Mergers fail to deliver as IT issues are overlooked

Company mergers are failing to deliver cost-savings due to problems with IT due diligence, according to a survey published this...

Company mergers are failing to deliver cost-savings due to problems with IT due diligence, according to a survey published this week.

Despite the complexities of integrating IT systems after a merger or acquisition, two-thirds of companies do not carry out technical due diligence.

Just over half of senior IT managers are consulted about technology fit and asset value.

But where technical due diligence standards are met they result in the abandonment or delay of a fifth of mergers.

"The true costs of both acquisition and post-deal operating overheads cannot be established without that work being carried out," warned the report, which was based on the survey of leading IT directors conducted by research firm the Bathwick Group.

Cultural integration and software and network integration are seen by IT directors as the key business issues following a merger. Skills and hardware integration are awarded the least importance.

A widening of IT directors' roles means the job is increasingly seen as a route to the job of chief executive, according to the survey of 137 leading IT directors in the UK.

Almost three-quarters of those surveyed said the skills they require have changed since the arrival of the internet, with marketing and brand management, finance and customer product development rising in importance and eclipsing traditional technology skills.

This means almost half of IT directors' decision-making time is now spent on business-related issues, bringing them into contact with senior managers across the company.

Less than one-third of their time is given to technical issues.

"It is clear that CIOs have become key asset managers, and as the skill set demanded by the role becomes deeper, being a CIO may well become a favoured route to the top job," said Jonathan Steel, chairman of the Bathwick Group.

The new role means IT directors are finding their jobs increasingly stressful.

The combined pressure of longer working hours, keeping up with new technologies and coping with budgets and expenditure levels were highlighted as the major causes of stress.

When coping with reduced budgets the most popular option for IT directors is to lay off IT contractors and cut IT projects.

Cutting IT staff is rated at only seventh on the list of 10 likely responses.

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