IS integration levels and dimensions

The previously mentioned levels – strategic, organizational, information system and IT system - of integration are quite general and can be applied to the combination of IS and IT. When limiting the scope to IS, more detailed levels can be distinguished. Integration of IS can occur on a business level, an application level or a technical level [2].

Integration at the technical level can be achieved by integrating data, objects or functions. An advantage of this type of integration is that it is relatively inexpensive. The downside of this integration type is that this integration ignores application and business logic [2].

Integration at the application level can have two forms, namely user interface integration and application interface integration. In the former one, no actual integration takes place. Actually, it presents data from multiple non-integrated systems. Application interface integration invokes application functionality and is accomplished by sharing common logic. Based on this logic the applications can be developed that can support the business processes.

The most complex, but at the same time the most beneficial integration level for IS is the business process level. Integration at the business level also considers the logic for conducting business for application integration [2].

A core decision in IS integration is choosing which systems will be maintained and which systems will be eliminated. Often this decision will be made by comparing the different alternatives and partially based on gut feeling. However, Miklitz [44] has proposed a more rational approach which is based on visualization of networks using nodes and edges. These networks can be analysed in a more or less mathematical manner. We doubt whether this approach is useful in the light of this research and application by IS practitioners, because this approach is very theoretical and does not take contextual factors into account. Therefore, we will not further discuss this approach.

An important concern of IS integration is integration of Enterprise Resource Planning (ERP) systems. Based on a longitudinal case study combined with a literature review, Alaranta [45] enhanced an existing framework for ERP implementation to make the framework fit to an M&A context. According to Alaranta, post-merger ERP integration consists of three elements: corporate level change

environment, integration level change environment, and post-merger enterprise system (ES) integration management.

Table 4: Alaranta’s framework for post-merger integration of ERP systems [45]

Element Related issues

Corporate Level Change Environment M&A factors

Factors related to company expertise & resources Factors related to software & vendor

Integration Level Change Environment Strategic initiatives Learning capacity Cultural readiness

Information technology leveragability and knowledge-sharing capacity

Network relationships

Post-merger ES integration

Management Change management Process management

Alaranta identified important issues in post-merger ERP and related these to the three elements. An overview of the elements and related issues can be found in Table 4.

In line with Alaranta, Myers [15] set up a model that shows which dimensions influence the ERP integration strategy and how this integration strategy relates to the business benefits. This model can be found in Figure 16. There are four dimensions that all influence each other and the ERP integration strategy. These four dimensions correspond with the dimensions and factors already discussed in this thesis. The first dimension, M&A objectives and business strategy, is about aligning the ERP integration strategy with the business strategy of the new situation. The second dimension, power and politics, is important because a more powerful acquirer will use several methods to ensure that their IS/IT systems will be used in the new situation and thus also affects the ERP integration strategy [15]. Organisational infrastructure and processes, which is the third dimension, is about the classic business- IT alignment. The organizational structure and processes need to be in line with the IS/IT. The fourth dimension, IT infrastructure and processes, refer to the entire system landscape and the degree of standardisation. The level of standardisation and the prior M&A experience can make the integration process much easier.

The benefits of the ERP integration should align with the expected benefits of the whole merger and the business strategy for new situation. These benefits can be short-term such and long-term. Often, these long-term and short-term goals conflict with each other [15]. The scope and allocation of resources should be derived from the ERP integration strategy and corresponding specified benefits. Myer argues that selecting an ERP integration strategy involves making two main trade-off decisions [15]. The first trade-off is to choose an appropriate level of standardisation and independence of the two systems. In the case when similarities are present between the business of both companies, a higher degree of standardisation, excellent business process reengineering and change

management are recommended. For the second trade off, deciding upon the speed of the entire integration project, Myer recommends a more careful and slower integration. This should go hand in hand with a comprehensive planning, an excellent communication strategy and generous retention packages for employees with important knowledge.

Figure 16: ERP integration model of Myers [15]

Replacing existing applications or introducing new applications often leads to employee resistance. Vieru and Trudel [46] have looked at this problem from a sociomaterial perspective. In their paper they propose an iterative process model that is based on a dialectical motor and focussed on configurable IS. The process starts with a planned post-merger integration system configuration. In general, this configuration imposes changed practices and is therefore resisted by users. Therefore, negations will be held that lead to reconfigurations of the IS. The negotiations are also used to agree upon practices. These negotiated practices lead to the emergence of new sociomaterial

assemblages which lead to an adjustment of the post-merger integration approach. To summarise, the integration of information systems is not seen as a linear process. Instead, the process is assumed to be iterative and the sociomaterial assemblage differs after every iteration. The underlying

assumption is of course that the IS is configurable.