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?