Why the Merger of ABN AMRO and Fortis will Fail (Part 1 Technical Infrastructure) if They Don’t Apply The Lessons Learned

Today it is almost sure that Fortys will buy ABN AMRO. I was involved in the merger between ABN and AMRO in 1991.

AMRO was the most important competitor of ABN. It was a strange idea that we (ABN) were combined to become a “Global Bank”.

Soon I found out that we were in many fields completely different. My part of ABN was not hierarchical. We were a network. The manager at the top and the manager at the bottom were freely talking to each other. We were highly efficient and cost oriented. AMRO was completely different.

They were strictly hierarchical and were (in our eyes) extremely wasting money. The effect was visible. ABN was doing the same work with 1/3 of the amount of people.

The information I give you was not known to us. We did not know anything about them and “they” knew anything about us. Nobody informed us or could inform us. Because we (ABN) came from a very open culture we trusted our colleagues and our colleagues were telling something completely different. In their eyes AMRO was the best. They were telling their way of the truth.

In the culture of AMRO everything was a plan. They were “selling expectations”. A better system meant “We have a plan to improve our system and when we have finished the plan we will be the best”. In the culture of ABN a System was not a plan but a Working System and we were always very hesitant to over-sell. So what we were telling our colleagues was really there. It was operational and it was doing more than we told them. Both of us “believed the other”. We were operating out of our own Worldview.

ABN was a “Sensory-Bank” (Based on Facts). AMRO was “Unity-Bank” (Based on Models). At that time I did not know anything about World-Views.

After some time the big DECISION was made. The Dutch Homemarket would be supported by a combination of the AMRO-Batch Systems and the ABN Branch Systems. The International Systems would be supported by ABN-systems. The last decision was simple. ABN was an International Bank.

The big problem was that the International System proved to be a big problem. Almost nobody knew this because the International System was “almost finished”. Many of us knew that this system was a software-mess.

When you find out something in the FUTURE You always think people knew in the PAST what you know now. This is very big mistake that causes a lot of trouble.

What also caused a big problem was the difference in NUMBERS. We were 1/3 of the whole. There were much more AMRO managers and employees and everybody was give a “position”.

An example will give you an idea what NUMBERS do to you. The Educational Department of ABN aimed at IT consisted of 2 people. Everything was outsourced. The AMRO department consisted of many people. The level of a Educational Manager at ABN was low. Education was a staff activity and Staff was “not important”. What happened was that the two people of ABN just were put in a team and all their knowlegde of doing things “cheap and efficient” disappeared. The “old way of working”, “we do everyhing ourselves” just went on.

Much later we found out that “the DECISION was wrong”. The realization of “the Facts” started a new process. We started to distrust each other. Nobody was aware of the differences in culture. People started to believed “they” had plotted and “they” had given “false information”.

The “distrust” was also caused by the way we worked. The managers of ABN and AMRO kept on working in the old way. The ABN-managers quickly restored the “old boys” network. The managers of the AMRO found out that we were talking with important managers everywhere in the company. They did not like that. They wanted managers to behave like hierarchical managers.

The effect of two very different cultures created a very instable new culture. This instability started to emerge when the great work, the integration, was finished. Until that time we were very busy solving very complex puzzles nobody ever was able to solve. We did not know about these puzzles until they appeared out of the blue.

The next step THE CONVERSION was much more complicated than we thought. When we started the process of conversion we soon found out that we had to support three systems, The ABN SYSTEMS, THE AMRO SYSTEMS and the slowly growing ABN AMRO SYSTEMS.

The first problem was COMPUTER CAPACITY. The mainframes we needed were NOT AVAILABLE on the market!!! Finally IBM helped us out.

The next step was the MAPPING OF DATA. We had to compare every field to find out what ABN field could be mapped on what AMRO-field. Soon we found out that the programmers never took any time to describe the data.

The last step was CONVERTING SOFTWARE (2.300.000 Software Programs!). This time we found out we were really in trouble. Many programs were not documented and worse (!!) many load-modules were without a compile-deck and a source. We could not find out what many programs were doing. When I left the bank in 1997 many of the problems were still not solved. The Year-2000 problem was very helpfull because many software-programs had to be checked and changed.

I don’t know what the current situation is but am convinced the quality of the IT-infrastructure has not improved but has gone down. The main reason is the Outsourcing and the Low Quality of the Current Generation of Programmers. I have written about this earlier.

My advice would be to abandon one of the IT-infrastructures and only convert the Data. This wan’t be easy.

My most important advice. Don’t touch the software! I feel this will open up a box of PANDORA. I have to tell you that this is not only a problem with ABN AMRO. Every company that has developed software from the Beginning of IT History or has Merged will encounter this problem.

LINKS

Part 2 Culture

Part 3 Cash Management

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