Easing Systems Integration, Post-Merger

By Ruotolo, Frank | Chief Executive (U.S.), April 1997 | Go to article overview

Easing Systems Integration, Post-Merger


Ruotolo, Frank, Chief Executive (U.S.)


Post-merger integration is never an easy affair, and in no area is the challenge more complicated and dangerous than in merging information technology. Improperly integrated disparate systems can result in seriously interrupted customer service, and loss of benefits hoped to be gained from the merger. "There is already a 70 percent chance that a merger and acquisition will fail to meet management needs. An inept merger of IT systems will only further increase the likelihood of failure," says John McCreight, president of Wilton, CT-based McCreight & Co., a consultancy specializing in strategy implementation.

Ideally, M&As allow the combined unit to realize synergies and benefit from technology redundancy. But how do you know which systems to keep and which to scrap? When should you keep both and tie them together with an IT integration tool? While they might sound like questions for an IS manager, not a CEO, the answers to these questions always begin with the business need. Many IT integration projects actually fail because business objectiveswere never made clear to the IS team, says George F. (Rick) Adam, president and CEO of New Era of Networks (NEON), a systems integration technology provider based in Englewood, CO.

Also behind the failure of IT integration is the tendency to underestimate IT costs and underfund projects to make merger numbers work. Just how much should be dedicated varies on the industry and its average IT expenditure, Adams explains. "Financial services, as a whole, spends 10 percent of revenue on technology, whereas hospitals spend 3 percent."

After the merger, customer databases should be integrated quickly, and accounts reassigned immediately. Aggressive communication with the customer should begin posthaste, so customers can begin to see the merged entity as one institution. …

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