IT Standardization and Integration in Mergers and Acquisitions: A Decision Model for the Selection of Application Systems

Transcription

1 Assocaton for Informaton Systems AIS Electronc Lbrary (AISeL) ECIS 2007 Proceedngs European Conference on Informaton Systems (ECIS) 2007 IT Standardzaton and Integraton n Mergers and Acqustons: A Decson Model for the Selecton of Applcaton Systems T. Mtz Technsche Unverstät Darmstadt, mtz@s.tu-darmstadt.de Peter Buxmann Technsche Unverstät Darmstadt, buxmann@s.tu-darmstadt.de Follow ths and addtonal works at: Recommended Ctaton Mtz, T. and Buxmann, Peter, "IT Standardzaton and Integraton n Mergers and Acqustons: A Decson Model for the Selecton of Applcaton Systems" (2007). ECIS 2007 Proceedngs Ths materal s brought to you by the European Conference on Informaton Systems (ECIS) at AIS Electronc Lbrary (AISeL). It has been accepted for ncluson n ECIS 2007 Proceedngs by an authorzed admnstrator of AIS Electronc Lbrary (AISeL). For more nformaton, please contact elbrary@asnet.org.

2 IT STANDARDIZATION AND INTEGRATION IN MERGERS AND ACQUISITIONS: A DECISION MODEL FOR THE SELECTION OF APPLICATION SYSTEMS Mtz, Thomas, Technsche Unverstät Darmstadt, Hochschulstrasse 1, Darmstadt, Germany, mtz@s.tu-darmstadt.de Buxmann, Peter, Technsche Unverstät Darmstadt, Hochschulstrasse 1, Darmstadt, Germany, buxmann@s.tu-darmstadt.de Abstract Mergers and acqustons (M&A) have been an mportant topc n strategc management for years and have therefore been the subject of comprehensve research work as well. However, the post merger ntegraton seems to be a key factor for the success of the whole deal. One objectve of many transactons s the realzaton of synergy potentals, especally from the consoldaton of the nformaton technology (IT). Unfortunately only few research work on IT ntegraton n M&A projects can be found. Wth ths paper, we want to contrbute to ths topc by focusng on the ntegraton of applcaton systems n merged companes. Frst of all, we wll gve an overvew of 4 general ntegraton strateges suggested by the lterature. Secondly, we wll present a decson model for the selecton of applcaton systems, whch s based on the well-known standardzaton problem. Afterwards a procedure s beng ntroduced whch shows how the decson model can be appled n the context of M&A projects. Keywords: M&A, standardzaton, ntegraton, decson support. 1041

3 1 INTRODUCTION Wthn the framework of M&A projects, a substantal task s the ntegraton and reorganzaton of nformaton and communcaton systems. For example, decsons have to be made whether partcular IT systems should persst or gve way to the mplementaton of new systems. If necessary, employees have to be convnced and traned and busness processes mght have to be changed. Startng pont for the ntegraton are (at least) two system and applcaton landscapes of the mergng companes. Subjects of ntegraton decsons mght be IT nfrastructure, corporate applcaton systems, databases and data warehouses, IT staff as well as the organzaton of the nformaton processng. In ths artcle we wll focus on corporate applcaton systems snce they consttute the core of the nformaton and communcaton systems. The efforts related to the IT ntegraton can be outweghed by a number of opportuntes: for example, a centralzaton of IT departments can generate sgnfcant savngs. Furthermore, the merger can serve as a motve for the ntroducton or development of new nnovatve systems. Varous strateges can be appled f nformaton and communcaton systems are merged n corporate acqustons. One possblty s to am at a complete standardzaton, e.g. by the company-wde mplementaton of a certan Enterprse Resource Plannng (ERP) system. As an alternatve, a best-ofbreed strategy can be chosen, meanng that the best software soluton s mplemented for each dvson of the company, whch mght then be lnked by Enterprse Applcaton Integraton (EAI) solutons. Although several publcatons on these strateges exst, most of them only provde rough recommendatons. In ths artcle we wll ntroduce a decson model whch provdes support n selectng applcaton systems n the context of M&A projects. The objectve s to offer concrete normatve decson support for the choce of these systems based on the specfcaton of the model parameters. In the second secton we wll ntroduce some alternatve ntegraton strateges and dscuss basc advantages and dsadvantages from an economcal pont of vew. Subsequently, selected types of company mergers and ther mpact on IT ntegraton strateges wll be examned. The thrd secton s dedcated to the presentaton of a decson model for the choce of applcaton systems n M&A projects. In secton four we wll provde a concluson and an outlook on further research work. 2 IT INTEGRATION IN MERGERS AND ACQUISITIONS 2.1 Strateges n IT ntegraton The lterature bascally dfferentates between four man strateges for IT ntegraton n M&A projects (Brünng, Pedan and Deasley 2002, Duthot et al. 2004, Johnston and Yetton 1996, Keller 2004, Pedan 2003): Absorpton The nformaton systems of one mergng partner wll be chosen as standard for the merged company. If for example one of the mergng partners (A) s so far usng a certan standard software n hs dvsons and the other mergng partner (B) s applyng varous ndvdual solutons, the absorpton strategy would n that case mean that all dvsons of the merged company (C) use the standard software of A. By mgratng B s data and processes to the new soluton, B s system wll be completely replaced. On the one hand, the general advantages of ths approach are the relatvely low rsk, the reduced related costs and ts comparatvely short tme to completon (Johnston and Yetton 1996). On the other hand, the absorpton strategy mght lead to a low level of acceptance among the users. Ths can be traced back to necessary addtonal tranng efforts and an mpresson of lost functonalty (Duthot et al. 2004). Another dsadvantage s the fact that the dsplaced 1042

4 system wll be completely gven up, wthout consderng that some of the components mght be better than the ones of the selected system. Best-of-breed Best-of-breed denomnates an approach where the best subsystems of each partner are selected from the entrety of all systems of companes A and B. These subsystems are taken over nto the systems of company C. However, the problem s to dentfy the best soluton for each purpose. Ths s even more complcated snce the functonal ranges of the sngle components of both system landscapes usually do not correspond exactly. Dfferent opnons n both companes departments on whch s the better subsystem (whereas each one would usually prefer hs own one) make the decson even harder. Moreover, ths knd of ntegraton ncreases the expenses for nterfaces consderably. These expenses can be reduced by employng EAI technologes (Lee, Sau and Hong 2003, Lnthcum 2000), but stll the best-of-breed approach wll generally lead to comparatvely hgh costs and tends to brng about a lower speed of ntegraton. Co-exstence Co-exstence refers to cases where both nformaton systems are operated n parallel but more or less ndependently. Interfaces between the two systems are only created n a small number of cases, e.g. to ntegrate data of fnancal reportng. Although ths approach can be mplemented qucy, t has one sgnfcant dsadvantage: due to the persstence of the orgnal systems no synergy potentals can be realzed from the consoldaton of the IT. However, ths strategy can be approprate as nterm soluton or f certan condtons apply. Greenfeld Accordng to the greenfeld approach a new system landscape s developed for the merged company C wthout usng the exstng systems. However, ths new system landscape does not necessarly requre the development of an ndvdual software. It could also mean the companywde ntroducton of a new standard software. Ths offers the possblty of a fundamental adjustment of the systems to the new requrements and of gettng rd of legacy systems. At the Integraton strategy Absorpton Best-of-breed Characterstcs Advantages Dsadvantages - selecton of one of the exstng system landscapes - mgraton of the other company s data and processes - mxture of the best components of both systems - short project tme and low effort - lmted project rsk - low operatng costs due to standardzaton - good coverage of functonal requrements - hgh user acceptance - low user acceptance - lmted coverage of functonal requrements - loss of powerful components of the dsplaced system - dffcultes n component evaluaton - hgh expenses for nterfaces - ncreased project rsk Co-exstence Greenfeld Table 1. - retenton of both companes system landscapes - mnmum ntegraton through few nterfaces - ntroducton of a completely new system landscape - development of a custom software or mplementaton of a standard software - short project tme and low effort - optmal coverage of functonal requrements - hgh user acceptance - optmal IT archtecture Dfferent aspects of IT ntegraton strateges - synergy potentals can not be realzed - hgh operatng costs due to co-exstng systems - ncreased complexty n future M&A - long project tme and hgh effort - hgh tranng effort - lmted project rsk 1043

5 same tme, modern technologes can be appled. However, the hgh costs for ths greenfeld strategy have to be borne n mnd. Another negatve fact s that the conceptual desgn and development of ths deal soluton s extremely tme-consumng. Nevertheless, ths approach can be approprate f both mergng partners work wth outdated system landscapes whch do not correspond to the modfed demands n functonaltes, extensblty, mantanablty and scalablty or f a new development had been planned pror to the merger. In ths case an nterm soluton should be created that lnks at least parts of the co-exstng old systems by nterfaces. Duthot et al. (2004) ntroduce another varant. They recommend the bundlng of the ndvdual subsystems of each partner nto closed packages, the so-called clusters. The respectve clusters of both partners should map the comparable functonaltes. In comparson to the best-of-breed strategy, ths reduces the number of unts to be compared. What dstngushes ths approach from the absorpton strategy s the fact that frst-class subsystems of both companes can be jontly used after the merger. Kromer and Stucky (2002) examned the mportance of dfferent ntegraton strateges n an emprcal study among companes n Austra, Germany and Swtzerland. Ther results show that n approxmately two-thrds of all surveyed mergers the applcaton landscapes have been standardzed completely or n ntegral parts accordng to the absorpton strategy. In one thrd of the cases both systems were mantaned n co-exstence. The study revealed no examples where the greenfeld approach or the best-of-breed strategy were appled. 2.2 Determnants of IT ntegraton In the followng secton we wll dscuss dfferent types of corporate mergers and relatve szes of the companes nvolved as essental factors of the IT ntegraton. Frst of all, we therefore consder the relatonshp between the mergng companes n terms of ther relatve poston n the supply chan. Ths s a crteron to classfy three types of mergers and acqustons: horzontal mergers, vertcal mergers, and conglomerate mergers (Certo and Peter 1988, Sudarsanam 2003). A horzontal merger descrbes a transacton between two companes of the same ndustral sector whch operate on the same level of the supply chan. It usually targets to an mproved compettve poston and to realzng synergy benefts of scale and scope economes. Vertcal mergers take place between companes of dfferent levels of the supply chan wthn the same ndustral sector. Thus they refer to the prolongaton of the (nternal) supply chan drectng to procurement or dstrbuton. The ams of vertcal mergers are the reducton of transacton costs, the acquston of company-specfc functons as well as mproved access to procurement and sales markets. A conglomerate merger denomnates an amalgamaton of companes from dfferent ndustral sectors. Usually a dversfcaton or expanson strategy, whch shall reduce the dependency from partcular busness areas or realze opportuntes on new markets, s the motvaton for ths knd of merger. Besdes the aforementoned types of mergers and acqustons, the relatve sze of the companes nvolved n the transacton has a sgnfcant nfluence on the ntegraton strategy. Wthn a take-over where one company s domnatng the other, the scope of decsons s more lmted per se than n a merger of equals. If the corporate strategy of the domnatng partner focuses on repeated acqustons of smaller companes, the domnance s even enforced. Aganst ths background, the next secton wll be about a decson model to dentfy the optmal IT ntegraton strategy n M&A projects. 1044

6 3 A MODEL FOR THE SELECTION OF APPLICATION SYSTEMS IN M&A PROJECTS 3.1 Bascs of modellng Ths model s based on the representaton of companes as networks,.e. on bass of vertces (nodes) and edges. In the followng we assume that nodes stand for dvsons of a company lke accountng, HR, etc. Edges represent the nformaton relatonshps between these dvsons. On ths bass we can depct the results of varous IT strateges. Fgure 1, however, concentrates on the absorpton strategy and the best-of-breed strategy. mysap ERP HCM Peoplesoft HCM Personnel Personnel EAI Integraton Server Accountng mysap ERP Fnancals Absorpton Customer Servce mysap CRM Accountng mysap ERP Fnancals Best-of-Breed Customer Servce Sebel ebusness Applcatons Fgure 1. Absorpton vs. best-of-breed The left sde of Fgure 1 depcts a network n whch all nodes use the SAP standard. Assumng that one of the mergng companes mplemented a standardzed SAP applcaton landscape, ths could be nterpreted as the result of an absorpton strategy. The network on the rght shows the result of a bestof-breed strategy. Each dvson employs the standard whch best supples ts needs. How can these IT strateges be evaluated n the context of M&A projects? For ths purpose we wll get back to the basc concept of the so-called standardzaton problem (Buxmann et al. 1999, Domschke and Wagner 2005, Schade and Buxmann 2005), whch arses n stuatons where several actors need to exchange nformaton. Usng the same communcaton standard, actors can beneft from decreased nformaton costs as a result of cheaper and faster communcaton as well as from elmnatng errors and avodng meda dscontnutes. Besdes, standardzaton allows exchangng more and better nformaton and thus leads to an mproved bass for decsons. But standardzaton does not only lead to benefts: they are opposed to drawbacks resultng from the costs for the mplementaton of the standard. Whle the conventonal standardzaton model s used to select communcaton standards, t shall now be extended to support the decson on the mplementaton of applcaton software. For ths purpose the basc utlty has to be ncluded n the model. The basc utlty of a good results from ts functonalty and s ndependent from ts utlzaton by other users (Buxmann 2001). For communcaton standards the basc utlty s obvously zero there s no advantage of a telephone or a certan EDI standard f nobody else uses ths standard. In contrast, applcaton software provdes a basc utlty whch s ndependent of the number of other users of the system. 1045

7 In the context of the standardzaton problem, a company s nformaton systems ncludng ther communcaton relatonshps are descrbed as undrected graphs (see Fgure 2). In our model, let V be the set of vertces (nodes) and let E be the set of edges of the standardzaton graph. Fgure 2. IT landscape consstng of 3 systems The decson model s supposed to select one of the avalable standards for each busness unt. We assume that t does not make any sense to employ more than one software e.g. n HR. At the same tme exsts a multtude of applcaton standards whch can be deployed n almost every busness unt. For nstance, ERP systems provde solutons for fnancal accountng, controllng, logstcs, HR, etc. Furthermore, standards exst whch can only be appled n a sngle or a few departments, e.g. producton plannng systems. In the followng let S be the set of standards whch can be mplemented n node, for nstance the set of software solutons for producton plannng. k Furthermore, we assume that standard k wll lead to a basc utlty of u when t s mplemented n node. Thus the basc utlty s node-specfc and standard-specfc. In ths way we can for example represent that ERP software s havng a hgher utlty n fnancal accountng than n producton k plannng. In addton, standardzaton costs c ncur, whch are node-specfc and standard-specfc as well. These standardzaton costs nclude the full costs for the mplementaton of the standard, e.g. costs for lcenses, development, customzaton or data mgraton. The net basc utlty of a standard n a specfc node corresponds to the dfference between basc utlty and standardzaton costs,.e. k k a = u c k. However, the best-of-breed strategy would be the optmal soluton when only the net basc utlty s consdered. One would just have to dentfy the soluton where the dfference between basc utlty and standardzaton costs s maxmal for each node. But ths soluton does not have to be optmal for the entre company, snce nformaton s exchanged between the nodes. Ths nformaton exchange causes nformaton costs due to transport, meda breaks, etc., whch normally are hgher n heterogeneous software envronments. Under these crcumstances network effects arse snce a hgher number of mplemented modules leads to a hgher number of supported communcaton relatonshps. Here network effects denomnate the (postve) dependency of a standard s utlty from the number of ts users (Farrell and Saloner 1985, Katz and Shapro 1985). Obvously the utlty of standard software lke Mcrosoft Offce or OpenOffce wll ncrease wth the number of users, snce users can easly exchange fles. In our model these network effects are operatonalzed as follows: We assume that nformaton s exchanged along edge [,j], whch leads to nformaton costs. These costs can be reduced by usng compatble standards whle the provson of addtonal nformaton can contrbute to an ncreased value. In the followng, we refer to the sum of ncreased nformaton value and cost savngs as network effect utlty. We assume that a network effect utlty of s s generated along edge [,j] f node mplements standard k and node j mplements standard l. Normally a hgh network effect utlty wll be realzable between two nodes f both of them use the same standard, e.g. the same ERP system. 1046

8 If two entrely ncompatble standards are used, the network effect utlty s zero. The general formulaton usng s allows depctng that a better compatblty exsts between two standards and therefore a hgher network effect utlty can be realzed than by usng two other standards. In contrary to the classc standardzaton problem, ths allows us to depct partal compatblty. On ths bass the optmzaton model shall be ntroduced n the followng. 3.2 A decson model for the selecton of standards The objectve of the model s to maxmze the sum of node-based net basc utltes and the realzable network effect utltes. However, there s often a trade-off between these two objectves. The selecton of applcaton systems whch maxmze the sum of net basc utltes n each node n other words: a best of breed strategy wll usually lead to lower network effect utltes. Vce versa a company-wde deployment of a certan standard wll often yeld to a hgh network effect utlty, but n most cases these systems are not optmal for all busness unts. In the followng we wll ntroduce an optmzaton model to maxmze the sum of net basc utlty and network effect utlty. We defne bnary decson varables k k x for all V and k S. x takes a value of 1 f and only f standard k s ntroduced on node. Further we ntroduce bnary decson varables y for all, j V wth < j as well as k S and l Sj. y takes a value of 1 f and only f nodes and j use standards k and l respectvely for exchange of nformaton and therefore a network effect utlty can be realzed. Usng these varables the problem can be formulated as an nteger program as follows: a x Max. F(x, y) = s y + k k V j V k S l Sj < j V k S (1) s.t. y y k x 0, j V wth j, k S, < l x 0, j V wth j, k S, j < l S (2) j l S (3) j k x = 1 V (4) k S y = 1, j V wth < j (5) k S l Sj k { 0,1} x V, k S (6) { 0,1} y, j V wth j, k S, l S (7) < j Objectve functon (1) maxmzes the net overall utlty of corporate nformaton systems. The term k k a x represents the net basc utlty of all vertces whch results from the basc utlty and the V k S standardzaton costs. The network effect utlty s ncorporated n the expresson s y. V j V k S l Sj < j Constrants (2) and (3) guarantee that the network effect utlty s can only be realzed f node mplements standard k and node j mplements standard l respectvely. Constrant (4) enforces that each 1047

9 node mplements exactly one standard. Constrant (5) assures that the network effect utlty s wll be realzed n the objectve functon s value, even n nstances of the model where t can be negatve. The model descrbed above can be regarded as a modfcaton of the well-known standardzaton problem to focus on applcaton systems. Ths s beng accomplshed by mplementng the concepts of basc utltes and partal compatbltes. So far the model only refers to one network. In the followng secton we want to show how t can be appled n the context of M&A projects. 3.3 Applyng the model to M&A projects As n secton 2, we assume that two companes A and B shall merge to a company C. The frst step of an IT ntegraton project conssts of an analyss phase, whch comprses a comprehensve survey of the IT solutons of both companes. In addton to these exstng solutons, new system alternatves can be taken nto account as well. In order to apply our model, the standardzaton graphs of company A and B and all ther parameters have to be nqured. Ths ncludes dentfyng relevant departments of both companes, whose nformaton systems are subject to the standardzaton consdered here. When dentfyng these departments, those whch shall afflate after the merger should obtan the same labelng for ther nodes n both graphs. Wth respect to the applcaton of our standardzaton model the analyss phase can be splt n the followng steps: 1. Determnng the set of nodes V, 2. dentfyng the sets, S k 3. dentfyng the weghts of nodes,.e. the net basc utltes a, 4. determnng the set of edges E, 5. dentfyng the weghts of edges,.e. the network effect utltes In addton, t has to be examned f new communcaton relatonshps open up due to the merger. For nstance, ths could happen f a department of one mergng company has to exchange nformaton wth a department of the other mergng partner. These communcaton relatonshps are referred to as the + set of edges E. For these relatonshps the network effect utlty has to be determned n dependency + of the standards appled. Ths network effect utlty shall be denoted below. Ths analyss phase s followed by the decson phase. In ths phase the standardzaton graph of the merged company C can be derved from the standardzaton graphs of company A and B. Subsequently the decson model has to be appled to the derved graph. For an automated dervaton of company C s standardzaton graph, we act on the followng assumptons: The net basc utlty of a standard n a department of the merged company corresponds to the sum of the net basc utltes n the equvalent departments of both mergng partners. The network effect utltes of C can be calculated by addton of the correspondng values of the mergng companes A and B. Of course, these assumptons consttute a smplfcaton of the real facts. Our approach s exemplarly geared to these assumptons, but bascally t can be transferred to any other dependency between the weghts of nodes and edges. Accordng to these assumptons the standardzaton graph for company C can now be generated n a two-step process. Frstly, we have to jon the sets of nodes and the sets of edges respectvely. s s. 1048

10 Secondly, we need to sum up the weghts of correspondng nodes and accordngly the weghts of correspondng edges. A formal descrpton of the automated generaton of the graph s presented n the appendx to ths paper. In the followng we wll llustrate the unon of graphs by consderng two examples. In both cases we suppose that two standards are avalable, whch can both be employed n every department. Hence 1 every node s marked wth two weghts, the net basc utltes a and a 2, and every edge s marked wth four weghts, the network effect utltes s, s, s and s 22. For the sake of smplcty theses weghts are depcted as vectors and matrxes n Fgure 3 and Fgure 4. Company A Company B Merged company C Legend: Weghts of a node: 1 a 2 a Weghts of an edge: s s s s Fgure 3. The unon of graphs n a horzontal merger Fgure 3 shows the unon of graphs for a horzontal merger. Departments 1 to 3 exst n both companes nvolved. These departments are subject to fuson after the corporate merger. In company B an addtonal department 4 exsts. After the merger the new company conssts of all four departments. Snce communcaton relatonshps between all departments already exsted n company B, no further relatonshp can evolve n the merged company. As we see n the example of node 2, the net basc utlty of a certan standard n a certan department can be derved by summng up the correspondng values of the mergng partners. The network effect utlty arsng between two departments due to a partcular par of standards can be calculated accordngly as we can see n the example of edge [1,2]. In contrast, net basc utltes and network effect utltes can be taken over drectly from one mergng partner f the correspondng department or communcaton relatonshp dd not exst n the other company. The weghts of node 4 and edge [2,4] exemplfy such a case. Company A Company B Merged company C E = {[2,4]} 5 2 s24 = Fgure 4. The unon of graphs n a vertcal merger 1049

11 The second example refers to a vertcal merger (Fgure 4). In ths case we assume that only the departments 3 of both companes shall afflate. All other departments reman unchanged snce there are no counterparts n the other company. All exstng communcaton relatonshps are also taken over from the mergng partners to the merged company. Addtonally, nformaton has to be exchanged between departments 2 and 4 n the merged company. Thus edge [2,4] has to be ncluded n the merged company s graph and t s + E = {[2,4]}. The weght of ths edge s gven n matrx form as + s CONCLUSIONS AND FURTHER WORK In the context of IT ntegraton n M&A projects, a multtude of decsons has to be made. Besdes HR the strateges of IT ntegraton have to be mentoned n partcular. So far the lterature generally gves rough recommendatons, whch abstan from a model-based background. Emprcal fndngs and experences, e.g. form the bankng sector, suggest that usually the applcaton systems of the domnatng company n the merger are selected. In ths artcle we ntroduced a model to support such fundamental decsons n matters of IT ntegraton n M&A projects. The bass of ths model was the standardzaton problem, whch has been extended by these three dmensons: the basc utlty to support decsons between dfferent applcaton systems, the concept of partal compatblty, as well as the explct consderaton of M&A projects by the dervaton of the standardzaton graph of the merged company from the correspondng graphs of the mergng companes. The man problem n the utlzaton of the model conssts n the hgh costs for the provson of nformaton. Hence one should consder the trade-off between the beneft of applyng the model and the costs caused by the applcaton. Snce the costs of IT ntegraton n M&A projects are generally very hgh, the employment of a formal model seems to be worth consderng. A smplfed applcaton of the model provdes another opportunty. Wth ths opton only selected parameters of the model could be collected extensvely whle others could be roughly estmated. Based on the model ntroduced n ths paper, we currently develop a prototype for the computer-aded employment of the model. Ths prototype shall provde decson support as well as senstvty analyses n terms of what-f and how-to-acheve analyses. On ths bass we wll deduct normatve statements on the optmal ntegraton strategy for each parameter constellaton. For example, a queston to answer n ths context s how the selecton of applcaton systems n the merged company s nfluenced by the proportonal szes of the mergng companes. Such smulatve and analytcal consderatons shall contrbute to a better methodcal foundaton of IT decsons n the context of M&A projects. References Brünng, I., C. Pedan and P. J. Deasley (2002). Managng Busness Processes and Informaton Technology n Mergers. M&A Revew (3), Buxmann, P. (2001). Network effects on standard software markets. In Proceedngs of the 2nd IEEE Conference on Standardzaton and Innovaton n Informaton Technology, p , Boulder. Buxmann, P., T. Wetzel, F. von Westarp and W. Köng (1999). The Standardzaton Problem - An Economc Analyss of Standards n Informaton Systems. In Proceedngs of the 1st IEEE Conference on Standardsaton and Innovaton n Informaton Technology, p , Aachen. Certo, S. C. and J. P. Peter (1988). Strategc management. Random House, New York. Domschke, W. and B. Wagner (2005). Models and Methods for Standardzaton Problems. European Journal of Operatonal Research, 162 (3),

12 Duthot, C., R. Dreschmeer, A. Gourevtch and M. Menegaux (2004). Cluster and Nuggets. Boston Consultng Group, Boston. Farrell, J. and G. Saloner (1985). Standardzaton, Compatblty, and Innovaton. Rand Journal of Economcs, 16 (1), Johnston, K. D. and P. W. Yetton (1996). Integratng nformaton technology dvsons n a bank merger. Journal of Strategc Informaton Systems, 5 (3), Katz, M. L. and C. Shapro (1985). Network Externaltes, Competton, and Compatblty. Amercan Economc Revew, 75 (3), Keller, W. (2004). Managng Applcaton Portofolos n Merger Stuatons. In INFORMATIK Informatk verbndet, Band 2, Beträge der 34. Jahrestagung der Gesellschaft für Informatk e.v. (GI), Ulm, September 2004 (P. Dadam and Rechert, M. Ed.), p , GI, Ulm. Kromer, G. and W. Stucky (2002). De Integraton von Informatonsverarbetungsressourcen m Rahmen von Mergers & Acqustons. Wrtschaftsnformatk, 44 (6), Lee, J., K. Sau and S. Hong (2003). Enterprse ntegraton wth ERP and EAI. Communcaton of the ACM, 46 (2), Lnthcum, D. S. (2000). Enterprse applcaton ntegraton. Addson-Wesley, Readng. Pedan, C. (2003). Managng processes and nformaton technology n mergers. Cranfeld. Schade, S. and P. Buxmann (2005). A Prototype to Analyse and Support Standardzaton Decsons. In Proceedngs of the 4th Internatonal Conference on Standardzaton and Innovaton n Informaton Technology, p , Geneva. Sudarsanam, S. (2003). Creatng value from mergers and acqustons. Prentce Hall, Harlow. Appendx Assumng that two companes A and B shall merge to a company C, the standardzaton graph for A A A A A company C can be generated as follows: Take the graphs G = V, E, s, a and B B B B B G = V, E, s, a of the mergng companes as well as + + E and (cf. secton 3.3) as granted. The graph C G = C V, C E, C s, C a of the merged company can be composed by the unon of graphs A G and B G. Ths can be accomplshed by: the unon of the sets of nodes C V = A V B V, the unon of the sets of edges C E = A E B E + E, A B A B s + s, f [, j] E E A A B C s, f [, j] E [, j] E the defnton of the weghts of edges s = and B B A s, f [, j] E [, j] E + + s, f [, j] E the defnton of the weghts of nodes A k B k A B a + a, f V V a = a, f V V B k B A a, f V V C k A k A B s 1051