M&A’s are among the biggest challenges for companies and their IT organizations to navigate. They often create issues that cannot be dealt with conventional leadership and management techniques.

1. IT Integration during M&A’s
MIS Practicum Amit Pawar
Katz Graduate School of Business

2. Issue of IT integration during M&A’s
M&A’s are among the biggest challenges for companies and their IT organizations to navigate.
They often create issues that cannot be dealt with conventional leadership and management
techniques.
Research to identify the issue:
 Seventy-five percent of managers worldwide admit they don't even consider how IT
issues will affect operations until after the merger, according to a 2007 Hay Group
study.
 Seventy-nine percent of mergers and acquisition activity ignores IT integration,
according to another 2007 survey, this time by Bloor Research.
General problem: Lack of awareness that IT integration has to be a integral part of the M&A
process.
Departments involved:
 Information Technology department – CIO’s office
 M & A team
 Senior Leadership team
This issue is difficult because…
• Each organization uses its own technology and has crafted its own infrastructure, with
distinct operating costs.
• Bringing the two systems together means additive costs, and integrating them means that
complexity increases exponentially.
• IT and the business side do not make enough efforts to develop a common vision of the
combined company end state and to create a common agenda for getting to it.
Who cares about the issue?
CIO and the IT organization:
• Successful M&A integration does not rely exclusively on the CIO and IT, but they bear a
large part of the burden, since integrating people, operations, information and processes
requires significant technology investments
• According to the Bloor study of 56 large organizations, only 21% of CIOs feel that the
consideration of IT issues had been given appropriate weight in the decision to merge or
acquire.
• Senior management typically fail to appreciate the scale and the level of disruption
caused by smashing together two IT-enabled business infrastructures
Why do they care?
• All too often in the M&A world, IT integration is incomplete, delayed, and costly, and
this can frustrate business goals and undermine the success of a merger.
• Acquisitions were executed under severe stress so the post-merger IT integration
becomes a process that is force fitted after the merger occurs

3. What bad things happen if people do not understand the problem?
Numerous studies digging into transactions that have totaled between $1 and $4 trillion
annually during the past decade - from deep academic research to qualitative surveys by
well-connected consultancies - have come up with roughly the same figure: around 70%
of M&A’s ultimately fail to create any incremental shareholder value.
Fingers increasingly point to IT as one of the key sources, especially in industries which
are largely driven by technology: the difficulties that surround the integration of
complex, sprawling, and incompatible IT infrastructures.
What good things can happen if people understand the problem?
If the issue is identified before merger the IT organization will be better geared up to manage
post-deal IT implementation risks.
Following steps can be taken to improve the
• Assessing the current IT environment and making necessary improvements,
• Training staff to handle specific integration efforts
• Developing integration principles and templates for due diligence and planning
Some of the recent M&A’s
The size and scale of IT complexity of recent acquisitions is especially enormous – For example,
o Bank of America must integrate Countrywide
o Merrill Lynch and LaSalle
o JP Morgan Chase must integrate Bear Stearns and Washington Mutual.
o Barclays must integrate Lehman Brothers.
o Lloyds TSB and HBOS,
o Banco Itau, and Unibanco, and many others.
These were all extremely large organizations prior to recent acquisitions. These organizations
have significant challenges with IT complexity and redundancy of applications, processes and
data – much of this resulting from acquisitions in previous years.