Gérald Brunetto
CREGO Laboratory, University of Montpellier II, place Eugene Bataillon, 34095 Montpellier, France,
Keywords: Information system, integration, mergers, acquisitions.
Abstract: Today Information Systems (IS) integration constitutes one of the major success factors of mergers and
acquisitions. This article draws on two case studies of firms having realized more than 10 mergers and
acquisitions between 1990 and 2000. This paper shows the importance of carrying out an approach to
understand IS integration process. This approach represents the necessity of using organizational
configuration to define possible IS integration modes. Thus we show the importance of organizational,
strategic and technological contingencies within the elaboration of integration mode.
Currently, mergers and acquisitions are increasing in
numbers and values. The carrying out of mergers
and acquisitions result in an economic and
organizationnal failure for more than 50% of
mergers (Cartwright & Cooper 1993 ; McKinsey
2000 ; Mercer Consulting 2001). The reasons for
explaining mergers failures have been largely put
forward and acknowledged. Strategic fit, although
necessary, is not enough to realize expected synergy.
Informational, cultural and human aspects are now
more and more evoked to account for the result
(Marks 1982 ; Shrivastava 1986 ; Buono, Bowditch
& Lewis 1988 ; Schweiger & Weber 1989 ;
Schweiger & Walsh 1990). It is now largely
established that a major part of mergers failures can
be explain by difficulties with methods, management
processes and information systems (IS) integration.
Then, once the merger or acquisition made
official, integration process is the true key to the
success of this project (Haspelagh et Jemison 1991,
Shrivastava 1986). The 2001 Mercer Consulting
study, about 159 transatlantic mergers between 1994
and 1999, mentions five central factors for the post-
merger integration. In addition to the importance of
human ressources and business preservation
problems, the need to integrate information systems
seems to be on of the main issues to settle in order to
achieve general post-merger integration.
“At the level of mergers, information systems
integration is an organisationnal and technical issue
largely underestimated. It’s not a matter of
administration detail but rather that of a key success
factor considering the way firms are operating
today” as informed a listed big French company
CEO (dec 2004). Hence, the particular integration of
information systems plays a crucial role in the
integration process. Nevertheless the failures
regarding information systems are numerous and
have serious effects on the operating and financial
results of merged firms. Information system
management and its staff are usually pushed aside
from negociation and assessment of the target firm
(Walton 1989).
Consequently, these actors and managers are in
charge of settling all the merging incompatibilities
only at the beginning of the integration process,
which generates several malfunctioning and
blocking situation: one of the argument used to
counteract the merger between Société Générale and
Paribas (two French banks) was the time necessary
to integrate the information systems. At Axa, in
2000, then three years after the merger with UAP,
we rated that information systems merger had just
been finished and had overcost the expected
amounts. At Total-Fina-Elf, six months after the
Brunetto G. (2007).
In Proceedings of the Ninth International Conference on Enterprise Information Systems - DISI, pages 71-77
DOI: 10.5220/0002348900710077
merger, one of the source of staff demotivation lies
in the difficulties in information exchanges (data,
mail, ...). This prevented a well functioning of the
firm. The human factor is also often alluded to as a
problematic point. At Aventis, an executive tells that
the delay in the achievement of the information
system integration schedule was due to the fact that
it took 47 work council meetings to have the
integration project accepted. All these examples lead
one to wonder about the IS integration modes and
their implementation.
Nevertheless, literature on mergers and
acquisitions focuses primarily on financial aspects of
the acquisition process, the culture and
communication issues (Mirvis & Marks 1992), the
different general integration strategies (Haspelagh &
Jemison 1991) or also on the analysis of the general
organisational and strategic fit between merger firms
(Jemison & Sitkin 1986). If the latter research
benefits are fundamental to perceive and understand
the post-merger integration process in general, they
call for other specific researches regarding post-
mergers integration of IS. But, when IS integration
is dealt with, it remains mentioned only in
professional and industrial journals, where it focuses
on technical aspects of integration and deals them
apart from strategic and organizational contingencies
(Rubin 1992). In this literature, integration issues are
usually considered as technical incompatibilities
(Rosenberg 1987 ; Johnson 1989 ; Kubilus 1991).
Recent research provides us with elements on
post-merger information systems integration issues.
Part of this research gives priority to a technological
and computer approach of the IS integration process
(Giacommazzi, Panella et Pernici 1997, Pareek
2004), by proposing a classification which considers
the final configuration of the applications (software)
and the final configuration of the architecture of the
new IS. Another part of the research seeks to
identify key factors of success relative to the process
(Stylianou, Robbins, Jeffries 1996, Stylianou
Robbins 1999). These authors have developped a
research model explaining the variables that
determine the success of the IS integration process
during mergers and acquisitions as well as variables
which enable to measure this success. Another
approach consists in examining the role of
information systems in merger and acquisition
process (Stylianou et Robbins 1999, McKiernan
Merali 1995, Alaranta 2004). This work shows that
IS function has a reactive or a proactive role in
mergers and acquisitions, and asks the question of IS
strategic planning regarding merger process seen as
a whole and integration process in particular. If the
latter research applies to determining variables of the
IS integration process and their key factors of
success, nowhere can we see studies about the
process in progress as such.
Hence, the aim of this article is to provide a
description and a model of the IS post-merger
integration process from a holistic point of view, that
is to seek which are the possible IS integration
modes and how are they implemented in merged
IS post-merger integration consists of two
complementary and sequential aspects that we
should consider together in order to propose a
characterization of the process: the first one
concerns possible integration modes, the second one
deal with the implementation of the chosen
integration mode. Then, in this research, we define
IS integration process as an integration mode choice
and as an implementation of the chosen integration
mode in a same time.
We examine the IS integration process through
the theory of fit, enabling us to take into account
technological, orgnizational and strategic
dimensions in a congruent perspective (Buck Lew,
Wardle and Pliskin 1992). If we want to try and
understand how the (emerging or deliberate) choice
of the IS integration mode is made, three dimensions
must be integrated by firms into their integration
vision: a business strategy dimension, an
organizational dimension and an information
technology dimension.
Walton (1989) makes clear that “it’s essential for
a firm to incorporate these three perspectives into a
single vision and to consider each of these
perspectives during the merger process”. This type
of gestalt fit gives opportunity to supply with ideal
profile so as to better comprehend choices of IS
integration modes and to be able to build up a
multidimensional analysis frame. Then, we select a
fit configurational approach drawn from
organizational theories literature. We try to apply
and adapt it in order to analyse IS in mergers and
acquisitions contexts.
ICEIS 2007 - International Conference on Enterprise Information Systems
From this angle, organization tries to maintain
the consistency of its gestalt and, among
acquisitions, this maintaining attempt is diluted
because of the number of firms involved. Although
rarely used and capitalized in IS research (Iivari
1992), this fit configurational approach is considered
as the most appropriate way to analyse complex
organizations (Van de Ven & Drazin 1985 ; Miller
1987 ; Meyer & al 1993), which is perfectly the case
of mergers and acquisitions. Thus, merged firms
must choose and implement an IS integration
process allowing them to make consistent their
organizational, strategic and technological
configuration. This compatibility of these three
dimensions, as we showed previously, should be
understood and examined as a single vision (Walton
1989 ; Weber et Pliskin 1996). So, the
configurational approach leads us to keep as a
theoretical framework the MIT works (Scott Morton
Figure A: Analysis framework from MIT works (Scott
Morton 1991).
The term “configuration” is usually employed in
computer science in a technological perspective,
considering that it constitutes a type profile of
equipement and software designed for a predefined
and definite use. In our analysis framework, “IS
configuration” designates a configurational
representation of the IS dimension. This IS
configuration includes structural contingencies,
management processes and roles of people and
actors belonging to or users of IS function in the
organization. This cares for both organization
(structure and roles definition), technology, strategy
and above all the importance of actors (employees,
managers, consultants) in a reactive and proactive
dimension, makes it possible to present a theoretical
analysis framework of IS configuration of
integration process during the merger, and to
understand the already or emerge integration choices
according to compatibilities or incompatibilities
between the firm’s IS involved. We postulate indeed
that the existing or no compatibility between the two
firms IS involved in merger results from the
similarities of their respective IS configurations.
3.1 Methodology
The chosen method to construct cases is that of
retrospective stories. We chose a technique close to
Yin’s (1990) to reconstruct IS integration and
mergers stories. The latter calls for primary data as
main data source (interviews in total with many
varied actors from 2002 to 2005) and secondary data
to complete it (internal documents, records, press).
We chose to carry out a process analysis by
exploring IS integration process development
3.2 Data and Results
3.2.1 Data
Our work relies on the analysis of two big French
companies specialized in real estate construction
industry which both engaged in mergers and
acquisitions between 1990 and 2004 (10 in total).
These cases recount IS integration process stories
among both studied mergers. This choice is based,
on the one hand, the will to make comparable
regularities emerge in different post-mergers IS
integration situations and, on the other hand, the
wish to determine the similarities and divergences
between the different studied cases as to elaborate a
generic model putting emphasis on behaviour
patterns adopted within the IS integration process.
3.2.2 Results
The two firms examined, MFC and Geoxia, work in
a fragmented industry. This triggered off external
growth wave which allowed these two firms to buy
up their business rivals. Geoxia started to apply this
policy from the early 90’s, that is, in the middle of
the industry crisis in order to reach the critical size
and continued it up to now. MFC has launched in
acquisitions after its finance listing at the Paris stock
exchange in july 2000. So, the two groups have
competing acquisitions policies during the same
periods (2000-2005).
INFORMATION SYSTEMS INTEGRATION DURING MERGERS - Integration Modes Typology and Integration Paths
MFC acquisitions serve a market strategy, i.e. an
increase in profitability, market shares and
economies of scales. Concerning IS function, the
strategic aim is clear: cost rationalization and
reduction. MFC adopts a steady integration mode
and applied in a uniform manner for each acquisition
: MFC information system is applied to the acquired
firm in order to establish a centralized control and to
improve the financial situation. IS configurations of
MFC and other acquired firms are very far away
from each other in terms of technology, management
process, structure and culture. We sum up these
operations characteristics in the following table 1.
Table 1: Mergers and acquisitions realized by the two
groups between 1990 and 2004.
Purchaser Acquired
07/2000 MFC OCR
06/2001 MFC Berval
07/2002 MFC GHPA
07/2003 MFC Bruno Petit
10/2004 MFC Horizons
12/1989 GEOXIA H-France
03/1991 GEOXIA MFamiliales
10/1992 GEOXIA MBouygues
02/2002 GEOXIA DCA
04/2002 GEOXIA Stylgit
Geoxia group begins its purchasing policy in
following a market strategy as well. Geoxia
configurations and those of its first acquisitions are
quite similar: same structure, same management
process, close technologies. Contrary to MFC,
Geoxia experiences an integration mode based on
setting up a simple link between technologies and
conversion procedures. The merged firms IS are
kept as they are and must cohabit. Then, Geoxia is
aiming at the cheapest IS integration in an industry
crisis context.
The merger with Maisons Bouygues in 1992
marks a change of integration mode. Their IS
configurations are incompatible due to the structures
in place, the formalization level, the technologies
employed and the different cultures in the computer
departments. In addition, this merger aims at other
strategic goals based on synergies seeking and a
market leader group identity creation leading to
value creation for customers and shareholders. This
results in an integration which finds expression in a
radical overhaul of IS. It takes three years for the
new set to take shape. Business processes are
rethought, structures are modified, previous systems
are given up to the benefit of a new architecture.
New IS will act as an integration catalyst during the
last group acquisitions in the 2000’s.
New integration mode: since its new IS
implementation at the end of 1999, Geoxia holds an
atypical configuration compared with other market
actors, which remain less formalized, less structured
and technologically less equiped. The studied IS
configurations are witnessing strong
incompatibilities, coupled with an integration
strategy turned to integration cost cutting and
rationalization. IS integration mode corresponds to
absorption: Geoxia IS is applied to acquired firms.
Geoxia relies on its IS to accelerate the general
integration phase: better financial consolidation,
building sites management centralization,
accelerated reporting, ... Thus, in the space of 14
merging years, three integration modes have
succeeded as regards IS.
4.1 An Emerging IS Integration Modes
Exploration of these firms, having each experienced
more than 5 mergers during a long period, enable us
to propose a typology presenting several
combinations within a matrix built up on two axes :
the degree of IS configurations compatibility, and
the strategic goals assigned to IS function.
Overhaul. In incompatible IS configurations
cases, overhaul process constitutes the hardest
process to implement. It requires management
process reconstruction of each firm to integrate,
architecture and IS structures conception, an
overhaul of technological elements. This process led
by Geoxia illustrates the organization will to create
synergies and value in spite of initial disparities
presented by each firm IS configuration. However, a
major risk is inherent in this approach : attempting to
adopt individual components stemming from each of
the present configuration, and trying to merge them
into a new configuration may lead to failure because
of the discrepancy inside entities interdependents
components to integrate and because of the
discrepancy between the two underlying
organization schemes.
ICEIS 2007 - International Conference on Enterprise Information Systems
Figure 1: IS integration modes typology.
Absorption. Resolving different IS
incompatibility occurs through an absorption process
as well. So, integration issue is largely simplified to
the extent that one configuration absorbs the other
one. Present risks in the overhaul process are
strongly reduced making migration the preferred
process in an incompatibility context (process
immediately chosen by MFC from 2000 at the time
of its acquisitions, then by Geoxia in 2002 to make
its new IS pay). Neverthless other risks of different
kinds are emerging : risks of destroying acquired
firm initial value, change reluctance, no-
acknowledgement of acquired firm IS specificities.
Symbiosis. In the case of IS configurations
compatibility synergies can be achieved more easily.
The symbiosis process appears to be as the process
to be preferred to take advantage IS configurations
proximities offered by the connection established
between the firms. Here IS acts as a synergies
catalyst and makes it possible to turn strategy to
value. Firms examined here didn’t allow us to
observe such a case.
Preservation. In the case where goals declared
by the acquired firm depend upon cost-
rationalization or cutting, preservation process
permits to answer positively to this situation. Indeed,
configurations compatibility allows the possibility to
minimize integration costs and to establish a
minimal technological, structural and organizational
coherence in the merger of the two firms concerned
(Geoxia case). Basic technical or procedural links
are then set up (two front offices, two back offices)
in order to fulfil these objectives.
The longitudinal study of these two groups
reveals several integration paths leading from one
mode to another one. We strive to identify and
explain them.
Path n°1: A strategy change turn toward
integration to symbiosis. Merged firms make the
most of their configurational compatibilities in order
to generate value and synergies
Figure 2: Path n°1.
Path n°2: Merged companies configurational
compatibility moves with time to an incompatibility
due to technological initiatives, process changes or
structures done separetly by firms. The Geoxia case
from 1993 illustrates this transition. The sliding
move to these configurations and the change in
strategy decided by the new management enforced
in 1994 explain the IS overhaul giving a new
character to integration process.
Figure 3: Path n°2.
Path n°3: Same sliding move as for path n°2,
but the strategy assigned to IS remains focused on
observed when purchaser and acquired firm have
similar configurations. The fact that the acquired
firm commits to a change in its IS (for instance an
ERP implementation) leads to an automatic
alignement of the acquired firm’s configuration.
Figure 4: Path n°3.
Path n°4: Purchaser strategy is modified in order
to make the investments undertaken in IS overhaul
pay. The latter is then assessed as an integration
catalyst. The new acquisitions whose configuration
is close to that of the purchaser find themselves
forced to apply purchaser IS in the perspective of
“copy-pasting” style. Integration process led by
Geoxia between 1999 and 2002 follows this path.
INFORMATION SYSTEMS INTEGRATION DURING MERGERS - Integration Modes Typology and Integration Paths
Figure 5: Path n°4.
Our research doesn’t focus on the integration
failures reasons. It aims to offer an understanding of
the construction, implementation and issues related
to IS integration process by integrating strategic,
organizational and technological contingencies. So
this research aims to make clear which integration
type should be set up related to the IS getting
merged, and to define the pooling of the different IS
during this integration process. Similarly, this
research is about the degrees of this integration and
the actors characterization, their role in the
participation in the process as well as the
interactions between the same actors.
We carried out two case-studies reflecting
different IS integration process approaches. We
considered temporality each of these actions and
their intervention levels in the process. The research
results enable us to identify the determinants of the
possible IS integration modes. We suggest an
approach insisting on contingencies leading to
absorption, preservation, symbiosis and overhaul
modes. For this purpose, we put forward the
necessity to take into account a vision based on
organizational, strategic and technological levels. So
configurational approach allows to show the
importance of fit between two merged firms within
the IS integration process. This fit between these 3
levels makes it possible to understand IS integration
process and to characterize it according to two
perspectives : chosen or emergent integration mode
and dynamics implementation of this mode.
If mergers and acquisitions are two of the main
focuses of media attention at the announcement
time, they constitute operations hard to study due to
their strategic and confidential nature, namely at the
integration phase. In order to consolidate our results,
we advocate to extend our study field to other firms
belonging to different industry sectors. This
perspective would permit to refine our analysis and
more particulary one integration mode (symbiosis)
that we couldn’t observe in our field and which
remains a theoritical conclusion in our research.
Similarly, it ought to enhance the possible
complementarities between the two dynamics
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