The CW story http://www.computerweekly.com/Articles/2009/08/03/237159/britannia-and-co-operative-set-for-it-journey.htm regarding the merger of Co-operative Financial Services and the Britannia Building Society indicates that, following the merger, much needs to be done to decide which systems to use going forward. This begs the question as to the extent of IT related due diligence and pre-merger planning that went into the deal before it was agreed. Whilst not knowing how much or how little was done in this instance, in my experience, despite its potential to unlock post merger value, IT is often subject to a relatively perfunctory review as part of the due diligence process. This can prove to be a major mistake as the potential for value from IT can often have the opposite effect once the merger euphoria has dissipated. The failure to spot lock-in to significant contracts, the failure to identify failing or unnecessary projects, the loss of key staff through merger uncertainty, together with many other matters, can quickly turn value creation into value destruction. Many companies have learnt this the hard way.
During my professional career I have been involved in many due diligence projects, often being given only a very few days to carry out the IT related reviews, sometimes in very complex environments. Indeed in many instances IT was excluded from the due diligence completely. By contrast my financial and tax specialist colleagues would bring in large teams and spend weeks reviewing their aspects of the proposed deal. Perhaps little has changed.
Successful and ambitious CIOs need to ensure that they are involved from the outset in any merger or acquisition activities. IT will be a key success (or failure) factor in any significant M&A activity in almost all industries. Within financial services it could be a potential deal breaker. IT can certainly have a significant effect on deal pricing. Enterprises that pay insufficient attention to the impact of IT on M&A success do so at their peril.
Couldn't agree with you more Paul. Your post reminds me of the merger between Daimler and Chrysler more than 10 years ago. Then CEO Juergen Schrempp was drinking champagne to celebrate the merger while the IT teams had just found out they had hundreds of ERP systems that could not be integrated...