Two Financial Giants Merge - Essay Example

Two Financial Giants Merge Common practice of integration on the mergence of two organizations is meant to complete ad-hoc aims via formation of links in the short term between the systems of the two companies ate various points. To form these links during integration, the two companies, majority are created between control and process components (Frankel 76). Here, the systems are controlled through joint supervision with reception of data from information systems across the merging organizations. For instance, when systems from Wells Fargo require information from those at Wachovia, they have to form new links between the business end and control end of the two information systems. After these links are formed, the integration process moves to the maturity stage where new links are formed between the same ends of the two information systems. Increased expansion as expected with the merger leads to formation of cross-links between the units present in both organizations (Frankel 76). With the merger between the two organizations in this case, integration of IS was necessitated in order to manage the chaos that would follow with communication hitches and revenue loss from redundant links. When Wells Fargo merged with Wachovia, they came across various challenges and difficulties in the integration of their information systems. One of these difficulties had to do with the making it financially viable to integrate the two systems. For example, Wells Fargo and Wachovia needed the capability to take advantage of those opportunities that would result from IS integration within the merged organization (Frankel 78). In addition the two organizations may have lacked the ability to deal with the issues that come from the integration of the information systems. For instance, the satisfaction of the new organization’s end users with the integrated IS and the entire process of systems integration could be a hurdle. Lack of proper communication about the integration process’ capabilities and its importance to the success of the merger may precipitate resistance from the workers of the organization that adopts the other’s system. Eventually, this could cause depressed effectiveness and efficiency in leveraging the resources at hand during the period of integration (Frankel 78). Wells Fargo and Wachovia may also have found it challenging to improve the capabilities of their previous information systems after the merger. Because the goal of the merger was to improve the entire new organization’s processes, the IS integration would also have to improve its capabilities (Frankel 79). Difficulties that could affect the new organization include the enhancement of their competitive advantage, as well as the enhancement of their business strategies. Organizational planning and IS integration could also prove to be a challenge because it is important for the new organization to achieve its financial targets. Information system integration across departments within the new organization in order to increase their access to data and information may also be difficult since they have ingrained models of system operations. The ability of the merged company to keep staff who are competent in the new system, as well as recruit new ones, will also be challenging. The identification of the best fit technology and its assimilation will also be difficult (Frankel 79). However, there are also benefits to the merger of information systems between the two organizations. First, because the two are organizations of similar size, the IS integration will be much easier compared to if they had different capabilities (Frankel 81). However, because of their disparate images, protocols, websites, systems, and hardware, it was essential to integrate their systems. One reason that this is important is so that they can attain the benefits they expect from the merger. For this to happen, the standardizing systems, technology architecture, and application systems have to be rationalized. Insufficient data and information available to the two merged companies could lead to inefficiencies in their service delivery. In addition, lack of synchronization within the infrastructure of IS may cause hold ups with everyday operations of the new company, such as in lead management, quote to cash, marketing, sales, and integration of new employees. The implication of this could be slow operational time for the new organization. Also, IS integration is essential to the operational process applications and supporting processes like ERP, HR, marketing, CRM, and sales. This makes integration inevitable (Frankel 81). Failure to integrate the processes may cause the new organization to stray from its core competencies in services and products in banking. Coming up with an integrative standard is, therefore, essential because they have different suppliers, partners, and systems of finance. Integration of the two companies’ information systems is also important with regards to how they share data. Data integration within the new company will enable them to access updated data and information (Frankel 82). Regardless of its storage form by Wells Fargo and Wachovia, integration of data and information systems will be of utmost importance. Failure to enable effective integration of their IT and data systems may lead to complications that could come during information retrieval across their systems, services, and applications. Finally, IS integration will be fundamental for the new organization to improve their presence. Since they have similar technological landscapes, it is possible that they could have duplicate information and data on similar customers. In order for them to appear as one company, this data and information will have to be integrated. Failure to do so, especially because of their disparate databases in marketing and sales, may lead to them contacting the same clients with the same information, which will give the customers a feeling that the new organization is disjointed (Frankel 83). Who is Minding the Security Store? An antivirus software update from McAfee failed on April the 20th, 2010. This led to numerous computers running Windows XP to either reboot continuously or crash. The update reversed the activity of the antivirus software by turning it against Microsoft Windows vital components, rather than against malicious software (Harkins70). The damage caused by the antivirus update was widespread. Michigan University’s medical school was hard hit, for example, with reports of eight thousand computers crashing. While the update was meant to detect the W32/wecorl.a virus, which was a minor threat, and destroy it, it went rogue and attacked the svchost.exe file that is critical for Windows XP SP3. It quarantined the file and removed it and, in some cases, totally deleted it. Without the file, computers running on Windows were unable to boot properly. After updating their McAfee antivirus software, the machines booted repeatedly or crashed. Some lost the capability to connect to the internet, while others lost ability to use the USB drive. The latter problem made it even more difficult to reinstall the svchost.exe from another computer (Harkins70). Personal computers that ran Windows XP SP3 were all affected, while those running SP2, SP1, Windows 2000, Windows 7, and Vista were not affected. The apology eventually came from the EVP, followed closely by the CEO three days after the malfunction of their anti-virus software (Harkins, 2013). This was too late and the damage to McAfee as a trusted brand had already been done. If the CIO had liaised with the brand and public relations people, the issue would have been solved with less frustration from the clients. In this aspect, while McAfee was able to arrest the situation with relative speed, the communication of the malfunction was more damaging than the malfunction (Harkins, 2013). The effect that the anti-virus malfunction had on ordinary everyday computer users shows that the world is becoming too reliant on information systems. They have taken over the everyday running of organizations, as well as daily planning for individuals. Information systems are now used to store most of the information and transfer the information (Harkins, 2013). The use of cell phones and computers to communicate has gone up tremendously in the last ten years. It is almost impossible to imagine what life was like when one had to use a call phone or write a letter. Increasingly, businesses are transacting business using technology and most accounting is now information system based. The use of information systems has also become indispensible to decision making and logistics for most medium and big organizations (Harkins, 2013). Finally, even government agencies are now reliant on information systems. This shows that, as a society, information systems have begun to define how man interacts with information. The advancement of information systems have been good for society and arguing otherwise overlooks how easy it has made decision making at multiple levels. However, this heightened use has ensured that the law of unintended consequences will apply (Harkins, 2013). In case of any breach or failure for these systems, the consequences will be far reaching, particularly if it is on a large scale. Over-reliance on information systems has made society a little more vulnerable. The use of passwords and pin numbers to guard these systems is basic to the threatening vulnerability. Because society now uses interconnected systems for majority of their activities from banking, to food supply, to power, if anything goes wrong with the systems or they are sabotaged, the effects will be widespread. The collapse of information system networks due to cyber attacks by terrorists or system failures, there would be mild paralysis (Harkins, 2013). As can be seen, the McAfee anti-virus update failure caused a lot of inconveniences to their clients. Reimbursement for reasonable expenses was the right thing to do, particularly for those home clients who were hit by the fault. In fact, McAfee was obligated legally to reimburse its clients (Harkins, 2013). Software is dealt with in the US and EU by the consumer guarantee act and other similar acts These require that, in a situation where software products such as McAfee’s anti-virus software is purchased in a manner covered by the Act, the consumer can seek compensation if it does not meet acceptable quality. The reimbursement that consumers are entitled to include damage or loss that results from failure of the software, which could have been foreseen as liable to failure (Harkins, 2013). Therefore, what McAfee did was enough under most laws in the western hemisphere. The expenses that would be considered for reasonable reimbursement depend on various factors. In the McAfee case, the factors include the costs for the clients to hire technicians that would disable the software in case they could not do it, the cost of buying or hiring a new computer as the faulty one was serviced and fixed, and other charges like telephone support (Harkins, 2013). Some other costs such as lost profits, interruption to business costs, and other business costs would be harder to recover because it is difficult to prove them. However, this does not mean that it is impossible, for example, where the business was a client of McAfee rather than the individual owners. In addition, specific losses like loss of opportunity would be difficult to prove since it could be argued that the developer did not adequately foresee the losses in the circumstances (Harkins, 2013). Work Cited Frankel, Michael E. S. Mergers and Acquisitions Basics. Hoboken, NJ: John Wiley & Sons, 2012. Harkins, M. (2013): Managing risk and information security: Protect to enable. New York: Apress. Read More