Grounded Theory: Difficulties in Accurately Forecasting Technology Integration Costs During Acquisitions in Latin America Banking

Grounded Theory: Difficulties in Accurately Forecasting Technology Integration Costs During Acquisitions in Latin America Banking

Author: 
Gustavo Cira
Program of study: 
D.M./IST
Abstract: 
Leaders of acquiring companies make acquisition decisions based on estimated financial gains. Those financial gains are affected by technology integration costs that are usually higher than the estimates forecasted by the acquisition managers during the due diligence process of an acquisition. The purpose of this qualitative grounded theory study was to explore technology department personnel's perceptions of why the actual costs of technology integration are usually higher than the estimates forecasted by the acquisition managers during the due diligence process before an acquisition in the Latin America banking industry. The collection of the data for the study was performed through six open-ended and semi-structured interviews with 20 purposively selected interviewees from technology departments, who participated in acquisitions in the Latin America banking industry during the last 5 years. The result of the study was the development of a theory of difficulties to forecasting technology costs during an acquisition in the Latin America banking industry. The summary of the theory is that people and organizational culture, technology aspects, and financial factors affect the acquisition process, which creates difficulties for cost estimates accuracy that can improve with a better integration planning and execution. This theory will help technology leaders to understand the barriers they can find during the acquisition process from the due diligence to the technology integration, and mitigate any risk of failure
Dedication: 
To my very lovely wife, Adelia, who supported me during every moment of this long journey.
Acknowledgements: 
I especially acknowledge the valuable support of my mentor, Dr. Cynthia Davies, who was available all the time during this long journey. I also acknowledge the valuable support of my committee members, Dr. Sorin Gudea and Dr. Augusto Casas, in guiding me to the completion of my dissertation. I appreciate the support from the 20 interviewees for this study who were willing to share their experiences with no major constraint.