6. A Preliminary Theoretical

6.3 The complete framework

among the concepts are often difficult as limits tend to differ from author to author and also evolve over time. The classification above is chosen as it is likely to show more stability, thus enabling conclusions that persist during a longer period of time. Although trends come and go, the fundamental architectural principles persist.

6.2.6 Dimension F: IS integration role

Although many authors regard integration as a post-M&A issue, processes that are meant to end in integrated organizations can be traced back to well before the M&A deal is closed. McKiernan and Merali (1995) argue that an important distinction to understand IS integration in M&A is whether IS integration is a post-M&A issue, dealt with reactively, or an early issue on the agenda, used proactively to maximize chances for positive outcome. McKiernan and Merali (1995) argue that currently IS integration is considered by managers as a post-M&A issue, dealt with reactively. However, according to the authors it should be an early issue on the agenda, used proactively to maximize chances for positive outcome. Later surveys continue to report that managers still regard IS as a post-M&A issue (Accenture, 2006;

Rodgers, 2005)

relationship between IS integration and M&A. Chapter 2 presented 3 potential relations, which were summarized in Table 2.5. Relations are numbered according to the dimensions to which they relate. The three relations are indicated in Figure 6.5:

BD1: B. Organizational Integration – D. IS ecology: Operational integration requires integration of the internal value chain, which requires heavy integration of Transactional IS. Functional integration, in turn, is related to integration of Information IS. The more complex dependency of operational units should make integration in Transaction IS more demanding in terms of resources and time, compared to Informational IS (Barki & Pinsonneault, 2005; Weill &

Broadbent, 1998).

DE1: D. IS ecology – E. Integration Architecture: If integration of Transaction IS, as suggested, is more demanding and requires deeper coupling than Informational IS, then there are consequences for

Figure 6.5. A framework for IS integration in M&A

A: Synergetic potential Technical

marketing, production, experience, scheduling, banking, compensation Pecuniary

monopoly, monopsy Diversification Portofolio management

B: Organizational Integration Interdependency type Pooled, Sequential, Reciprocal Degree of Integration Holding, Preservation, Symbiosis, Absorption Integrated Activity Operational, Functional

C: Intentions & Reactions Friendliness/Hostility Rescue, Collaboration, Combination, Takeover Reaction

Turnover rate, Level of distrust

Phase-models

pre-M&A, deal, post-M&A

D: IS Ecology Function

Infrastructural, Informational, Transactional, Strategic

E: Integration Architecture Integration level

IT, Infological, Organizational (business)

Integration structure P2P, Middleware, Enterprise-wide, Meta-level, SOA

F: IS integration role Proactivity

Proactive/Reactive IS integration

in M&A

selection of the integration architecture. Integrating a whole operational chain with point-to-point architecture should logically be too complex.

In this case a single system, not perhaps a complete Enterprise-wide, but at least some sort of “process wide” architecture can be claimed more suitable (Markus, 2000).

DE2: D. IS ecology – E. Integration Architecture: If the IS is business critical then integrating with point-to-point or middleware could be preferred in favor of an enterprise wide system. Implementing a new enterprise wide system is a highly risky and complicated process.

Integrating existing systems is arguably less difficult and risky than a complete transition (Markus, 2000).

In Chapter 3 with focus on general M&A characteristics, three additional relations with possible impact on the IS integration were identified:

AB1: A. Synergetic potential – B. Organizational integration: The degree and mode of integration should be dependent on synergies expected as higher levels of integration is resource demanding (Haspeslagh &

Jemison, 1991). In chapter three it was explained how different kinds of synergies were leveraged by different levels of integration. Leveraging

A:

Synergetic potential

B:

Organizational integration

E:

Integration architecture

C:

Intention and reactions

D:

IS ecology F:

IS integration role

Figure 6.6. Deductively identified relationships between dimensions of IS integration in M&A.

AB1

AF1 BC1

DE1, DE2 BD1, BD2

EF1

monopoly synergies do not demand integration to the same extent as production or scheduling synergies.

AF1: A. Synergetic potential – F. IS integration role: A proactive use of IS integration enables more accurate synergy estimation and possibly identification of supplementary synergies (McKiernan & Merali, 1995).

As IS integration is a risky and cumbersome process it is an issue that has 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.

BE1: B. Organizational integration – E. Intention and reactions:

Resistance among employees may cause integration problems. If one strives for higher degrees of integration, it is not a good idea to have the workforce opposing you. What Buono and Bowditch contributed with was insight that helps understand when and why people are opposing the integration in order to avoid such situations (Buono & Bowditch, 1989).

In chapter 4 the two theoretical domains were integrated, and two further potential relations were found:

BD2: B. Organizational Integration – D. IS ecology: Stylianou et al.

(1996) suggested that the IS fit as part of the organizational fit had significant impact on the resources needed for IS integration. They found that differences in the two companies’ IS, for example programming language if internally developed, had not only a negative impact on resources needed. They found that determining these differences and taking action upon the information prior to the M&A also had a positive impact, which further strengthens the evidence that IS fit is significant in M&A.

EF1: E. Integration architecture – F. IS integration role: A reactive approach is likely to transform existing systems rather than replacing them (McKiernan & Merali, 1995). If the IS managers 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.

Table 6.2 summarizes the theoretically deduced relations from Chapters 2 – 4.

Table 6.2 Theoretically deduced relations from chapter 2 – 4

Relation Description Indicative

references A. Synergetic potential – B. Organizational integration

AB1 The degree and mode of integration should be dependent on synergies expected as higher levels of integration is resource demanding. In chapter three it was explained how different kinds of synergies were leveraged by different levels of integration. Leveraging monopoly synergies do not demand integration to the same extent as production or scheduling synergies.

(Haspeslagh &

Jemison, 1991)

A. Synergetic potential – F. IS integration role

AF1 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 an issue that has to be considered early in the process. If not, costs related to IS integration can rapidly overshadow the benefits of the integration. McKiernan and Merali even argue that sometimes relative ease in IS integration could even be a reason to make an M&A.

(McKiernan &

Merali, 1995).

B. Organizational integration – C. Intention and reactions

BC1 Resistance among employees may cause integration problems. When pondered, it makes a lot of sense. If one strives for higher degrees of integration, it is not a good idea to have the workforce opposing you.

What Buono and Bowditch contributed was the insight that helps understand when and why people are opposing the integration in order to avoid such situations.

(Buono &

Bowditch, 1989)

B. Organizational Integration – D. IS ecology

BD1 Operational integration requires integration of the internal value chain, which requires heavy integration of Transactional IS. Functional integration, in turn, is related to integration of Information IS. The more complex dependency of operational units should make integration in Transaction IS more demanding in terms of resources and time, compared to Informational IS.

(Barki &

Pinsonneault, 2005;

Weill & Broadbent, 1998)

BD2 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)

D. IS ecology – E. Integration Architecture

DE1 If integration of Transaction IS, as suggested, is more demanding and requires deeper coupling than Informational IS, then there are consequences for selection of integration architecture. Integrating a whole operational chain with point-to-point architecture should logically be too complex. In this case a single system, not perhaps a complete Enterprise-wide, but at least some sort of “process wide” architecture can be claimed more suitable.

(Markus, 2000)

DE2 If the IS is business critical, then integrating with point-to-point or middleware could be preferred in favor of an enterprise wide system.

Implementing a new enterprise wide system is a highly risky and complicated process. Integrating existing systems is arguably less difficult and risky than a complete transition.

(Markus, 2000)

E. Integration architecture – F. IS integration role

EF1 A reactive approach is likely to transform existing systems rather than replacing them. If the IS managers 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)

The preliminary theoretical framework creates the foundation for this study. The potential of the framework lays in the individual value of each dimension and additionally the combined potential to illuminate dynamics and relations between different aspects of IS integration in M&A. Based on the literature review in chapter 2-4, the framework presents six dimensions and sums up IS characteristics and characteristics in the M&A process that could influence each other.

What we bring for future use is, apart from the theoretical framework from which the subject of this thesis is studied, five potential relations as described in the existing literature. Together they create the starting point for the empirical work presented next.

I dokument Managing Information Systems Integration in Corporate Mergers and Acquisitions Henningsson, Stefan (sidor 156-161)