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Risks Of IT Integration

You should be able to grasp after reading this article that traditional IT integration is difficult, the cybersecurity threats prevalent during M&A deals and Zero Trust security has many advantages.


The number of failed mergers and acquisitions in the last few years have startled business analysts. Post-acquisition and merger integrationscan bloat IT costs and give rise to complex operational problems. These could lead to post-deal misalignment in synergies. According to a research, 27 percent of companies said their synergies failed to mmet expectations for acquisitions. Fifty to eighty percent of mergers and acqusitions fail because of poor IT integrations. There is a lot of demand for a merged company to produce immediate commercial value and to deliver return on investment. However, the back-end logistics of IT/Security integration are typically difficult, slow, and hazardous, which impedes progress.

Spin-off logistics pose similar network, security, and identity risks and issues to the divested company as it quickly develops a new IT strategy in the wake of the sale. Avoiding steep fines depends on a smooth and timely exit, which necessitates a platform that can speed up the process.

There is a lot of pressure to show a quick return on investment (ROI) after a merger.

Seventy percent of process and system integrations fail.

The capacity to offer a unified front to the client and realize cost savings and revenue increases more quickly is facilitated by a more rapid integration of systems.

Read: AI and Machine Learning Are Changing Business Forever

Below is one of the diagrammatic representations of how Cloudflare manages and modernizes M&A dealing with the IT risks and accelerating value by simplifying their operations and avoiding complications.

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IT Risks

  • Prior cyber security decisions and underlying IT systems of one company have an effect on the other during an M&A situation. If a firm is being purchased or divested, the data of the acquired company could be a target for hackers.
  • Consider the US FBI’s advisory against ransomware criminals who target merger and acquisition (M&A) processes as an example. Attackers utilize the Trojan virus to target sensitive information that, if made public, would derail a business transaction and then hold that information over the victim’s head until payment is made.
  • One-third of executives in charge of merger and acquisition (M&A) tasks at acquirer companies have suffered data breaches that can be attributed to M&A activity during integration. One reason for this is that more people have access to your data because you’re sharing it digitally with them. When Graduation Alliance Inc. was acquired for $130 million, hackers used the M&A law firm’s hacked email addresses to steal shareholder contributions.
  • Latent flaws: Integration can have unintended consequences if security levels aren’t equal. Before Marriott bought the Starwood hotel chain, for instance, the guest reservation system used by Starwood had previously been hacked. Two years passed before anyone noticed the hack, during which time around 500 million customer records were exposed online.
  • Shadow IT: It takes time for employees of the combined organization to become accustomed to the new, unified systems and procedures. During this time, certain workers or divisions may start using unauthorized software or refuse to adhere to the new IT regulations.
  • Extra care must be taken to ensure compliance with data-sharing requirements if one organization operates in a different country or industry with tighter data protection regulations. For instance, personal data transfer in M&A scenarios in China is subject to notification and permission requirements under the country’s Personal Information Protection Law (PIPL), with penalties beginning at RMB 1 million (about $149,000) for non-compliance.

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According to previous research, between 70% and 90% of purchases end in failure. To avoid becoming another (failed) M&A statistic, businesses should be ready for new cyber dangers and successfully integrate IT during the deal.

The Importance of Managing IT Risk During Mergers and Acquisitions

  • The goal of a standard IT merger is to provide users with seamless access to shared resources from both merged firms. As such, it adheres to the “castle-and-moat” network security concept (wherein no one outside the network can access data on the inside, but everyone within the network can).
  • They could, for instance, utilize firewalls to allow traffic to flow between the networks or merge the networks at a bridging point in between (using, say, MPLS to link data centers). Alternatively, more VPNs might be set up to securely admit new users. Historically, this was enough because most businesses still used on-premise hosting within data centers and their employees rarely left the office.
  • However, in today’s offices, workers from both the acquiring “Company A” and the acquired “Company B” need ways to securely link to an almost infinite variety of cloud-hosted SaaS apps and networks from any device, anywhere. But if even one of those individuals or devices is compromised, the attacker has a way to get through the “moat.”
  • That is to say, a perimeter-based approach is insufficient when multiple types of work environments converge during an M&A.
  • However, modern CIOs and CISOs can do things differently when it comes to M&A IT integration. All inbound and outbound traffic is authenticated and permitted with a modern method based on the Zero Trust security concept.

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Zero Trust Network Access (ZTNA)

  • By requiring several authentication mechanisms, security risks like credential theft and phishing can be mitigated. In addition, microsegmentation (a key part of Zero Trust) helps contain any breach in a tiny area, reducing the overall impact.
  • Authentication for external users (i.e., employees and contractors of “Company B”) can be sped up by integrating with numerous identity providers at once. These providers can be either corporate or personal.
  • Protecting internal assets without introducing riskier new VPN connections; granting access based on user identification and context; using universal, granular restrictions.
  • Using Zero Trust simplifies internal access without the hassle of merging networks, expedites the onboarding of new hires, and provides secure access from “Day 1” for all users. Time is money in mergers and acquisitions, and these things help businesses reap the benefits of mergers more quickly.

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