A framework for assessing IT integration decision-making in mergers and acquisitions

Organizations have actively pursued mergers and acquisitions (M&As) over the past several decades but unfortunately almost half of these M&As have been unsuccessful, forcing researchers and practitioners alike to rethink the merger integration process that is so critical to M&A success. One vital aspect on the integration agenda is the integration of the two IT functions within the merging partners. In this paper, we offer a conceptual framework to understand why and when certain IT integration decisions are made during M&As. Three theoretical lenses - symbolism, power and strategic alignment are offered to interpret mergers in their pre-merger, merger and post-merger phases. It is contended that three factors govern much of the IT decision-making during merger integration: (a) the `aura′ of the Wall Street - and the `promise′ that the merging firms make to Wall Street analysts to achieve extraordinary cost-savings within a restrictive time frame; (b) the acquirer’s influence on the acquired firm, enforcing certain system choices on the acquired people; and (c) the goal to achieve business-IT strategic alignment. Influenced by Wall Street’s expectations and the acquirer’s persuasions, the new merged IT function may not be able to identify the best new arrangement of information systems infrastructure, people and processes, as prescribed by the strategic alignment lens, at least in the early phases of the merger process. We conclude the paper by illustrating some typical IT integration decisions that may be interpreted using these three lenses, and resulting practical implications. Through this paper, we hope to bring the M&A context to the IS researcher’s attention and provide a theoretical grounding to base future empirical research on.