Unity Bank Integration Case Study
The merger and acquisition of Delta by Unity Bank forces the integration of two companies with different core competencies, Information Systems and organizational structures and cultures. The CIO of operations, Stuart Irving must decide on the best strategy that would maximize the benefits of the merger by leveraging synergies against the potential costs and risks. Following the recommendation of the IT Governance Institute, newly merged company should establish effective duopoly IT governance with special focus on strategic alignment. Executive and department level steering committees consisting of members of both companies should be granted decision rights with respect to strategic direction, resource allocation, and prioritization. Even though there are disadvantages to this decision that mainly come from increased difficulty of reaching compromise agreements, they are by far outweighed by benefits of immediate propagation of clear direction throughout both companies, leveraging synergies while minimizing risks, and effective change management process that utilizes core competencies of both companies.
Summary of Relevant Facts
Unity Bank, a small South African bank has acquired Delta Bank, a much larger US based bank for $310M, as a way of breaking into the US market. Unity’s Board of Directors has identified synergy savings as a result of the merging of various legacy IS systems of $60M, expected to be realized within 3 years. An Integration Team lead by Stuart Irving, Unity Bank CIO for Integration has been tasked to achieve this goal, in the climate of mergers failing to realize value for stockholders and stakeholders alike.
Problem
Integration of the two companies involves a trade-off between benefits resulting from leveraging synergies against the potential costs and risks that stem from differences in organizational structure and culture, incompatibility of IT systems, use of legacy systems, conversion costs and significant risk of disturbing
Summary of Relevant Facts
Unity Bank, a small South African bank has acquired Delta Bank, a much larger US based bank for $310M, as a way of breaking into the US market. Unity’s Board of Directors has identified synergy savings as a result of the merging of various legacy IS systems of $60M, expected to be realized within 3 years. An Integration Team lead by Stuart Irving, Unity Bank CIO for Integration has been tasked to achieve this goal, in the climate of mergers failing to realize value for stockholders and stakeholders alike.
Problem
Integration of the two companies involves a trade-off between benefits resulting from leveraging synergies against the potential costs and risks that stem from differences in organizational structure and culture, incompatibility of IT systems, use of legacy systems, conversion costs and significant risk of disturbing
References: IT IG Board Briefing in IT Governance, 2nd Edition, IT Governance Institute, 2003, www.itigi.org Keri Pearlson, Carol Saunders Managing and Using Information Systems A Strategic Approach, John Wiley & Sons Inc., 2010