What Happens to IT When Companies Merge

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    I’m just catching up on some reading. Looks like Tony Kontzer gives some interesting details in his article, "Merger on the Fly," in InformationWeek, regarding the merger of America West and US Airways and how its IT systems will be welded together.


    Apparently, America West has a history of not outsourcing much (its IT staff was about 140), whereas US Airways did (its IT staff "barely exceeded a dozen, most overseeing outsourcing contracts").


    EDS was supplying many of the IT services that US Airways needed — an agreement that started when EDS acquired Sabre’s outsourcing business in July 2001. In August 2002, when US Airways first filed for bankruptcy, EDS put out a press release that said it was paid about $200 million a year and that it was renegotiating its agreement with the airline. In February 2003, EDS announced that it had retained the IT services contract, beating out IBM Global Services for the work.


    Since America West is the stronger party in this equation, the new IT structure will more closely resemble its practices. For instance, many of the outsourcing contracts that US Airways has will be canceled or renegotiated. Interestingly, America West also worked with EDS, which hosted its reservation system. Sabre ran the one powering US Airways. EDS won that round because, according to Kontzer, "so many of the America West systems that will survive have interfaces into Shares," the EDS Shared Airline Reservations System. (Perhaps EDS was being thrown a bone too — to keep it happy through the transition.)


    The article is a good read if you want to understand the untangling that takes place during a major corporate reorganization.

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