The Importance of Integration During Mergers and Acquisitions


Economic uncertainty tends to lead to buy-outs and mergers and acquisitions, so CIO Insight is probably hitting a timely theme with its recent piece, "How CIOs Can Make Mergers Work." The article's introduction pointed out that the "failure rate for mergers and acquisitions is painfully high."


Companies are trying to improve this problem by paying more attention, pre-merger, to operations and other complexities involved in turning two organizations into one. You would think it would've occurred to someone to do this before now, but apparently not. Anyway, since operations and the related complexities definitely involve IT, the article theorized that CIO involvement from the get-go could really help boost that M&A success rate.


Morrison, a partner in Accenture's Strategic Information Technology Effectiveness practice, suggested CIOs form their own merger team, complete with a full-time project leader and leaders for key areas, including infrastructure and application.


I would take that one step further and suggest that this is exactly the sort of team that would benefit from a specialist in integration or, if you have one, a representative from the corporate Integration Competency Center.


Sadly, integration is often an afterthought in these situations, as Informatica Chief Marketing Officer Chris Boorman recently pointed out. Boorman cited a 2007 report by Bloor Research, which revealed that 79 percent of merger and acquisition activity ignores IT integration.


Boorman listed a number of merger and acquisition projects that involve data integration in particular, including merging general ledgers, consolidating customer service functions and aligning outsourced functions.


Opined Boorman:

"Data integration is a critical enabler to successful M&A. Without it failure is far more probable - with it at least organizations have a chance of delivering shareholder value."

He also discussed a few examples of successful M&A integration efforts.

The case is pretty clear for making integration a top focus when you're looking at a merger or acquisition. Here are a few other, recent resources for tackling the integration challenges of M&As: