Making choices - post merger systems integration

Dealing with mergers and newly acquired companies often means a lot of work in integrating the back end systems. The first step usually is to determine the course of action for integration, i.e., which systems to merge, which to drop and how to provide the technological infrastructure on which the combined business can be carried on. This article deals with the issues that the integration team will need to consider when deciding the course of action for systems in the merged entity.

This article appeared in print in March 2005 in the 'Control' journal.
MAKING CHOICES – POST MERGER SYSTEMS INTEGRATION

By Mukul Pareek

Integrating systems of two companies after a merger or an acquisition can be a formidable task – in fact, if not done right, many of the synergies factored into the merger valuations may never be realized. Poorly integrated systems could mean deserting customers, lack of a focused corporate brand identity for the new merged entity, and spiraling costs. Timely integration of systems and processes is necessary for the merged entity to derive the economies of scale, and the elimination of duplicate functions for the synergies to be achieved.


"Over the years, every firm acquires an agglomeration of boxes and code as unique as a fingerprint. Then firms merge, and someone has to try to stitch several of these unique datacentres together. This is the sort of thing that Charles de Felipe did at J.P. Morgan, a huge global bank, where he was one of the chief technical people for 26 years until he quit in July. During his career there Mr de Felipe went through nine mergers, which amalgamated once-famous names such as Chemical, Horizon, Manufacturers Hanover, Chase, H&Q, Jardine Fleming, J.P. Morgan and, most recently, BankOne into a single bank. “Every four years or so the entire landscape changes,” says Mr de Felipe. “On day one you merge the books; on day two you do the regulatory paperwork, and on day three you start talking about the systems.” The first two, he says, are child's play compared with the third."

- The Economist, A survey of information technology, October 30th 2004


The complete article is in PDF format and can be downloaded here