Information Technology in Business - Term Paper Example

Banks must provide a consistent customer experience across multiple distribution channels under demanding time-to-market, data distribution, and product quality conditions. This was a prime consideration when Allianz began acquiring very valuable financial instruments, which were important for its distribution of insurance and fiduciary plans. It is not unusual for IT spending to consume 15–20% of total operating costs, and these often grow after the acquisition as new uses for advanced technology are developed.

Paying close attention to systems analysis is key to keeping costs down. Another consideration Allianz had to consider each and every time they merged with or acquired another company was: “given the existing state of the IT infrastructure and its alignment with the overall business goals, which merger objectives and integration strategies can realistically be pursued? The answers usually center on the interdependencies between business strategy, IT strategy, and merger strategy” (Johnston and Zetton 1996).

At the beginning of every merger or acquisition stands the evaluation of the potential fit between the acquiring firm and the potential target. To address these differences, Allianz built a temporary technical bridge among the various systems in order to pursue a best-of-both-worlds approach: identify best practices in each to use as the basis for a new integrated IT structure. Agreeing on what was the best practice was a difficulty. This covered the external systems which had to communicate.

Allianz used flexible, project-based management processes for integration, and cost control. Its strategy for integrating staff was based upon first-hand observations of key personnel, retaining those who would fit well and migrating those who would not to other firms or early retirement.Since financial firms hope to harvest IT integration synergies, this will most likely be associated with more contact between the two top management cultures, setting the groundwork for culture clashes whose negative performance effects may offset some of the potential positive effects of IT integration.