4. IS Integration and M&A

4.3 Contribution of Chapter 4

leverage synergies. McKiernan and Merali (1995) studied the integration of IS after mergers from a strategic perspective. As said before, they concluded that IS could either be used proactively or reactively. Although IS normally was used reactively, meaning that IS integration was not an issue when considering mergers, IS staff was faced rather with the settled deal, and the authors argued in favor of proactively IS use. Drawing parallels to the M&A phase-models discussed above, McKiernan and Merali (1995) argue that currently IS integration is a post-M&A issue, dealt with reactively. However, it should be an early issue on the agenda, used proactively to maximize chances for positive outcome. The same was suggested by Weber and Pliskin (1996). In their study they investigated the relation between investments in IS integration and a company’s effectiveness. Their findings pointed out a positive relationship when accounting for IT intensity and cultural differences in the integration process. In the cases where these two issues were not considered, no relation between IS investments and effectiveness was found.

McKiernan and Merali’s (1995) conclusion that IS integration should be used proactively could be criticized, based on Clemons &

Row (1991), Mata et al (1995) and Powell & Dent-Micallef (1997) who all argue that IS have limited possibilities to create competitive advantage, but instead should align to and support other organizational resources and thus logically follow subsequently to the shaping of the new integrated organization. However, according to McKiernan and Merali (1995), involving IS integration with due diligence could lead to IS integration enabled synergies being identified that would not have been discovered if due diligence had not been paid to IS integration.

more prominent role in the M&A process. Whether IS integration should remain in its current role as a reactive approach or, as suggested by (McKiernan & Merali, 1995; Weber & Pliskin, 1996), be used proactively as part of the due diligence phase, is still a important research issue. The discussion on proactivity is also nestled with the discourse regarding the importance of IS integration for the outcome of the M&A. Although stressed for far more than a decade by researchers, IS integration still plays a demure role.

Table 4.1 Classification concepts in Chapter 4

Key concept Description Classification Source references IS integration role

Proactivity It has been suggested that IS should be a part of pre-M&A due diligence and not, as currently, a post-M&A issue.

Proactive/Reactive use (Merali &

McKiernan, 1993)

Late contributions

Alignment Alignment has been proposed as the denominator for successful strategy. The IT strategy is supposed to be well aligned with the overall M&A strategy

Aligned, partly aligned, non-aligned

(Wijnhoven et al., 2006; Mehta &

Hirschheim, 2007)

IS integration success

Alaranta propose that the concept of IS integration success could be subdivided into four categories.

User satisfaction, Efficient and effective IS integration management, Efficient IS staff integration, IS ability to motives of the merger

(Alaranta, 2005a)

Among the later contributions, two publications on the topic of IS alignment were identified (Wijnhoven et al., 2006; Mehta &

Hirschheim, 2007). They point, to a large extent, to similar conceptualizations of alignment, even though they are based on different models. The difference is to be found in whether to include outsourcing and partnerships among the strategic decisions. The later contributions also include a conceptualization of IS integration success in M&A (Alaranta, 2005a), in which success is refined into User satisfaction, Efficient and effective IS integration management, Efficient IS staff integration, and IS ability to motives of the M&A.

Research has also highlighted relations between specific aspects of M&A and IS integration (see Table 4.2). The relations, graphically presented in Figure 4.4, are relations between Chapters 2 and 3 which

identified key concepts and the above introduced concept of IS integration role. Especially the matter of IS fit has been stressed.

However, the empirical foundations for these conclusions are not sufficiently grounded to establish secure relations between IS characteristics and fit. Initial findings need to be tested further. When it comes to the process of IS integration, even less is known. However, it has been suggested that a reactive approach to IS integration is likely to have certain consequences on the decision of integration architecture. A reactive approach is more likely to transform existing systems, rather than replacing them, since the leverage of synergies following an M&A is normally under great time pressure.

Table 4.2 Relational concepts in Chapter 4

Relation Suggestion Source references

Synergetic potential – IS integration role

A proactive use of IS integration enables more accurate synergy estimation and possibly identification of supplementary synergies As IS integration is a risky and cumbersome process it is a issue that have to be considered early in the process. If not, cost related to IS integration can rapidly overshadow the benefits of the integration.

McKiernan and Merali even argue that sometimes relative easiness in IS integration could even be a reason to make an M&A.

(McKiernan &

Merali, 1995).

Organizational Integration – IS ecology

Stylianou et al. suggested that the IS fit as part of the organizational fit had significant impact on the resources needed for IS integration.

Not only did they find that differences in the two companies’ IS, for example programming language if internally developed, had a negative impact on resources needed. They also found that determining these differences and taking action upon the information prior to the M&A did have a positive impact, which further strengthens the evidence that IS fit is significant in M&A.

(Stylianou et al.

1996)

Integration architecture – IS integration role

A reactive approach is likely to transform existing system rather than replacing them. If the IS manager are approached with the issue to fulfill an integration need after the deal is closed the completion of the plans are often time critical as the pressure is high to recapture invested money.

(McKiernan &

Merali, 1995)

Chapters 2 to 4 have presented the existing research on the topics of IS integration, M&A, and IS integration in an M&A context. The theories, models, and concepts accounted for indicate the collected knowledge on which the study is founded and to which it aspires to make a contribution. The collected knowledge is reused by its amalgation into a preliminary theoretical framework that, in turn, is

used to guide empirical work and analysis. With this summary of the contribution of Chapter 4 ends the first part of this thesis. In the next part will be accounted for the empirical studies of IS integration at four M&As by Trelleborg AB and related analysis to describe and explain the management of IS integration in those M&As.

Synergetic potential

IS Ecology

IS integration role

Figure 4.4 Relations between key constructs

Organizational integration

Integration Architecture

5. Methodological considerations for

I dokument Managing Information Systems Integration in Corporate Mergers and Acquisitions Henningsson, Stefan (sidor 118-122)