ABSTRACT

This research explains the main motives of mergers in banking sector, how the
process of merger is been carried and what are the major impacts of bank merger
on share holders and the overall performance of two merged banks. The research
identifies the success factors in the merger process and also identifies the IT
integration success factor. The research analyzes the IT cultural conflicts in bank
mergers and how the conflicts will be resolved. In bank merger process the
integration of two divergent cultures is crucial to make the merger successful and
to maintain performance after merger. This research examines the post merger IT
integration process in general bank scenario and argues that understanding of IT
cultural conflicts and their solution will lead to effective post merger IT
integration and ultimately the successful merger. This research identifies three IT
cultural conflicts and how to resolve those conflicts in post merger IT integration.
The research indicates that once the IT cultural conflicts resolved then merged
bank can effectively improve their performance even if the IT infrastructures and
processes of merged banks are incompatible

INTRODUCTION

A merger defines the combination of two (or more) companies into a single company,
which includes acquisitions or any other forms of merger.(Kloosterman, 2005). Bank
merger is known as the process by which two or more banks unite and appear as one new
entity. Mergers can be broadly classified into three types: vertical mergers, horizontal
mergers, and conglomerate mergers. Vertical merger is if a company acquires another
company, which buys the products of Acquirer Company and uses them as raw material
in its production process. If a bank acquires a marketing company which provides the
bank, marketing services for its products as an outsourcing solution, then it can be stated
as vertical merger. Horizontal merger is if a bank acquires another bank and merges it
into itself, it is known as Horizontal merger. And conglomerate Merger is if a company
acquires a company which is not at all connected with the area of operations of acquiring
company, it is said to be a conglomerate merger. For example, if a bank acquires a
cement company and merges it into itself, then it can be treated as conglomerate merger.

Merger strategy determines the degree of merger integration (Giacomazzi, 1997).

McKiernan and Merali (1995) identify three merger objectives, which are
(1) Absorption: the target company becomes integrated into the bidder company to form
one new entity in order to achieve the benefit of scale and to increase market share. This
strategy thus requires complete integration of the operations, IT, organization and culture.
(2) Symbiosis: a merger strategy is to combine only the strengths of both parties in order
to enhance the resulting company’s market power; and thus only partial integration takes
place.
(3) Preservation: no integration occurs in this strategy, and two parties remain
autonomous in order to allow them to further exploit and develop their capabilities.
LITERATURE REVIEW

 MAIN MOTIVES FOR BANK MERGERS:

o Limiting competition:
It would be wrong to conclude that mergers limit or restrict competition from the
consumer’s point of view. Competition is always enabled to do its part and competition is
protected by well defined and administered law and administration of the same. In merger
business enterprises are termed as a buyout of the competitions market shares or stake.

o Market Leadership:
It will increase the market share of both the company through the market recourses which
is present in greater number. Company will also increase its profitability by cutting its
extra cost and make control in the prices.

o Improving Economies of Scale:

The synergies are derived from the mergers of firm in an industry .They take advantage
of synergy in order to improve the economies of scale. This improvement is related with
the volume of production which leads to cut the cost per unit. Revenue enhancements due
to mergers in bank size, scope and increased market power.

o Operating Economics:
Individual basis Bank is bearing lot of cost, when two bank or merges it may result to cut
down cost due to operating expense. A combined form may avoid overlapping of
function and facilities.

o Financial Benefits:
With the mergers in banking sector they got a lot of benefits from financial perspective
like increase in financial performance, increase in consolidated debt capacity, deployment
of surplus cash and lowering the cost of financing.

 Merger Process(Maps of World.com, Merger Process)

Merger Process is a great concern for all the companies who intend to go for a merger.
This is so because, the process of merger can heavily affect the benefits derived out of the
merger. So, the Merger Process should be such that it would maximize the benefits of a
merger deal.

The Merger Process can be divided in to some steps. The stepwise implementation of any
merger process ensures its profitability.
o Preliminary Assessment or Business Valuation
In this first step of Merger Process, the market value of the target company is
assessed. In this process of assessment not only the current financial performance
of the company is examined but also the estimated future market value is
considered. The company which intends to acquire the target firm engages itself
in a thorough analysis of the target firm's business history. The products of the
firm, its' capital requirement, organizational structure, brand value everything are
reviewed strictly.(Maps of World.com, Merger Process)

o Phase of Proposal
After complete analysis and review of the target firm's market performance, in the
second step, the proposal for merger is given. Generally, this proposal is given
through issuing a non-binding offer document.(Maps of World.com, Merger
Process)

o Exit Plan

When a company decides to buy out the target firm and the target firm agrees,
then the latter involves in Exit Planning. The target firm plans the right time for
exit. It considers all the alternatives like Full Sale, Partial Sale and others. The
firm also does the tax planning and evaluates the options of reinvestment.(Maps
of World.com, Merger Process)

o Structured Marketing

After finalizing the Exit Plan, the target firm involves in the marketing process
and tries to achieve highest selling price. In this step, the target firm concentrates
on structuring the business deal. (Maps of World.com, Merger Process)

o Merger Agreement

In case of Merger, the final agreement papers are generated in this stage. (Maps of
World.com, Merger Process)

o Stage of Integration
 In this final stage, the two firms are integrated through Merger. In this stage, it is
ensured that the new joint company carries same rules and regulations throughout
the organization. (Maps of World.com, Merger Process)

Impact of Mergers (mapsofworld.com, Impact of Mergers)

Mergers are aimed at improving profits and productivity of a company. However,

mergers are not successful. At times, the main goal for which the process has taken
place loses focus. The success of mergers is determined by a number of factors. Those
mergers, which are resisted not only affects the entire work force in that organization but
also harm the credibility of the company. In the process, in addition to deviating from the
actual aim, psychological impacts are also many.

o Impact of Mergers on Workers or Employees:

Aftermath of mergers impact the employees or the workers the most. It is a well
known fact that whenever there is a merger, there are bound to be layoffs. In the
event when a new resulting company is efficient business wise, it would require
less number of people to perform the same task. Under such circumstances, the
company would attempt to downsize the labor force. If the employees who have
been laid off possess sufficient skills, they may in fact benefit from the lay off and
move on for greener pastures. But it is usually seen that the employees those who
are laid off would not have played a significant role under the new organizational
set up. This accounts for their removal from the new organization set up. These
workers in turn would look for re employment and may have to be satisfied with a
much lesser pay package than the previous one. Even though this may not lead to
drastic unemployment levels, nevertheless, the workers will have to compromise
for the same. If not drastically, the mild undulations created in the local economy
cannot be ignored fully. (mapsofworld.com, Impact of Mergers)

o Impact Of Mergers On Top Level Management:

Impact of mergers and acquisitions on top level management may actually

involve a "clash of the egos". There might be variations in the cultures of the two
organizations. Under the new set up the manager may be asked to implement such
policies or strategies, which may not be quite approved by him. When such a
situation arises, the main focus of the organization gets diverted and executives
become busy either settling matters among themselves or moving on. If however,
the manager is well equipped with a degree or has sufficient qualification, the
migration to another company may not be troublesome at all. (mapsofworld.com,
Impact of Mergers)
 o Impact Of Mergers On Shareholders:
We can further categorize the shareholders into two parts:

 The Shareholders of the acquiring firm

 The shareholders of the target firm.

o Shareholders Of The Acquired Firm:

The shareholders of the acquired company benefit the most. The reason being, it
is seen in majority of the cases that the acquiring company usually pays a little
excess than it what should.

Unless a man lives in a house he has recently bought, he will not be able to know
its drawbacks. So that the shareholders forgo their shares, the company has to
offer an amount more than the actual price, which is prevailing in the market.
Buying a company at a higher price can actually prove to be beneficial for the
local economy. (mapsofworld.com, Impact of Mergers)

o Shareholders of the Acquiring Firm

They are most affected. If we measure the benefits enjoyed by the shareholders of
the acquired company in degrees, the degree to which they were benefited, by the
same degree, these shareholders are harmed. This can be attributed to debt load,
which accompanies an acquisition. ( mapsofworld.com, Impact of Mergers)

Common factors undermining the success of merger

Include;
• Failure to accurately understand and gauge the cultural implications of combining the
two banks.
• Failure to understand the networks and relationships which are keys to the functioning
of the targeted bank.
• An inability to identify, retain and motivate key staff at the targeted banks.
• Failing to assemble an effective integration team.
• Poor formal and informal communication between merged banks.

In summary, many mergers fail to take into account the often intangible or hidden aspects
of what makes each transaction unique. Taking a one-size fits all approach or ignoring
the personal and cultural element of the merger is likely to lead to missed opportunities
and an inability to maximize the expected gains from the transaction.
Cultural Compatibility
The failure to appreciate or manage the cultural aspects of a merger is often cited as a
cause of a poor or disappointing outcome. In this case, Merger should not only focus on
the strategic or commercial rationale behind the deal but also take into consideration how
the transaction will impact the identity and values of the banks involved. Despite
thorough due diligence and planning, many mergers fail to take into account the more
intangible aspects of integration, in particular a thorough understanding of the cultural
differences between merging banks. Culture is often an intangible or abstract concept
which is difficult to quantify and compare. In simple terms culture can be summarized as
“how we do things here” and represents considerations such as how information is
communicated, how decisions get made, the working style of the bank, attitudes to risk
and other variable which define each bank as unique. Taking a systematic approach to
compare banks cultures and understand areas of compatibility helps develop a clear and
consistent understanding of the challenges and potential pitfalls facing the merger.
Furthermore, understanding how the combined bank will be different from the current
reality is also a relevant consideration. This process of “acculturation” is worth
investigating, particularly for relatively large transactions where effects of the transaction
will be felt across all areas of the combined bank. The compatibility or lack of it between
merging banks is likely to indicate the relative ease or difficulty with which the two
banks can be integrated. One pertinent question one merging bank should ask themselves
is, “Do our Corporate values and culture represent an attractive alternative to those of the
second merging bank?” If the answer is yes, fully integrating the banks should be a
relatively
Smooth process, if the answer is no, alternative scenarios should be considered
Such as letting the merging banks maintain a higher degree of autonomy and distinct
identity.

Retaining, Engaging With and Motivating Key Personnel

When executing a merger, one of the key issues facing mergers is how to identify and
retain key personnel. Considerable value can be destroyed by departures and the
subsequent loss of knowledge. Many mergers will look to avoid this outcome by
identifying key individuals and offering them financial and other benefits in order to
remain with the enlarged bank.
Although effective in the short-term, this strategy often turns out to be a divisive and
negative influence on morale.
In order to understand how best to deal with this issue, it is important to bear in mind that
when making a merger, banks buy more than the assets and infrastructure of the bank.
Mergers also involve a series of relationships and networks, between individuals, teams,
departments, suppliers and clients. The challenge facing the merger is to understand the
key relationships which are likely to enable the fulfillment of all the goals of the merge
.This means that merger need to do more than identify the “stars” or key performers, it is
also necessary to understand the networks and relationships which allow these
individuals to excel.
By identifying and prioritizing the relationships and networks which allow key staff to
perform, mergers can identify where the most value lies in terms of people and resources.
Efforts to maintain and develop these networks make the success of the integration far
more achievable.

Assembling the right team to lead the integration

Failing to allocate sufficient resources or assemble an effective team to manage the
integration process is a further cause of poor post-deal performance.
An integration process that is under resourced and lacking commitment and effort from
senior management becomes a burden on both banks.
For the target company in particular, this can lead to decreasing morale and a poor
perception of the merger. In addition to allocating sufficient physical resources to the
integration process, it is also necessary for the composition of the integration team to
reflect the nature and demands of the specific merge. A team that successfully completes
the integration of one bank may not be exactly the same team to successfully work on the
next project where a different approach may be required. Banks need to be aware of the
need to combine individuals who are process specialists and capable of dealing with the
nuts and bolts of the transaction with managers who can execute a communication
strategy suited to the target and other informal day to day aspects of the integration. By
aligning the integration team with the senior management at the bank, the merge is
maximizing the chances of strong relationships and understanding developing between
the banks.

Communication
Communication is another key factor often neglected or mismanaged between mergers.
Done well, it can accelerate and strengthen the links between the two banks and increase
the likelihood of the goals of the transaction being realized. Done badly and it will have
the opposite effect. By delivering a transparent and clear communication programmer,
merger can address a number of key concerns of personnel and avoid widespread rumor
and speculation from spreading. By being consistent and transparent, it is also likely that
the merger will more develop a reputation as being credible and trustworthy. In addition
to having a formal communication structure in place, covering areas such as new
employment terms, redundancies or any future relocation, informal communication is
equally important in ensuring a smooth integration. Day to day contact with staff,
customers and suppliers should reflect the strategy and rationale behind the transaction. It
should also acknowledge the strengths and achievements of the target company. The
quality of informal communication is likely to impact on the speed with which
relationships are formed between the two organizations. By assembling an integration
team where individuals are fully aware of the culture and values of the target audience
and capable of forming a strong collaborative relationship with key executives at the
target company, communication is likely to be consistent and transparent on all levels.

 Success Factor For IT Integration

However, merger has also come with many challenges; for example, post-merger
integration problems are common to most mergers. For IT-intensive firms, IT integration
is a crucial factor for successful mergers. Recently, a survey shows that cultural
integration is an important impediment to successful IT integration, and suggests that
learning how to plan and execute IT cultural integration in post-merger is getting
important.

Organizations that have a track record of successfully managing acquisitions seem to

have several major processes in common that differentiate them from the rest of the pack:
(Sinclair,
June 28, 2003)

o The assessment of organization culture and people are critical components of the
identification, selection and due diligence processes ;( Sinclair ,June 28, 2003)
o A “transition team” dedicated to the success of the merger/acquisition is
appointed prior to the merger, and is active in managing the post-merger
integration period(Sinclair ,June 28, 2003)
o The development and delivery procedure for integration includes clear, coherent
communications before, during and after transition (Sinclair, June 28, 2003)
o A celebration of the legacy left by the acquired/merged entities, followed swiftly
by a resolute and unapologetic focus on the vision and values of the new
entity(Sinclair ,June 28, 2003)

To make effective use of the IS evaluation research to support it, four components of
post-merger IS integration are proposed: User satisfaction with the integrated software’s
system and information quality; Efficient and effective IS integration processes;
Efficient IS staff integration; and IS ability to support the underlying motives of the
merger.”(Alaranta Evaluating Success in Post-Merger IS Integration,)
Components of post-merger information systems integration success:

o User satisfaction with the integrated software’s system and information

quality as well as its use
Not disrupting the work of employees, not inconveniencing customers, corporate-
wide information accessibility; accurate, useful and timely information (Alaranta,
Evaluating Success in Post-Merger IS Integration)

o Efficient and effective IS integration management:

Efficient and effective use of resources (time, cost and personnel) during the
integration processes, effective management policies with , regard to project
management, change management, outsourcing etc. (Alaranta, Evaluating Success
in Post-Merger IS Integration)

o Efficient IS staff integration:

Avoiding the loss of key IS people and their expertise; Recruiting technically and
managerially compete like: Reduced commitment and disloyalty, Reduced
productivity, Motivational problems, Dissatisfaction, frustration, confusion and
stress, Dysfunctional behavior and sabotage, People refusing assignments,
 Increased absenteeism, Health problems, Power struggles.(Alaranta, Evaluating
Success in Post-Merger IS Integration)

o IS ability to support the underlying motives of the merger:

For example, cost-cutting and exploiting redundancies in the IS function; supporting
synergies in Production by e.g. better coordination of production capacity supporting
new, integrated R&D function; supporting vertical integration and visibility with the
supplier/client acquired, etc (Alaranta, Evaluating Success in Post-Merger IS Integration)

 IT CULTURE CONFLICT

(Leidner and Kayworth, 2006) proposed a values-based approach of culture to develop

the themes to connect the relations between IT and culture. IT-culture themes deal with
culture which may influence the design of information systems, IT adoption, IT
outcomes, IT management and strategy. Given that culture is by definition shared value,
IT culture means the value attributed to IT by a group Leidner and Kayworth (2006
identified three types of value, which are (1) the group member values representing the
values held by a group’s members that signify the espoused beliefs about what is
important to the particular group, (2) the values embedded in a specific IT referring to
values which are assumed in the working behaviors that IT is designed to enable, and (3)
the general IT values referring to those values that a group ascribes in general to IT.
Based on the values-based approach, Figure 1 shows the three forms of conflicts which
may emerge in the context of IT development, adoption, use and management, and may
exist at the national, organizational, and subunit levels (Leidner et al., 2006). System
conflict describes conflict that emerges when the values implicit in a specific IT
contradict the values held by the group members who are using, or expect to use the
system. For example, a knowledge management system designed to foster communities
in an organization that cherishes individual billable hours. Contribution conflict is
defined as the contradiction between group member values and the group’s IT values. For
example, the relevant user group (physicians) viewed IT in general as cost control
whereas they espoused to cherish first and foremost quality of care. Vision conflict is the
contradiction between values embedded in a system and a group’s IT values. For
example, IT designed to promote efficiency for a group that perceives IT as a time-
consuming burden.
FIG 1
View of IT-Culture Conflict (adopted from Leidner and Kayworth, 2006)
IT culture conflicts of Bank A According to Leidner and Kayworth’s IT culture conflict perspective, there
are three conflict types of IT integration between merged banks.

(1) System conflict occurring in IT platform integration

As defined above, system conflict occurs when the values assumed in a specific IT contradicted the
values held by the group members. First of all, different group member values in IT platform’s
selection existed within two banks.

Suppose two banks merged to explain this conflict consider two banks like one whose name is A and
second one is B. For cost consideration, bank A needs an inexpensive platform, which operated AS/400
based systems. Bank B was committed to an IBM mainframe platform for system reliability regardless of
cost. for Bank B stability and ability are essential to a core banking system. Similarly, these two banks
existed some differences in treating values embedded in an IT platform. Bank A appraised AS/400 based
system for its user friendly and easy-to-maintain, while Bank B used IBM mainframe by emphasizing its
reliability at the expense of complexity. In summary, in considering cost and ease of use, Bank A is
contrary to Bank B’s reckless cost and hard to manage, and system conflict occurred in the selection of IT
platform after emerging.

(2) Vision conflict occurring in internet banking integration

Vision conflict describes the contradiction between values embedded in a specific technology and a group’s
IT values. First of all, these two banks existed some differences in treating values embedded in IT process
design. For supporting external customers’ needs, Bank A adapted simple and flexible process to discover
the potential customers, while Bank B used
formal and control process to meet internal customers’ needs. Similarly, the group’s IT values
were very different from each other in IT process integration. The IT department of Bank A was
business-driven; however, the IT department of Bank B was traditionally more technology focused. In
summary, Bank A’s flexible process and business-driven design are contrary to Bank B’s formal process and
technology focused design. There existed vision conflict in IT process integration of internet banking
business.

(3) Contribution conflict occurring in IT skills integration

Contribution conflict occurred when the group members’ values conflicted with the group’s IT values.
Firstly, different group members’ values existed within these two banks in the selection of IT skills. IT
employees of Bank A are more creative to accomplish the systems for better serving customers, for
example, they try to take advantage of new technology such as using web service to create ‘e-channel’ as
information exchange between different systems, while the IT staffs of Bank B tend to follow rules, work
hard and execute well and they are good at using dedicated technology to maintain the legacy system.”
Similarly, the group’s IT values were very different from each other in IT skill integration. Since the IT
department of Bank A adapted to new technology, IT personnel will work independently soon; however, the
IT department of Bank A used dedicated technologies to the system development, IT staffs must accept a
series of training before the formal operations, which made the acquisition of new technology and
personnel more
difficult. In summary, more creative staffs and new technology of Bank A were contrary to conservative
employees and dedicated technology in Bank B. There existed contribution conflict during the integration
of IT skills.

Process of IT integration In the beginning, Bank A detected that there were different cultures and IT
configuration in the both sides. To achieve the full integration goal, they made cultural integration before
system integration, and then turned IT department into the service-orientated organization. The integration
process is shown as follows.

(1) Change IT group members’ mindsets through training

Since Bank A adopted the IBM mainframe platform and core banking applications of Bank B, IT staffs of
Bank A “were in great agitation because their system will be stopped after merging and they have to learn
the new IT platform and skills.” The Chief of Bank A bewared that it is a tough job, held a series of team
moving trainings. These courses encouraged IT staff to recognize the changes caused by the merger, and to
change their mindsets. After that, the original IT staffs of Bank A would be responsible for process
integration, and the original staffs of Bankk B took charge of the system integration.

(2) Turn to customer-oriented service by management-by-objective strategy

In the past, IT staffs of Bank B were more technology-focused, and information systems were
limited to support internal customers. Bank A adopted management-by-objective strategy to deliver
customer oriented services. IT staffs of Bank A were responsible for service design, while these of Bank B
took charge of system implementation. For Bank A the goal of merging was not only to reduce cost, but
also to provide better services. IT departments will adopt service perspective to design the system. IT staff
will bring in the innovative ideas for looking new customers. After the integration process, the concepts of
two sides come close to each other. Therefore, many concepts have to be changed.
1. Background Study & Preliminary Literature Review

Background Study
Bank merger is known as the process by which two or more
banks unite and appear as one new entity, which includes acquisitions or
any other forms of merger. However, merger has come with many
challenges; for example, post merger integration problems are common
to most mergers. For IT-intensive firms, IT integration is a crucial factor
for successful mergers. Recent surveys show that cultural integration is
an important impediment to successful IT integration, and suggests that
learning how to plan and execute IT cultural integration in
post-merger is getting important.
This research is aimed to investigate how IT
culture conflicts affect post-merger IT integration, including the types of
IT culture conflict occurring in post-merger IT integration, and their
corresponding resolution.

Preliminary Literature Review:

 IT Integration usually confronts complex issues, such as the
decision on how to merge IT components including infrastructure,
processes, applications, people (skills) and culture (Johnston and Yetton,
1996; Robbins and Stylianou, 1999). Although a high level of integration
enhances synergy of merger (Chakrab and Mitchell, 2005; Kaarst-Brown
and Robey, 1999), it may increase coordination cost and potential conflict
(Chatterjee et al., 1992; Weber and Camerer, 2003). The culture fit
(Cartwright and Coopler, 1993) and the integration of divergent culture is
crucial to the success of merger (Teerikangas and Very, 2006; Weber and
Pliskin, 1996).

2. Problem Statement :

What are the IT culture conflicts in bank merger and how to

resolve them?

i. Questions in mind

• What factors motivates banks for merger?

• What are the main methods of IT integration in

bank mergers?

• What is the process of integration?

ii. Issues

• Integration of information systems (IT

Platforms).

• Adoption of integrated IT platform.

• Use and management of integrated IT platform

at operational level.

3. Scope of the Study:

The scope of the study is limited towards the IT conflicts when the mergers are
taken under consideration specifically in the banking sector. Within the IT
conflicts research will be focusing on the main problems like the platform,
adoption and use of the banking tools which they differ from one another. The
research is not about to analyze the network issues that how one’s network is
different from others.
4. Objectives:

• To study the factors motivates banks for merger.

• To analyze main methods of IT integration in bank

mergers.

• To analyze the process of integration.

5. Importance of Research:
As the Growing competition in the banking business environment drives
banks to conduct various mergers to expand their business and to get edge over
their competitors. And in conducting bank mergers the main hurdle is to integrate
to different IT systems, so the research will be quit helpful in realizing successful
bank mergers and to get a true edge over their rivals because now days every bank
is facilitating their customers through intensive IT services.

Research Methodology:
As already mentioned that this research is conducted to analyze the IT culture
conflicts whenever the mergers are being done specifically in the banking sector.
The main research question of this study is to identify IT culture conflict and
observe how to resolve these conflicts in bank merger IT integration. Therefore
Analysis methodology is well suited to explore these questions.
Variables:
As the study is conducted to analyze that how the good IT integration helps the
mergers to be successful so the variables can be:
Dependent Variable
Success of merger.
Independent Variable
Good IT integration (Platform, Adoption, use and management)
Sources of Data:
As due to the time line the study can not done by collecting primary data but
where as needed the data will be collected from the sources mentioned in Primary
sources. The sources of data gathering are as under:
Secondary Sources:
• Electronic documents & research journals related to bank post merger
issues.
• Finance and banking related web sites.
 • Research papers relevant to the study.
Primary Sources:
• Interview from Deputy director SBP
• Interview from Manager RBS Gulistan-e-jauhar branch Karachi.

Limitations:
This research is not going to analyze the network factor that how one’s branch
network is different from other.
Based on strategic alignment model [12], Figure 2
shows the four fields of business and IT interaction in
business strategy, IT strategy, organizational
infrastructure and processes, and IT infrastructure and
processes. In general, post-merger IT integration is
treated as a technology transformation process driven
by business strategy. The infrastructure and processes
field is always the impacted domain [17]. To support
business strategy, IT architecture, processes and skills
should be effectively redesigned [12] and conflicts may
occur. For example, in order to avoid the loss of
expertise possessed by key IS staffs, the efficient skill
integration of IS staffs is critical in the post-merger IT
integration process [1]. These choices will affect the
administrative structure, such as roles, responsibilities,
and authority structures, and then conflicts may emerge
between departments in the merged organization [9].

We examined the aforementioned issues by

incorporating Leidner and Kayworth’s IT culture
conflict perspective [15] into strategic alignment
model, creating a framework to analyze the types of IT
cultural conflict occurring in post-merger IT
integration. Following the framework as shown in
Figure 2, we recognized different value propositions of
the merged IT organizations. Then, we identified the
emerging conflicts after analyzing participants’
perspectives of both sides. Finally, we discussed the
resolution for IT culture conflicts and the relationship
between IT integration strategies and IT culture
conflicts
On the whole, acquirers are adept at executing the technical or process side of the
transaction, such as technology, systems
and infrastructure. However, many acquisitions fail to deliver the anticipated benefits
because they do not take into account the more intangible aspects of integration. The
difficulties encountered when it comes to integrating two independent entities can
quickly lead to unexpected costs, increased frustration, poor morale and require
considerable time and energy from senior management.
Four Groups has developed a set of simple processes and tools which address some of the
potential pitfalls of the integration process; by identifying where difficulties or problems
are likely to emerge and where easy wins can be made, it is possible to accelerate and
smooth post-acquisition integration, reducing the risk of the transaction failing to deliver
the anticipated benefits. Specifically, these tools address cultural compatibility,
assembling the optimum integration team, retaining and motivating key staff and
managing formal and informal communication.

Analysis

How important are the following factors to the success of a

merger? (where 1 = unimportant and 5 = extremely important)
How important are the following factors to the success of a
merger? (where 1 = unimportant and 5 = extremely important)

In general, post-merger IT integration is treated as a

technology transformation process driven by business strategy. However, the pivot is IT strategy
and
IT infrastructure as the areas of impact, for support business strategy, IT department must
develop the
proper IT integration strategy and redesign the IT architectures and processes, in which at least
three
components, IT architecture, IT processes, and IT skills, are addressed (Henderson and
Venkatraman,
1993). IT architecture selection is to redesign the technical infrastructure, such as core
applications,
the configuration of hardware, software, communication, and the data architecture. IT processes
selection is to redesign the work processes central to the operations of the IT infrastructure, such
as
systems development, maintenance, and monitoring systems. IT skills selection is to redesign the
acquisition, training, and development of the knowledge and capabilities of the individuals
required
effectively managing and operating the IT infrastructure after the merger.