=Paper=
{{Paper
|id=Vol-3327/paper12
|storemode=property
|title=Pre-evaluation of Post-Merger Information System Integration Strategies
|pdfUrl=https://ceur-ws.org/Vol-3327/paper12.pdf
|volume=Vol-3327
|authors=Ksenija Lace,Marite Kirikova
|dblpUrl=https://dblp.org/rec/conf/ifip8-1/LaceK22
}}
==Pre-evaluation of Post-Merger Information System Integration Strategies==
https://ceur-ws.org/Vol-3327/paper12.pdf
Pre-evaluation of Post-Merger Information System Integration
Strategies
Ksenija Lace1, Marite Kirikova1
1
Institute of Applied Computer Systems, Faculty of Computer Science and Information Technology, Riga
Technical University, 6A Kipsalas Street, Riga, LV-1048, Latvia
Abstract
Mergers and acquisitions (M&A) are frequently used tools for company growth. With M&A,
companies can grow bigger and faster by creating a new organisation with more resources to
achieve M&A goals. However, there are still ongoing discussions if M&A can achieve its
stated goals and assure sustainable performance. One frequently mentioned reason for this is
the inability to transform merging organisations. As information systems (IS) play an essential
role in organisational architecture, the transformation of IS should take more attention in
transformation planning and implementation. There are different possible strategies to
transform existing IS; each brings specific value and requires particular circumstances to be
realistic and efficient. This research focuses on the decision of a specific IS integration strategy
for selected IS by applying a practical approach which evaluates each strategy from several
perspectives - contribution to M&A goals, stakeholder support, user satisfaction, cost, risk and
time. The process is verified by applying it practical case study.
Keywords 1
PMI IS integration, IS integration strategy, PMI, IS integration decision, M&A
1. Introduction
Despite its immense popularity, mergers and acquisitions (M&A) show questionable results [1]. The
whole idea of M&A is to create one new organisation by merging several organisations. This new
organisation should be able to achieve the goals stated for M&A, which were not possible for each
organisation on its own [2], [3]. This new organisation is created during the transformation process,
often called the post-merger integration (PMI) of organisations [4], [5]. The outcome of PMI impacts
the result of M&A [6]. A significant part of PMI is related to IS integration, through which future IS
architecture should be created to support newly created organisation needs [7]. Existing research
identifies many factors in the PMI context which can impact the decision on PMI IS integration strategy
and the outcome of selected strategy implementation [5]. Different IS strategies, such as co-existence,
absorption, bets-of-breed, and new build, contribute to specific M&A goals and bring more value to
specific PMI contexts [8].
The main questions for this research are what factors in the PMI context could impact the efficiency
of different PMI IS integration strategies and if it is possible to compare different strategies and identify
the one which fits the PMI context the most.
2. Research Method
To identify different factors impacting PMI IS integration literature review was executed. Authors
used “ScienceDirect”, “SpringerLink”, and “ResearchGate” databases. Keywords “PMI integration”,
“PMI IS integration”, “PMI IT integration”, “PMI integration factors”, “PMI integration factors”, “PMI
PoEM 2022 Forum, 15th IFIP Working Conference on the Practice of Enterprise Modeling 2022 (PoEM-Forum 2022), November 23-25,
2022, London, UK
EMAIL: ksenija.lace@edu.rtu.lv, marite.kirikova@rtu.lv
ORCID: 0000-0001-8196-1836, 000-0002-1678-9523
© 2022 Copyright for this paper by its authors.
Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
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IS integration outcome”, “PMI IS integration efficiency”, and “PMI integration decisions” were used.
The initial time frame for the research papers was set in the 2010 year or later. But entire research
history was explored for the authors whose articles were closely related to the research topics. During
the research review, closely related references were included in the literature review scope. Based on
the literature review, we distinguished six main factors impacting PMI IS integration – alignment with
M&A goals, IT staff and internal stakeholder reactions, user satisfaction, integration process
complexity, integration process maturity, and integration process uncertainty.
To transform identified factors into a practically applicable evaluation approach, the project
management triangle was selected as a framework with the following perspectives – quality perspective
represented by M&A goals, stakeholder support and user satisfaction, and project costs, timeline and
risks perspective. Using this analogy, PMI IS integration value formula was proposed as a ratio between
achievable quality and a related combination of costs, timeline and risks. The next step for each formula
element was to define a formula for evaluating the value of this element for a specific PMI IS integration
strategy in a particular context. As the last step, PMI IS integration evaluation process was defined,
describing the required steps to make all necessary calculations. The illustrated process was verified by
application for the specific case study.
3. State of the art
IS integration decisions should consider integration context specifics and contribute to the best
possible post-merger integration result. PMI IS integration context factors are all factors that impact
either IS integration decision or the outcome of this decision [5]. Based on the proposed framework for
IS integration value analysis [9], we can perceive IS integration decisions as finding the optimal
proposal between several possible options. Finding the optimum considers two perspectives –
minimising the cost and maximising the value of the IS integration.
In the existing PMI IS integration-related research we can find the following main groups of
impacting factors:
• Alignment with M&A goals [5], [8], [10]–[14] – IS integration should contribute to M&A goals
as much as possible
• IT staff and internal stakeholder reactions [5], [8], [10]–[12], [14]–[16] – IS integration should
motivate IT staff and other stakeholders involved in the PMI IS integration
• User satisfaction [5], [10], [16] – IS integration should provide the best possible user experience
• Integration process complexity [5], [8], [11], [12], [15], [17]–[20] – IS integration should
consider current organisational and IS architecture and interdependencies
• Integration process maturity [5], [10], [15]–[17], [21], [22] – IS integration should be realisable
in a current organisational process and with available resources
• Integration process uncertainty [8], [15], [22], [23] – IS integration should have an acceptable
risk level and be justified with a previous positive experience
Existing research characterises IT integration strategies by effort, risks, time, budget, business
alignment, etc. [8]. But it is provided at a high level of abstraction and does not review specific IS
integration strategies. The following subsections discuss specific decision-impacting factors on the IS
integration level listed in the current research.
3.1. Alignment with M&A goals
PMI IS integration strategy should contribute to M&A goals. Each project has its own specific goals
and motives, but we can see frequently used goals mentioned in M&A-related research. The principal
motivations for M&A initiatives are lack of internal resources, growth in the global market, gaining
competitive advantage, avoiding competitive edge, and cost-saving synergies through
consolidation/economies of scale [11]. M&A goals often are linked with synergies. Synergies are
expected in different organisational perspectives, such as functional, business model and strategic [13],
or technical, pecuniary or diversification [12], [14]. In [5], besides high-level M&A motivations,
organisational integration objectives and IS integration objectives are mentioned as factors impacting
IS integration decisions.
We can see that each of the PMI IS integration strategies is focused on different M&A goals [8].
Co-existence contributes to diversification, absorption is more focused on economies of scale, best-of-
breed is linked with acquiring strategic skills, and new build supports innovation. Depending on the
specific M&A goals, different PMI IS integration strategies can be effective. So, while deciding on the
best PMI IS integration strategy, we should evaluate how each of them contributes to defined M&A
goals.
3.2. IT staff and internal stakeholder reactions
Recent research highlights that the human factor can play an essential role in PMI IS integration.
We can see several repeating trends regarding internal employees and another internal stakeholder
impact on IS integration success. An efficient IS staff integration is proposed as one of the M&A success
evaluation criteria [10]. This includes avoiding people loss, recruiting more competent people, avoiding
demotivation and reducing productivity problems. Demotivation and productivity are linked to lack of
executive support, business unit resistance, as well as inadequate stakeholder participation [5], [12],
[14], [15]. Senior management support and focus are also mentioned in [11]. Power and politics in
merging organisations and the power differential between merging companies can impact PMI IS
integration [5]. Emotionally distressed employees and exhausted and overwork employees and
managers are mentioned as one of the PMI IS integration deficiencies in [16].
We can conclude that involved stakeholders and management should support the selected PMI IS
integration strategy. Moreover, responsible stakeholders involved in PMI IS integration implementation
should be willing and able to contribute without overwork and burnout. PMI IS integration strategies
lead to different consequences for stakeholders and trigger different reactions [8]. Co-existence makes
the organisation more complex and not transparent. Absorption requires acceptance from the absorbed
organisation. Best-of-breed can lead to competitive thinking. New build leads to significant changes in
both organisations and requires high acceptance for personal changes. When choosing between different
PMI IS integration strategies, we should analyse how it will impact internal stakeholders, how well
each of them is supported by management, how motivated the executors are and how much they can
contribute to implementation.
3.3. User satisfaction
Additionally, to internal stakeholder support, PMI IS integration should also be supported by users
and lead to user satisfaction. User satisfaction includes several perspectives, such as not disrupting
employees' work, not inconveniencing customers and providing accurate, useful, timely and accessible
information [10]. Additionally to business non-disruption, business efficiency is essential - PMI IS
integration should not impact business performance and innovation [16]. But perfect user experience
does not guarantee user support [15]. Often user resistance is related to insufficient user readiness for
upcoming changes [5]. This could be linked to a personal attitude or lack of knowledge and experience.
Summarising all mentioned above, user support is essential for PMI IS integration strategy, including
not only motivations but also user readiness for changes and stability of user experience.
Each PMI IS integration strategy has a different impact on user experience and can trigger different
user reactions [8]. The new build has the highest risks of affecting user experience, as too many changes
are introduced in parallel. The complicated process of different IS combinations in best-of-breed can
evoke problems in business performance. Co-existence can complicate future operations and reflect on
business performance. Absorption causes resistance in users from the absorbed company. Thereby, one
more criterion for PMI IS integration strategy selection should be applied user support for this strategy,
which should incorporate subjective personal attitude, objective user readiness for changes and
undisturbed user experience.
3.4. Integration process complexity
Existing business and IS architecture can impact PMI IS integration outcomes and make PMI IS
integration projects more complex and expensive. The main factors affecting any IS integration
strategy's effect are IS complexity characteristics, such as size, standardisation, geographical
distribution, centralisation, and hierarchy [11], [17]. An additional factor important for any IS
integration decision is the use of external resources [5], [11]. IS evolvability is a vital prerequisite for
IS expansion, extension or enhancement. The following characteristics support IS evolvability [19] –
analyzability, architectural integrity, changeability, portability, extensibility, testability, and domain-
specific attributes. Some research mentions IT and business flexibility as essential for any strategies
demanding changes in the current IS [11], [17]. Business flexibility depends on merging companies'
size, industry and business process. IT flexibility is dependent on the level of standardisation and shared
knowledge. IT compatibility is also essential when several IS systems should be integrated [15].
Compatibility can be supported by the familiarity of technology, commonality in systems, decrease in
orthogonality, and functional and physical modularity[18]. Interdependencies on business and IT levels
are also mentioned across IS integration factors [12], [14].
Specific IT characteristics can be not just impacting factors but determinants for excluding specific
IS integration strategies [20]. Minimal architectural compatibility makes it very complicated to
implement any integration related to the combination or extension of current systems to fit the needs of
the future organisation. Modest architectural compatibility minimises the efficiency of the current IS
combination. Retireability is another characteristic that can impact IS integration decisions. If some IS
are not retireable, creating entirely new IS from scratch is impossible. With none of IS retireable,
choosing one IS for the future organisation is also problematic.
In [8], for each IS integration strategy are defined requirements for the current IS architecture so that
IS integration strategy can be implemented effectively. Co-existence is a good fit in cases when current
IS architectures should be different or when it is impossible to make changes or retire current IS.
Absorption works well when IS architectures are comparable and absorbing IS architecture is evolvable.
A new build requires the current IS to be retireable and the existing business to be flexible. The highest
requirements are for a best-of-breed strategy when current IS complexity, different quality and
incompatibility can become blockers for IS combination. With this, we can conclude that some
integration process complexity characteristics can impact implementation and require additional effort,
including other costs and time. While selecting the best possible strategy, we should verify that the
required effort will not become unacceptably high due to the integration process complexity.
3.5. Integration process maturity
Implementing IS integration decisions can also be impacted by available resources and established
practices. With insufficient resources or lack of experience, PMI IS integration can delay and require
rework. Such factors as lack of resources, such as money, time or experienced staff members, can
worsen IS integration risks [15], [23]. Even sufficient resources, time and market pressure, can
negatively impact the PMI IS integration decisions [5], [22].
IT leadership and IS planning quality are listed as additional factors impacting IS integration
outcomes [5]. Efficient and effective IS integration management is also mentioned in [10]. This
perspective highlights that resources should be not only available but also should be properly planned
and effectively used. Management policies should be established for project management, change
management, outsourcing, and others. Integration experience is highlighted as significant factors in
[17], [21], [22]. A lack of established processes and experience can cause inefficient integration or re-
doing of integration steps [16], leading to additional costs and required time. The company's insufficient
focus, limited participation extent, non-structured decision-making and lack of overall consistency can
be other blockers for PMI IS integration strategies that require more structured and organised processes
[24]. Strategies such as best-of-breed and new build, where default effort and budget are high, and a
long time is required, any additional overspending and delays can be critical.
We can see that some integration process maturity-related characteristics will impact specific PMI
IS integration strategy implementation, leading to additional costs and time required. One of the tasks
for integration strategy selection is to confirm that the selected PMI IS integration strategy with current
resources and maturity level can be implemented and maintained during a reasonable time.
3.6. Integration process uncertainty
PMI IS integration strategy implementation is linked to specific risks more likely to be realised [23].
As risks related to IS integration are listed integration process delays, cost increases and poor outcomes
[15]. Similarly, in [16], delay and overspending are two main risks. Overspending is related to the need
to re-do steps in integration or with inefficient integration processes. Overspending, value destruction
and benefit delay are risks for integration in [22].
Each IS integration strategy is related to a different level of risk in [8] – low risk for co-existence
and absorption, high risk for best-of-breed and new build. Additionally, migration and development
issues can impact absorption and best-of-breed strategies.
Decision on PMI IS integration strategy should incorporate risk impact and likelihood evaluation in
case the corresponding strategy is applied. The selected strategy should have an acceptable risk level.
4. PMI IS Integration Evaluation
In [8]. We can look at this through the so-called “project management triangle”, which states that
the quality of the project is constrained by the project’s budget, deadline and scope [25]. We can apply
this approach when selecting the most suitable PMI IS integration strategy (see Figure 1). Project quality
can be evaluated through achieved M&A goals, satisfied IT staff and internal stakeholders, and user
satisfaction. Project time is the required timeline to implement these changes in the context of current
companies' architectures, current process maturity and available resources. Project cost contributes to
change implementation cost, comprising project budget and project-related risks. Instead of a project
scope perspective, we apply project-related risks.
When we choose PMI IS integration strategy, we start with evaluating achievable quality. The
previous section identifies three main factors related to PMI IS integration quality: achieved M&A
goals, satisfied internal stakeholders and users. So when we compare PMI IS integration strategies from
a quality perspective, we compare how well each supports M&A goals, internal stakeholders and users.
Then, for each of the PMI IS integration strategies, we evaluate costs, time and risks related to
implementing the PMI IS integration strategy in the current project constraints. Existing research
assigns different costs and time required for each specific PMI IS integration strategy implementation
and maintenance [8]. In addition, we should consider extra costs and time required due to integration
complexity and lack of integration process maturity. Integration complexity and process maturity
characteristics impacting IS integration were explored in the previous sections. The last component in
strategy evaluation is related to risk level, which also was mentioned in the previous section.
Figure 1: PMI IS Integration management triangle
As a result, we can evaluate the proportion between achievable quality and required costs, timeline
and risks for each strategy. The best proportion allows us to determine the recommended PMI IS
integration strategy. We consider this proportion a value of the corresponding PMI IS integration
strategy.
To define this proportion, we divide total quality represented by contribution into M&A goals,
internal stakeholder support and user satisfaction by total cost, timeline and risks:
𝑉 = (𝐺 + 𝑆 + 𝑈)/(𝐶 + 𝑇 + 𝑅),
where:
V – the value of PMI IS integration
G – contribution to M&A goals
S – internal stakeholder support
U – user satisfaction
C – integration process cost
T – integration process timeline
R – integration risks
To balance possible outcomes for this formula, we propose to use as a value relative percentage of
the maximum value between all strategies. Additionally, each value and cost element can have higher
and lower priority for the selected initiative. In this case, we can use coefficients to represent relative
priorities. In the following subsections, we review each of the perspectives and try to define how each
of the perspectives can be evaluated.
4.1. Contribution to M&A goals
PMI IS integration quality component “Contribution into M&A goals” is based on the findings of
the “Alignment with M&A goals” factor impacting PMI IS integration (Section 3.1). To evaluate the
contribution to M&A goals, we need to define goals for the specific project, prioritise goals, and assess
their contribution to particular goals for the selected PMI IS integration strategy.
The evaluation formula could look like this:
𝐺 = ∑"!#$ 𝐼! ∗ 𝐶! ,
where:
G – contribution to M&A goals for the selected PMI IS integration strategy
n – number of goals set for the evaluation
Ii – importance of the specific goal
Ci – strategy contribution to a particular goal
A goal list can be defined for each specific PMI initiative. However, we define an essential list of
M&A goals frequently mentioned in the research. We grouped M&A goals found in the study (Section
3.1) and proposed the following general M&A goal groups. The first group is related to optimisation.
This can be cost savings or resource optimisation. The next group is connected to growth. The company
can sustain growth through new markets or new capabilities. Another group is related to competition.
This could be gaining a competitive advantage or achieving a monopoly. The last group is connected
to diversification to minimise risks.
4.2. Internal stakeholder support
PMI IS integration quality component “Internal stakeholder support” is based on the findings of the
“IT staff and internal stakeholder reactions” factor impacting PMI IS integration (Section 3.2). Internal
stakeholder support can be evaluated through subjective stakeholder attitude, and contribution to the
specific PMI IS integration strategy. We should include stakeholders from both groups – responsible
executors and management. Responsible stakeholder support should be evaluated from two
perspectives. The first of them is participant support, similarly to management stakeholders. Another
one is the willingness and ability to contribute. Stakeholder support should be adjusted based on the
stakeholder impact level.
𝑆 = ∑"!#$ 𝑅𝐼! ∗ (𝑅𝑆! + 𝑅𝐶! ) + ∑&%#$ 𝑀𝐼% ∗ 𝑀𝑆% ,
where:
S – internal stakeholder support for the selected PMI IS integration strategy
n – number of responsible stakeholders selected for the evaluation
k – number of management stakeholders chosen for the evaluation
RIi – the impact of the specific responsible stakeholder
RSi - support of the particular responsible stakeholder for the PMI IS integration strategy
RCi – practical contribution that the specific responsible stakeholder can add to the PMI IS
integration strategy implementation
MIj – the impact of the specific management stakeholder
MSj - support of the particular management stakeholder for the PMI IS integration strategy
4.3. User satisfaction
PMI IS integration quality component “User satisfaction” is based on the findings of the “User
satisfaction” factor impacting PMI IS integration (Section 3.3). User satisfaction is evaluated through
subjective user attitude and support, objective values for user readiness level for changes (related to
required training and support) and quality of user experience during and after modifications. User
satisfaction should be evaluated for all impacted user groups. User satisfaction for the specific user
group should be adjusted based on the user group impact level.
𝑈 = ∑"!#$ 𝑈𝐼! ∗ (𝑈𝑆! + 𝑈𝑅! + 𝑈𝐸! ),
where:
U – user satisfaction for the selected PMI IS integration strategy
n – number of user groups chosen for the evaluation
UIi – the impact of the specific user group
USi – support of the particular user group for the PMI IS integration strategy
URi – readiness of the specific user group for the changes related to the PMI IS integration strategy
UEi – specific user group user experience quality during and after the implementation of the PMI IS
integration strategy
4.4. Integration process cost
PMI IS integration cost component “Integration process cost” is based on the default PMI IS
integration implementation and maintenance cost for a specific strategy, as well as findings about
additional costs related to “Integration process complexity” characteristics (Section 3.4) and
“Integration process complexity” characteristics (Section 3.5). Integration process cost is evaluated
through the standard cost level associated with the corresponding PMI IS integration strategy
implementation and maintenance. Integration process complexity-related additional costs should be
added. Specific cost-impacting business and IS architecture characteristics should be defined, and
corresponding additional expenses specified. The following features are proposed as a baseline from
the existing research – part of outsourced IS, the complexity of current IS architecture, fit of IS
architectures in merging companies, retireability of existing IS, evolvability of existing IS,
interdependencies on business and IT levels, business and IT flexibility (summary from Section 3.5).
These characteristics can be adjusted for the specific project to include all factors that increase the
required cost for some PMI IS integration strategies.
Similarly, should be added costs related to process maturity characteristics. The following factors
are proposed based on the existing research – process inefficiency and lack of experience, lack of
resources and resource competence, and lack of leadership (summary from Section 3.5). Similarly, as
with integration process complexity, the list of cost-impacting characteristics can be adjusted for the
specific project.
𝐶 = 𝐶𝐼 + 𝐶𝑀 + ∑"!#$ 𝐶𝐶! + ∑&%#$ 𝐶𝐸' ,
where:
C – cost required for the selected PMI IS integration strategy implementation and maintenance
CI – standard cost level for the implementation of the PMI IS integration strategy
CM – standard cost level for the maintenance of the PMI IS integration strategy
n – number of integration process complexity criteria selected for the evaluation
k – number of integration process experience and maturity chosen criteria for the evaluation
CCi – additional cost level due to specific criteria of the integration process complexity
CEj – additional cost level due to specific criteria of lack of experience and maturity in the integration
process
4.5. Integration process timeline
PMI IS integration time component “Integration process time” is based on the default PMI IS
integration implementation and maintenance timeline for a specific strategy, as well as findings about
additional time related to “Integration process complexity” characteristics (Section 3.4) and
“Integration process complexity” characteristics (Section 3.5). The integration process timeline is
evaluated through the standard time level associated with the corresponding PMI IS integration strategy
implementation and maintenance. It is essential to notice that we differentiate between the total required
time and the required timeline. At the same time, the effort may be spread across different timelines.
Additional time due to integration complexity and lack of integration maturity is evaluated similarly as
additional costs (see Section 4.4).
𝑇 = 𝑇𝐼 + 𝑇𝑀 + ∑"!#$ 𝑇𝐶! + ∑&%#$ 𝑇𝐸' ,
where:
T – timeline required for the selected PMI IS integration strategy implementation and maintenance
TI – standard timeline level for the implementation of the PMI IS integration strategy
TM – standard timeline level for the maintenance of the PMI IS integration strategy
n – number of integration process complexity criteria selected for the evaluation
k – number of integration process experience and maturity chosen criteria for the evaluation
TCi – additional timeline level due to specific criteria of the integration process complexity
TEj – additional timeline level due to specific criteria of lack of experience and maturity in the
integration process
4.6. Integration risks
PMI IS integration risk component “Integration risks” is based on the findings of the “Integration
process uncertainty” factor impacting PMI IS integration (Section 3.6). Integration strategy risk level
is evaluated as the likelihood and impact of risks in case the corresponding strategy will be applied. It
is essential to assess all PMI IS integration strategies using the same risk list identified for the project.
Similar to M&A goals, project risks can be very specific. However, we can find three main risks
mentioned in PMI IS integration-related research – poor outcome, delay and overspending (summary
from Section 3.6).
𝑅 = ∑"!#$(𝑅𝐿! + 𝑅𝐼! ),
where:
R – risk level for the selected PMI IS integration strategy
n – number of risks chosen for the evaluation
RLi - likelihood for the specific risk for the PMI IS integration strategy
RIi – the impact of the particular risk on the PMI IS integration strategy
5. PMI IS Integration Evaluation Process
To define the application process of evaluation criteria discussed in Section 4 and to demonstrate
the practical applicability of our proposal in this section, we apply it to the case study. In this example,
one company acquires another company. Both companies have their HR information systems (IS). It is
required to decide on the best possible HR IS integration. In this case, the HR department of the acquirer
absorbs the acquired company's HR department. But the acquirer company is open to aligning and
adjusting for a better fit. The main goals for HR function integration are to reduce costs and optimise
processes and resources. Supplier and vendor optimisation is also a significant target. IT cost reduction
is not the main priority, but it is still valid for overall cost reduction. Two prominent IT representatives
are CTO and the HR administrator. CTO opinion is valued more. Both stakeholders are against
enhancements and reinvention, making this project more complicated and requiring more effort than
planned. Both stakeholders support no changes or acquirer system extension to add missing functions.
Three leading user roles are HR managers in the acquired company, HR managers in the acquired
company and employees equally important. Employees have no significant preference between
strategies; they are satisfied with a current experience. Reinvention is not preferred as it can negatively
impact everyday experience. All available functionality must be present for HR managers in the
acquired company. They are not in favour of replacing their existing system. HR managers in the
acquiring company are satisfied with their current system and do not want to change it. Current HR
systems are built using different technologies. But HR system in the acquirer company has a modular
design and comprehensive set of APIs. Data structures are also similar and can be mapped together. HR
IS can be retired on the acquired company side, but this system is integrated with many other IS. This
is the first acquisition project, so the project team has no previous experience.
The project team is small and mainly focused on other integration activities, no HR IS. However,
the acquirer company has formal project management practices and processes to follow. For HR
integration, decision-making is left to lower-level employees; high-level management is focused on
other initiatives. The lower priority participation rate is relatively small, and stakeholder availability
will be minimal. The approach for process management in the acquired company is somewhat different
and is not very well organised. The project is arranged to control scope, budget and timelines.
We use PMI IS integration strategies defined in the previous research – No changes in IS, IS
integration, IS expansion, IS extension, IS enhancement, or New IS [26]. In this paper we intentionally
exclude integration decisions on the business level impact on IS integration. However, in future
research, business-level integration and additional contextual factors should be combined in one PMI
IS integration decision support framework.
5.1. Introduction
During the evaluation process for each PMI IS integration, value components are calculated for each
comparable PMI IS integration strategy. To make results comparable, absolute values are transformed
into relative values. After all value components are defined for all strategies, the final value for each
strategy is calculated using the previously proposed formula: 𝑉 = (𝐺 + 𝑆 + 𝑈)/(𝐶 + 𝑇 + 𝑅).
Component individual evaluations and the final value for each PMI IS integration strategy can be used
to compare strategies and choose the one with the better ratio between delivered quality and the sum of
costs, time, and risks.
5.2. Contribution to M&A goals
Step 1. Define a list of M&A goals.
Step 2. For each M&A goal, define the importance of this goal in the specific M&A initiative as a
number from 1 to 3, where 3 is the highest priority.
Step 3. Then evaluate a contribution for each of the M&A goals for each IS integration strategy as
a negative or positive number from minus -2 to 2, where a negative number is a conflict, 0 is no
contribution, and a positive number is a contribution. Contribution is calculated using the previously
defined goal importance coefficient.
Step 4. An outcome for each IS integration strategy is overall alignment for M&A goals, which is
defined based on the accumulated contribution to all M&A goals.
Step 5. Assign contribution level to each integration strategy based on the relative outcomes.
We provide calculation results for illustration in Table 1. However, table usage in the process is not
mandatory.
Table 1
PMI IS integration strategy alignment with M&A goals
M&A goal Importance No changes in IS IS IS IS New IS
IS integration expansion extension enhancement
Cost reduction in 3 0 0 3*2 3*2 3*2 3*1
support functions
Supply chain 2 0 2*1 2*2 2*1 2*2 2*1
synergies
IT cost reduction 1 0 1 2 1 1 1
Purchasing cost 3 0 3*1 3*2 3*2 3*1 3*1
Absolute contribution 0 6 18 15 14 9
Relative contribution 0 0.3 1.0 0.8 0.8 0.5
5.3. Internal stakeholder support
Step 1. Define a responsible stakeholder list.
Step 2. For each stakeholder, define the importance coefficient as a number from 1 to 3, where 3 is
the highest importance.
Step 3. For each stakeholder for each IS integration approach evaluate contribution and support as
numbers from 0 to 5, where 0 means highly negative and 5 is highly positive.
Step 4. Define the management stakeholder list.
Step 5. For each stakeholder, define the importance coefficient as a number from 1 to 3, where 3 is
the highest importance.
Step 6. For each stakeholder for each IS integration approach evaluate support as a number from 0
to 5, where 0 means highly negative and 5 is highly positive.
Step 7. An outcome for each IS integration strategy is the sum of internal stakeholder support and
contribution and external stakeholder support.
Step 8. Assign internal stakeholder support levels to each integration strategy based on the relative
outcomes.
We provide calculation results for illustration in Table 2. However, table usage in the process is not
mandatory.
Table 2
Internal stakeholder support for PMI IS integration strategy
Stakeholder Importance No changes in IS IS IS IS New IS
IS integration expansion extension enhancement
CTO 2 2*3 2*3 2*5 2*4 2*2 2*1
HR Admin 1 3 2 4 4 3 1
Absolute support 9 8 14 12 7 3
Relative support 0.6 0.6 1.0 0.9 0.5 0.2
5.4. User satisfaction
Step 1. Define external and internal user group lists.
Step 2. For each user group, define the importance coefficient as a number from 1 to 3, where 3 is
the highest importance.
Step 3. For each user group for each IS integration approach evaluate motivation, readiness and
stable user experience as numbers from 0 to 5, where 0 means highly negative and 5 is highly positive.
Step 4. An outcome for each IS integration strategy is the sum of user group support, readiness, and
stable user experience.
Step 5. Assign user satisfaction levels to each integration strategy based on the relative outcomes.
We provide calculation results for illustration in Table 3. However, table usage in the process is not
mandatory.
Table 3
User satisfaction with PMI IS integration strategy
User group Importa No changes in IS integration IS expansion IS extension IS New IS
nce IS enhancement
HR manager – 1 1 + 4 + 5 = 10 2 + 4 + 4 = 10 5 + 4 + 4 = 13 5 + 4 + 3 = 12 5 + 3 + 2 = 10 1+1+1=3
acquirer
HR manager - 1 4 + 4 + 5 = 13 4 + 4 + 4 = 12 4+2+1=7 4+2+2=8 4 + 3 + 3 = 10 2+1+1=4
target
Employee 2 2 * (4 + 4 + 5) 2 * (4 + 4 + 5) 2 * (4 + 4 + 4) 2 * (4 + 4 + 4) 2 * (4 + 4 + 5) 2 * (2 + 1 + 1)
= 26 = 26 = 24 = 24 = 26 =8
Absolute satisfaction 49 48 44 44 46 15
Relative satisfaction 1.0 1.0 0.9 0.9 0.9 0.3
5.5. Integration process cost
Step 1. For each IS integration strategy define standard integration implementation and maintenance
costs as numbers from 0 to 5 indicating relative costs between different strategies [8]. These numbers
can vary for specific PMI IS integration projects.
Step 2. Evaluate integration complexity and define additional required costs as a number
representing relative cost from the standard implementation and maintenance cost. The numbers in this
example are based on the findings in the existing research. In practice, these numbers will be adjusted
per specific of the PMI IS project, as well as previous experience of the merging organisations.
Step 3. Evaluate the lack of integration maturity and define additional required costs as a number
representing relative cost from the standard implementation and maintenance cost. Similarly to
integration complexity evaluation, numbers in this example can be adjusted for the specific PMI IS
integration.
Step 4. An outcome for each IS integration strategy is the sum of standard implementation cost,
standard maintenance cost and all additional cost values.
Step 5. Assign cost level to each integration strategy based on the relative outcomes.
We provide calculation results for illustration in Table 4. However, table usage in the process is not
mandatory.
Table 4
Integration cost required for PMI IS integration strategy
Cost No changes in IS IS IS IS New IS
IS integration expansion extension enhancement
Standard 0 1 2 3 4 5
implementation cost
Standard maintenance 5 4 1 2 3 1
cost
Outsourcing part 0 +0.5 +0.5 +0.5 +0.5 0
Existing IS complexity 0 +1 +1 +1 +1 +1
Existing IS fit 0 +0.1 +0.1 +0.1 +0.1 0
Existing IS retireabaility 0 0 0 0 0 0
Existing IS evolvability 0 0 +0.1 +0.1 +0.1 0
Process efficiency 0 +0.1 +0.1 +0.1 +0.1 +1
IS integration experience 0 +0.1 +0.1 +0.2 +0.1 +0.2
Sufficient resources 0 0 0 0 0 +0.3
Resource competence 0 0 0 0 0 0
Absolute cost 5 5.8 4.9 7 8.9 8.5
Relative cost 0.6 0.7 0.6 0.8 1.0 1.0
5.6. Integration process time
Step 1. For each IS integration strategy define standard integration implementation and maintenance
time as numbers from 0 to 5, indicating relative time between different strategies [8]. These numbers
can vary for specific PMI IS integration projects.
Step 2. Evaluate integration complexity and define additional required time as a number
representing relative time from the standard implementation and maintenance time. Integration
complexity is evaluated similarly to integration cost evaluation (see the previous section).
Step 3. Evaluate the lack of integration maturity and define additional required time as a number
representing relative time from the standard implementation and maintenance time. Integration maturity
is evaluated similarly to integration cost evaluation (see the previous section).
Step 4. An outcome for each IS integration strategy is the sum of standard implementation time,
standard maintenance time and all additional time values.
Step 5. Assign time level to each integration strategy based on the relative outcomes.
We provide calculation results for illustration in Table 5. However, table usage in the process is not
mandatory.
Table 5
Integration time required for PMI IS integration strategy
Time No changes in IS IS IS IS New IS
IS integration expansion extension enhancement
Standard 0 3 2 3 4 3
implementation time
Standard maintenance 5 4 1 2 3 3
time
Outsourcing part 0 +1 +1 +1 +1 0
Existing IS complexity 0 +1 +1 +1 +1 +1
Existing IS fit 0 +0.1 +0.1 +0.1 +0.1 0
Existing IS retireabaility 0 0 0 0 0 0
Existing IS evolvability 0 0 +0.1 +0.1 +0.1 0
Process efficiency 0 +0.1 +0.1 +0.1 +0.1 +1
IS integration experience 0 +0.2 +0.2 +0.3 +0.2 +0.3
Sufficient resources 0 0 0 0 0 +0.3
Resource competence 0 0 0 0 0 0
Absolute time 5 9.4 5.5 7.6 9.5 8.6
Relative time 0.5 1.0 0.6 0.8 1.0 0.9
5.7. Integration risks
Step 1. Define the risk list for the specific project. In this example, we take three generic risks found
in the research. The risk list can be adjusted for specific PMI IS integration initiatives.
Step 2. Each PMI IS integration strategy for each risk defines likelihood and impact as numbers
from 1 to 5, where 5 corresponds to the highest likelihood or impact.
Step 3. Each PMI IS integration strategy for each risk defines risk as a sum of likelihood and impact.
Step 4. An outcome for each IS integration strategy is the sum of risk values.
Step 5. Assign risk level to each integration strategy based on the relative outcomes.
We provide calculation results for illustration in Table 6. However, table usage in the process is not
mandatory.
Table 6
Integration risks for PMI IS integration strategy
User group No changes in IS IS IS IS New IS
IS integration expansion extension enhancement
Overspending 2+3=5 3+3=6 5+3=8 5+3=8 5+3=8 5+4=9
Delay 1+3=4 3+3=6 5+3=8 5+3=8 5+3=8 5+4=9
Insufficient outcome 5+3=8 5+3=8 5+3=8 5+3=8 5+3=8 5+4=9
Absolute satisfaction 17 20 24 24 24 27
Relative satisfaction 0.6 0.7 0.9 0.9 0.9 1.0
5.8. Final evaluation and recommended PMI IS integration strategy
Step 1. Define the weight coefficient for each value and cost component.
Step 2. Calculate final value using formula 𝑉 = (𝐺 + 𝑆 + 𝑈)/(𝐶 + 𝑇 + 𝑅) and applying weight
coefficient defined in the previous step.
Step 4. Compare IS integration strategies evaluation for specific cost and value components, as well
as total calculated value and make a decision.
We provide calculation results for illustration in Table 7. However, table usage in the process is not
mandatory.
Table 7
PMI IS integration strategy evaluation comparison
Evaluation Criteria Weight No changes in IS IS IS IS New IS
Coefficient IS integration expansion extension enhancement
Contribution into 2 0 2 * 0.3 2 * 1.0 2 * 0.8 2 * 0.8 2 * 0.5
M&A goals
Internal stakeholder 1 0.6 0.6 1.0 0.9 0.5 0.2
support
User satisfaction 1 1.0 1.0 0.9 0.9 0.9 0.3
Quality 1.6 2.2 3.9 3.4 3.0 1.5
Integration process 1 0.6 0.7 0.6 0.8 1.0 1.0
cost
Integration process 1 0.5 1.0 0.6 0.8 1.0 0.9
time
Integration risks 1 0.6 0.7 0.9 0.9 0.9 1.0
Cost, time and risks 1.7 2.4 2.1 2.5 2.9 2.9
Final Value 0.94 0.91 1.85 1.36 1.03 0.51
With a focus on cost synergies, IS expansion takes the lead in value. Stakeholders and users also
support this strategy. IS expansion provides relatively small cost and time effort. Which is not
significantly impacted by current IS architecture and process maturity. Even with a relatively high-risk
level, IS expansion is still recommended IS strategy in this case.
6. Conclusions
PMI IS integration strategy selection is a complex decision considering several factors. Each IS
integration strategy can lead to different outcomes due to PMI specifics. The main questions for this
research are what factors in the PMI context could impact the efficiency of different PMI IS integration
strategies and if it is possible to compare different strategies and identify the one which fits the PMI
context the most. As a result, the authors propose the PMI IS integration strategy pre-evaluation
approach based on the value provided by different possible IS integration strategies. Value is calculated
as a ratio between an achievable quality and related costs, time and risk. Quality is a perceived
contribution to M&A goals, stakeholder support, and user satisfaction. The approach is described as
process steps required to calculate a value for strategies in review and make a comparative analysis.
The process is also verified with a case study. Verification confirms that process allows comparing
strategies using multi-facet criteria, representing value and required effort. Still, formulas used for
calculations should be verified in the more significant count of practical examples. Open questions for
the following research are how this evaluation can be combined with business decision impact on the
IS integration decisions to create one standard process that can be applied in PMI to choose between
possible IS integration strategies.
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