Roman Sandals

May 23, 2008

St. George and the IT dragon

Filed under: business, musing — Craig Lawton @ 3:08 pm

Over the last few months I’ve read a couple articles in the AFR relating to IT spend in M&A activity.

It’s amazing to consider that about half of the business integration costs for the proposed merger between Westpac and St. George will be in IT (0.5 * $451,000,000).

Consider that the Commonwealth Bank is planning on spending $580,000,000 to re-engineer its aging platforms (to me this means cleaning out all the legacy crap), and NAB is looking at doing the same.

A merged Westpac/St. George would be $225,500,000 behind the eight-ball, before it could even contemplate a project of this scale.

Also, to make the merger more attractive, or because of uncertainty, either side could be tempted to put off required upgrades, lay off staff (possibly key staff), and run-down maintenance.

Accenture recently concluded a survey of 150 CIOs and found that poor IT integration was the leading cause of failure to meet the stated objectives of a merger or acquisition (38%).

It makes you wonder if this whole “IT thing” is going to collapse under the weight, and expense, of its own complexity!

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