Integrating Management Information Systems
Following Organizational Mergers or Acquisitions
Fred Niederman, Saint Louis University
Elizabeth Baker, Virginia Military Institute
University of Missouri, St. LouisFebruary 2009
Outline of Program
PurposeBackground on mergersRole of MIS integration in mergersThe dependent variableMethodInitial findings
Purpose
“Studies and experiences have shown that a major reasonwhy many mergers and acquisitions fail is because of problemsthat occur during the implementation stage of the transaction. Information technology (IT) has emerged as one of the most critical aspects of integration and successful implementation.” (Popovich, 2001) “When dealmakers are trying to knit together a transaction, managing all the details can seem like death by a thousand cuts. But experts insist that deal principals must look beyond financial and other models when evaluating deals and include information technology (IT) on their short list of concerns.” (Shearer, 2004)
Background
Mergers are frequentMergers on average reduce shareholder value
Role of MIS Integration in Mergers
MIS is one of several factors that can unravel a merger, but don’t guarantee successReasons MIS contributes to success Sheer value of MIS assets Support for business process
Before, during, and after the merger Support for data/information as decision basis MIS personnel as important knowledge
repository
The Financial/Economic View
Are mergers a good thing? Overemphasis on the mean,
neglect of the variance Difficulties pulling merger effects
from other effects Question addressed to
government policy and, perhaps, investors
Not so helpful for merger implementers
Levels of Integration
Continued Partly Fully separately integrated combined
Culture and Personnel
Timing and informing Retention of key skills Service orientation Decision making
MIS Integration Strategies
Continue both groups Integrate at summary level
Dismiss one group Move transactions and support to dominant
systemSelect “best of breed” At various levels of detail
Move both groups toward new platform Particularly in moving to ERP from two “legacy”
systems
Theory Bases
Strategic integration/match Hirschheim and Sabherwal; Henderson and Venkatchraman
Resource based lens Focus on assets and their combination
Attribution theory Focus on “spin” in evaluating outcomes (Vaara 2002)
Not in the literature Absorptive capacity Transaction cost and agency theory Structuration
Prior Empirical Research
Sallie Mae 14 lessons Brown, Clancy, and Scholer, 2003
Multiple cases Not much evidence of strategic alignment
as an issue Meera and Hirshheim, 2007
The Elusive Dependent Variable
Embedded system and multiple levels of analysis Is a good MIS integration of significant value when
other elements of the merger fail?Financial measuresHR style measuresDeLone and McLean System, information, and service quality Use and user satisfaction Net benefit
Method
Qualitative Sparse prior development of definitions,
constructs, and measuresUnits of analysis Firms, mergers, individual experiences
Data collection through interviews Saturation, diversity in positions
Analysis through grounded theory approach
Grounded Theory: What is It?
An inductive method of qualitative research designed to build theory from ground up Emphasis is on theory as the output of the
research Uses sampling to obtain the richest data for theory
development Emerging concepts derived inductively from the
data Patterns recognized abductively A rigorous and structured analysis process is
used to derive the theory
Initial Observations
10 interviews Fortune 500 companies
2 specialists in IT integration 3 CIOs 3 “on the ground” workers 2 retired CIOs
Initial Observations
Interview complexity Many mergers and varied observations
Size mattersSuccess measured informallyPersonnel -- wide range of approachesCultural fit critical for firms and for MISTimingLearning
Questions? Comments?