CHAPTER 4 CASE STUDIES
4.2 Data Analysis－CIOs’ Measurements
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CHAPTER 4 CASE STUDIES
In this section, we present the empirical findings derived from cross-case analysis of the four merger cases.
4.1 Data Analysis－CEOs’ Measurements
We collected the secondary data from news, annual reports, and official announcements that represented the opinion of each CEO toward the M&A as Table 5 shows. From this, we can clearly see that Bank A wishes to improve synergies from the merge while the others aim at increasing market share and scaling up. These measurements coincide with those shown in Table 1.
Table 5 CEOs’ measurements derived from the Internet and public announcements
Bank CEOs’ opinions
A Integrate the resource of two banks, improve operation performance, and achieve better synergies
B Enlarge the business scale and increase the market share C Increase the market share of credit cards
D Expand service points and contact with more customers.
4.2 Data Analysis－CIOs’ Measurements
To validate the factors we proposed, we interviewed four IT managers from Bank A, Bank B, Bank C, and Bank D. The interview questions are shown in Appendix 1. The transcribed interview contents are shown in Appendix 3, Appendix 4, Appendix 5, and Appendix 6 in respective of Bank A, Bank B, Bank C, and Bank D. From the literature review, we concluded four factors that CIOs take for
evaluating the success of post-merger IT integration: achieving operational continuity, achieving technology consolidation, achieving cost savings, and integrating IT within a limited, desired time frame. However, after the interviews with IT managers, we learned that they had the same opinions in regards to these factors. Moreover, they prioritized the factors by significance and pointed out that there are other, additional issues that concern them. The findings from the interviews are as follows:
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First, all the managers indicated that achieving operational continuity was of utmost importance and the top priority regarding IT integration. Moreover, they are under pressure to work on this. Bank A’s IT Manager said:
“To achieve operation consistency undoubtedly is the first priority. It’s the most important thing for our company. It’s incorrect that the system can’t run smoothly due to the integration. The system should not influence customer service.”
The Senior Vice President of Bank B said:
“For me, as long as the business operation won’t be interrupted, it means success.”
The IT Manager of Bank C stated that:
“It’s important that all the customer data be correct. Furthermore, the integrated system shouldn’t influence the original merger’s data and operations. In the banking industry, the information service part is really critical. Even if the integrated system is not ready, the integrating deadline and related policy will be postponed to ensure the continuity of the whole business operation.”
The Vice President of Bank D explained:
“Without doubt, achieving operation continuity is a necessary condition. In the banking industry, it’s impossible to stop service for IT integration. The operation definitely can’t be interrupted.”
Second, they all stated that achieving technology consolidation was the next priority. When adopting IT integration strategy, it is especially important to consolidate all system and information
technology such as the data center, network, server, application systems, surrounding equipment, protocol, etc. This consolidation also influences the operational process. For example, if two different systems have not been integrated, users have to use both while offering services to the customer. The front-end user’s loading will increase, which will result in a more complex business process and directly impact the service quality and customer satisfaction.
The IT Manager of Bank A said:
“Regarding technology consolidation, it’s the secondary concern while I evaluate IT integration.
Besides the business aspect, information technology must integrate together in an M&A. In this way, the business process can be supported and run smoothly.”
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The Senior Vice President of Bank B said:
“I agree that technology consolidation is important. Even though some equipment consolidation seems less significant such as the mail server, the license authority, and contract renegotiations, it’s vital for the business operation. To some extent, information technology consolidation is related to the operational continuity.”
The IT manager of Bank C stated that:
“Of course, this point is critical. All the credit card-related systems and surrounding systems of the acquired bank are transferred to Bank C. In addition, the related licenses are not only transferred to Bank C but also rearranged. All the IT needs to integrate smoothly to maximize the utility of the IT resources.”
The Vice President of Bank D said:
“If the information technology is not consolidated, that means we haven’t finished all the integration work. Thus, achieving technology consolidation is a necessary condition. It’s definitely a
measurement for us to evaluate if the integration is a successful one or not.”
Third, integrating IT within a desired time frame ranked number three. The IT manager of Bank A said:
“According to our evaluation, it’s more appropriate that the accomplished IT integration date is postponed a month later than the business integration date. Even though in our case the system- integration date is not as same as the business- integration date, it would be better to accomplish the whole IT integration concurrently.”
The Senior Vice President of Bank B said:
”I think our integration was really successful. There were no problems during integration and we accomplished it even quicker than we expected. Due to the administrative affairs that were not completed, the predicted D-date was postponed. Thus, we had more time to do testing and training in IT integration.”
The IT Manager of Bank C said
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“In our case, it was important to integrate within a desired time. Due to taking over the new branches from the merged bank, we had to announce to our customers that we increased branch coverage and that the two banks would be integrated, since all of this related information was associated with customer’s right. Once the information was announced, we were not allowed to postpone or change it. If we wanted to modify the announced information, we had to complete supplementary measures.”
The Vice President of Bank D said:
“Of course, we had to integrate IT in time. Basically, we manipulated the merging date while we integrated all the systems. When we were quite sure about the completeness of system integration, then the merging date was announced and approved by Financial Supervisory Commission.”
Fourth, neither manager thought that cost savings is the criteria as they evaluated the success of the post-merger IT integration. The IT Manager of Bank A said:
“In the merging moment, relative to the other concerns, saving costs is much less significant.”
The Senior Vice President of Bank B indicated:
“In our case, no personnel were laid off and the cost of facility didn’t be reduced because of the merger. It’s not obvious that IT integration brought a cost-savings benefit. Basically, the whole IT integration would be executed within budget. Sometimes the costs would exceed the budget and general managers were usually willing to add more resources in a merge situation. In conclusion, saving costs is the least of our concerns.”
The IT Manager of Bank C said:
“Due to due diligence, we already know the value of the merged bank. Plus, all of the costs, including human resources, time, and facilities will be taken into account in the budget. Generally, it’s not a good way to achieve a cost down by system integration. A bank merger usually aims to expand market share rather than reduce IT costs.”
The Vice President of Bank D said:
“In my opinion, a merger is for expanding our business or acquiring another bank’s technique. In these circumstances, we seldom talk about saving costs. It’s better to control all the IT expenses in
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the budget. However, if the cost exceeds the budget, it’s ok to apply additional resources. There is no way back. We have to finish the integration.”
Fifth, in addition to the above concerns, two managers proposed that it was important that the integrated system has enough flexibility to cater to the new business requests. The Vice President of Bank D said:
“After post-merger integration, the integrated information system has to support the company’s IT needs, including capacity and performance. For example, the capacity of the system must be able to provide for the two company’s customer data. In the meantime, it must also be able to support the new business and services resulting from the merger. Moreover, as the number of branches range from 10 to 60, the coverage of the information system must increase.”
Also, the Senior Vice President of Bank B said:
“It’s critical to provide a total solution for our customers, including not only enterprises but also consumers. For retail banking, we have to provide online transferring and online ATM services. For institutional banking, we have to coordinate with the projects that Ministry of Economic Affairs practiced. After the merge, our total solutions must get more thorough. It’s important for the
information system to support all the new business of both customer needs and business department requests.”
Sixth, the Senior Vice President of Bank B had a unique concern that was different from the others.
He indicated that we also use a customer-satisfaction index to evaluate the information system. He said:
“In my opinion, it is very critical whether the customer satisfaction increases or not. Customer satisfaction is one of the key factors when we want to evaluate the success of our information system.
Hence, we use phone call complaints and internal request sheets as our evaluation criteria. Through service desks, we better communicate with our business unit that can solve a customer’s problems quickly. On the other hand, the request sheet is for internal troubleshooting and problem resolving.
In light of these two criteria, both external and internal customer satisfaction did not decline.”
According to the six points above, we list each manager’s measurements about evaluating integrated IT and sort the measurements by importance in Table 6.
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Table 6 Interview Results of IT Managers’ Measurements
Bank Interview result
A Achieve operational continuity
Achieve technology consolidation Integrate IT within a desired time frame
B Achieve operational continuity
Achieve technology consolidation Integrate IT within a desired time frame
The flexibility of the integrated system for new business
Customer-satisfaction index
C Achieve operational continuity
Achieve technology consolidation Integrate IT within a desired time frame
D Achieve operational continuity
Achieve technology consolidation Integrate IT within a desired time frame
The flexibility of the integrated system for new business