in vendor support and ease of IT administration. This recognition underscores our commitment to delivering exceptional service and innovative solutions tailored to our clients’ needs. You can read more about that announcement here.

Before your next renewal, we would love to connect with you and discuss why so many customers have chosen CLDigital as their trusted partner. Our focus on customer experience ensures that your operations remain resilient and your data secure, all while providing top-notch support and easy-to-use solutions. Let us help you navigate the complexities of the industry with confidence and peace of mind.