Simple Concepts Key to Complex Integration Projects

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7 Steps to Smarter Integration

Sometimes, change can be worthwhile. The key is knowing what's worth pursuing and what's not.

The financial crisis led to some hasty mergers between financial services companies, including Bank of America's purchase of Merrill Lynch, JPMorgan's purchase of Bear Stearns and Wells Fargo's purchase of Wachovia. Mergers are tough for these companies even in the best of times, thanks to their highly complex and heterogeneous IT systems.


Consider some statistics cited by IT Business Edge blogger Loraine Lawson in a post about banks' integration challenges:

  • According to a 1999 Economist study, two of every three deals do not work.
  • A 2001 Capgemini study showed that 50 percent of financial services mergers from 1990-2000 eroded shareholder returns.
  • 2003 Merrill Lynch research found that large bank deals tend to perform worse than smaller ones.


      Despite these kinds of historical problems and added pressures because of the high profile of the deal, Wells Fargo's integration of Wachovia's IT systems with its own appears to be proceeding smoothly. Loraine wrote about it last summer, sharing four lessons learned from the companies' strategic approach to the integration project. They are:

      • Involve the business in integration strategy. Wells Fargo is using a methodology previously employed by Wachovia during a post-merger integration project. Using the methodology, each business unit created a "target operating model" that outlined its product plans, workforce size, location, technology needs and any unmet technology or product requirements. Following this process, unit heads assessed everyone's needs as a group: prioritizing, looking for duplication, etc.
      • Keep it simple. Underlying the IT integration strategy was a simple assumption: Wells Fargo's system would take precedence, unless there was a clear advantage to Wachovia's system. They decided to always opt for one or the other-and resist the temptation to invest in totally different systems or software.
      • Acknowledge the IT staff's emotions and insecurities. IT staff may feel their careers are tied to a particular software or system. This can make deciding which systems stay and which go an emotional exercise. An executive involved with the project suggested facing these fears head on and reminding staffers their value is in their experience and knowledge about technology in general-not a particular system.
      • Establish key metrics to monitor progress. Wells Fargo is tracking system availability, employee retention, budgets and operational efficiency to ensure integration isn't negatively impacting the business.


      I addressed the integration topic in my recent interview with George Tumas, executive vice president and CIO of Wells Fargo's Internet Services Group. Tumas mentioned the target operating model, which helped the company create its goals and timelines. For instance, it was decided Colorado would be the first state with overlapping service areas to be converted, a project that was successfully completed less than a year after the deal between the two companies closed in late 2008. Following that success, schedules for conversions in different lines of the business and different geographies were established.


      Another important lesson, which Tumas mentioned to me more than once during our interview, is to focus on the needs of the customer. He said:

      A lot of the timing of the conversions was really focused on the customer. We wanted to make sure our customers knew what was happening, from a front-end and back-end perspective. ... One might say, "You're taking a long time to do this, Wells Fargo." But we want to keep our customers in mind, making sure they understand what's happening.

      It isn't as if the companies created an entirely new approach to integration. Instead, they relied on project management fundamentals such as frequent communication between business and technology partners. That's been the standard in the Internet Services Group for over a decade. Tumas told me his staff is co-located with the business, which "really helps with resolving issues and getting good camaraderie between the groups." He said:

      Not to say there can't be good communication in a more traditional model with business on one side and IT on the other, but I think we've taken it to the next level. Are there disagreements? Absolutely. But there's a true partnership in getting disagreements resolved and moving forward.