On the importance of IT in divestitures
Why is research on IT-related aspects of divestitures important?
Below I want to share my motivation for conducting research on this topic:
Acquiring and divesting business units are standard instruments of strategic management . Increased globalization and deregulation, external growth ambitions to capture new markets or protect existing market shares, a focus on the core business, and value driven portfolio management are the key drivers of this development [2-4].
Carve-outs refer to the operational activities needed to divest and separate a part of an organization, usually a strategic business unit (SBU), into a carve-out object. This object is to exist as an independent viable unit that can then either be integrated into another organization or can operate as a legally independent, standalone organization . Examples include the disposal of IBM’s personal computer business and its integration into Lenovo in 2004  or the carve-out of the semi-conductor branch of Siemens, followed by the establishment of Infineon in 1999 . Besides its transformational impact on individual companies, carve-outs play an important economic role. In 2009 more than 12.000 divestitures were conducted worldwide, having a total transaction volume of more than 600 billion US dollar .
The extant literature focuses on the acquisition and integration of new strategic business units, typically referred to as post-merger integration (PMI). In contrast, the divestiture of SBUs has rarely been researched . In both research and practice IT typically receives limited attention relative to its complexity and financial implications. An explorative study of Leimeister et al.  has revealed an inaccurate relationship between the IT sub-project, accounting up to fifty percent of the total cost, and other project stakeholders. IT is typically the most complex and most underestimated aspect of carve-outs . The case of Roche illustrates the importance of an early IT-involvement in the due diligence. When selling their vitamins division, “they had underestimated the cost of disentanglement and integration by a factor of 20” .
Furthermore the study of Leimeister et al.  emphasizes that the success of carve-outs is largely dependent on the experience of the carve-out manager. This becomes especially important because carve-out projects are different from regular IT projects. Typically the project teams are inexperienced as carve-outs are rather seldom for a single company. In addition, carve-outs lead to major company transformations, leaving no options for roll-backs, imposing a high success pressure. Moreover carve-outs impose high time pressure due to short lead times before the announcement of the divestiture as well as short project life spans due to external regulations .
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