PracticePeople In PracticeIT managers left in the dark on mergers

IT managers left in the dark on mergers

Half of IT directors say there are no cost savings to be made from mergers - and most are not consulted before they happen, according to a survey by the Bathwick Group.

Of the 48% of 137 respondents who said their companies had undergone mergers in the last two years, only half were actually asked about the technology implications, according to the research.

Fewer than a third of companies undertook a full-scale study of the IT issues involved. When checks did take place, one in five deals were delayed or abandoned.

‘Most mergers are usually justified by cost savings. If they are going to be a key driver of a merger, it would be a good idea to work them out,’ said Bathwick Group chairman Jonathan Steel.

About two-thirds said mergers had achieved increased revenues, but less than 20% said costs were cut. Half said there was no saving, while one-third also claimed no rise in customer satisfaction.

Banking is one area where IT integration is vital to mergers. Lloyds and TSB only completed integration of their IT systems at the end of 2000 – five years after merging. As a result, customers received different levels of service, depending on which bank they originally used.

More recently, Royal Bank of Scotland said it could save Pounds 350m in three years from IT streamlining after its merger with NatWest. Cutting duplication accounts for Pounds 180m, while efficiency gains will save another Pounds 170m as NatWest customers move to RBS systems.

Although the RBS is staying tight-lipped about IT integration, a spokeswoman insisted that it is still on track. This is despite NatWest’s pre-merger claim that it would take five years and 1,000 staff to replace its core systems.

The Bathwick Group survey found cultural integration was rated as the highest priority after a merger, followed by software and network integration.

And 90% of IT heads said they have released imperfect business-critical solutions due to time constraints.

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UK plc tops the bidding wars

  • This article first appeared in Computing

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