Accenture has long maintained that alignment of the business and the information technology functions within a company is critical to the effectiveness of any strategic initiative. Given the fact that, by our estimates, IT enables 60 percent of post-merger transactions, this alignment is particularly crucial in the realm of M&A.Three years ago, Accenture research1 identified a number of best practices in IT integration and the impact they have on M&A execution. These practices included involving IT in early business discussions about the prospective deal, performing pre-deal IT due diligence and driving IT integration from a vision of future capabilities. These best practices have not changed.What has changed, according to a new Accenture survey, is the way senior IT executives and senior business managers define success in a merger transaction. With so much at stake in any merger, we think the different attitudes held by these two important management constituencies are noteworthy. When it comes to M&A execution, these differences point to what might be called an "alignment gap."Accenture defines "alignment between IT and business as agreement in four key areas: definition of business objectives; definitions and performance metrics for those objectives; articulation of the vision of the role of IT; and the goal of IT investment. In reviewing strategic IT initiatives, we call organizations with a high degree of agreement in these four areas "strongly aligned"; those with major disagreements we call "weakly aligned."Accenture continuously tries to verify working hypotheses with formal field research, and our new survey was designed to illuminate the extent and contours of the alignment gap. Between January 28, 2005, and February 8, 2005, we conducted 334 interviews, equally divided between major companies in the United States and in Europe. At each company, we interviewed both senior business executives (54 percent of the total survey base) and IT executives (46 percent). Those who identified themselves as "IT executives" held titles including vice president, director and CIO. Those in the category of "business executive" held titles such as vice president, executive vice president or other senior management equivalents.Cultural integrationFrom our perspective, IT has always been a highly "cultural" profession, with the specific enterprise culture developing around specific business practices, just as it does with other functions. This might initially appear counterintuitive. In business, culture is typically classified as a "soft" factor, often grouped alongside such equally difficult-to-quantify attributes as morale or corporate reputation. Moreover, cultural traits tend to be associated with corporate functions that have a high quotient of intangible value, such as R&D, or in functions where significant face-to-face interaction is integral, such as investment banking. IT, on the other hand, seems the archetypal quantifiable discipline, measured by established "hard" key performance indices.Our survey, in fact, shows that in post-merger integration, IT "cultural integration" is an important if unequally acknowledged success factor. When our total survey audience (business and IT executives) was asked to choose the "most critical factor for the success of IT integration" from among eight items, only 9 percent named culture, which tied for sixth. In other words, as a factor to be anticipated in a merger, the integration of two IT cultures does not appear to be significant.According to the same survey respondents, however, their actual M&A experience suggests something different. When asked to choose the "greatest impediment to successful integration" from the same list of eight items, the executives ranked "cultural integration" second (after "infrastructure compatibility); it was named by 21 percent of the executives. This corresponds to our own experience working with major companies on post-merger integration efforts, and strongly suggests that learning how to plan and execute IT cultural integration is becoming a best practice much too important to ignore.Differing worldviews, differing expectationsAmong the notable differences between the two sets of respondents was that the business executives were nearly always less optimistic than their IT peers, and had more modest initial expectations. For example, more than twice as many IT executives as business executives31 percent versus 15 percent in the United States, and 12 percent versus 5 percent in Europecharacterized their most recent merger experience as "extremely successful."Similarly, nearly a quarter of US IT executives stated that recent post-merger integration efforts were stable within a month of close; only 9 percent of their US business counterparts felt the same. Twenty-nine percent of US IT executives stated that all of the projected value from IT synergies either "were realized" or "were expected to be realized"; just 8 percent of their US executive counterparts felt similarly.Given both field observations and previous Accenture research, it is not entirely surprising that IT and business executives would have significantly different views about post-merger integration challenges and outcomes. In our experience, many IT executives define "post-merger integration success" in terms of "IT integration," using, for example, connectivity or operational- continuity metrics: "Did we get the helpdesk up and running quickly?" or "How quickly was e-mail consolidated?" Business executives, on the other hand, define post-merger integration success in terms of the business integration and synergies that IT has enabled, such as technical support of merged sales forces and an integrated view of the customer.A similar phenomenon is reflected in our survey data on the use of performance metrics for IT integration. When those who reported using IT integration performance metrics were asked which ones, some important differences emerged. "Cost savings" metrics were used by 91 percent of US IT executives but by only 50 percent of their European counterparts. On the business side, the USEurope gap was even greater79 percent (US) versus 31 percent (Europe). Given our belief that framing IT issues primarily in terms of cost misses the full meaning of "value creation," we think the regional and functional discrepancies in the priority assigned to cost savings are noteworthy.Tactics commoditizedOne possible explanation for the variance in optimism is the fact that the definition of M&A success itself continues to evolve. Tactics that used to provide differentiating value (target selection, for example) have become commoditized. Bellwether acquirers have turned to other, increasingly fine-grained methods of extracting value in their M&A transactions. Previously, for example, the standard for IT involvement in merger planning was "before close." Now, the standard is "before announcement." (For more on this subject, see "Mastering the Art of Value-Capture in Mergers and Acquisitions").With certain notable exceptions, usually in high-performance businesses, we consistently find that IT and business executives have different worldviews. Why wouldnt these different worldviews apply to definitions and means of "value creation"? Alignment, as we defined it above, is uncommon and hard to achieve.When achieved, however, it paysand significantly. Other recent Accenture research into IT and business productivityregionally focused on the United Kingdom and Ireland, the Nordic region and the Americascontinues to confirm the importance of strong ITbusiness alignment. Strongly aligned companies reported overall productivity improvement rates that are 38 percent to 44 percent higher than those at their weakly aligned counterparts; IT productivity-improvement rates were similarly 33 percent to 38 percent higher at strongly aligned companies. And IT delivered 34 percent to 38 percent more value in strongly aligned companies than in weakly aligned companies. So what should companies contemplating or beginning merger transactions do to take advantage of these findings? First and foremost, align business and IT: Ensure that top line management and IT management sit at the same decision-making table, understand and agree upon the same business objectives, and are working toward the same integration outcomes. All of Accentures recent global research shows that there is no more effective single management action for maximizing ITs impact on the business generally, but most dramatically in merger transactions.Second, acknowledge the powerful role that cultural integration plays in delivering the best business outcomes from merger integration. Companies that proactively assess, plan and execute specific cultural integration activities throughout the pre- and post-merger periods are known to outperform those that take passive views on the role of culture; those that ignore the role of culture do so at their peril.This article originally appeared in Outlook journal, an Accenture publication, June 2005. Copyright 2005 Accenture. All rights reserved. Reprinted with permission."Keys to the Kingdom: How an Integrated IT Capability Can Increase Your Odds of M&A Success," Accenture, 2002. About the AuthorsGary A. Curtis, a partner in the Accenture Strategy service line, is the global head of the Strategic Information Technology Effectiveness group. As a consultant, Mr. Curtis has served the top managements of several global investment banks, major media companies and high-technology providers for more than 25 years. He specializes in evaluating the business value of large-scale IT applications and infrastructure portfolios, as well as in creating programs to improve that value over time. Based in San Francisco, Mr. Curtis serves on the advisory boards of several companies that are developing new technologies. Ravi Chanmugam is a New York-based partner in the Accenture Strategy\/Mergers & Acquisitions group. With more than 10 years' experience in M&A and management consulting, Mr. Chanmugam's work focuses on M&A strategy, divestitures, strategic due diligence and corporate strategy. He has consulted with clients on post-merger integration, helping them develop pre-merger plans, "first 100 days" plans and critical-decision items, as well as guiding processes for resolving organizational issues in the post-merger environment.For more about Accenture Strategic IT Effectiveness visit www.accenture.com\/site and here for more about Mergers & Acquisitions\/Post-merger Integration.