Managing IT Integration Risk in Acquisitions

Acquisitions of companies and business units have become important components of corporate growth strategies. Appropriately executed, acquisitions enable growth in scale or scope, create opportunities for future business and give access to important resources. In 2014, there were over 40,400 mergers and acquisitions worldwide, with a total value of $3.5 trillion.3 IT integration (integration of hardware, software, data and related business processes) is the second most frequent reason for acquisition failure.4 Accenture and McKinsey reported that 45%-60% of the expected benefits from acquisitions depend directly on effective IT integration.5 The combined organization cannot function effectively and leverage business synergies until the IT of the acquired business unit is integrated with the acquirer’s existing IT.6 In addition, companies with stronger IT integration capabilities are more successful in creating value from acquisitions than their peers.7 For the CIOs of acquiring companies, IT integration presents a critical management challenge.