Postmerger Integration at Northrop Grumman Information Technology

Abstract

This case presents the practices of a highly successful post-merger integrator that grew from $400 million in 1997, to $1.5 billion in 2000, to $4 billion in 2002.The case focus is on the $4.0 billion IT sector of Northrop Grumman, a company confronting immense change in the rapidly consolidating defense business. This integration is unique in that the product is a complete melding of various companies, systems, leaderships, and cultures of 11 legacy organizations. Not only is the result an organization with a new identity, but also one with new strategic capabilities unavailable to any of the stand-alone legacy companies. A teaching note is available to registered faculty, along with video clips that include footage of weapons systems (e.g., B-2 bomber) and information about the company's PMI process. Excerpt UVA-BP-0472 Rev. Feb. 1, 2011 POST-MERGER INTEGRATION AT NORTHROP GRUMMAN INFORMATION TECHNOLOGY It was March 2003, and Herb Anderson was watching the latest CNN report on the Iraqi warfront. He observed the potent effectiveness of a remarkable new confluence of existing weapons technologies connected by state-of-the-art computing. Northrop Grumman's C4ISR system connected pilots, ground teams, and sensors in the real-time Computer Command, Control and Communication of Intelligence, Surveillance, and Reconnaissance of battlefield operations. Each of these independent elements had already been the best in the world a few years ago, but they were much more so when integrated into the C4ISR system, as it was called. Advances in IT enabled the interconnection of several different systems, improving the performance of each individual system and reducing what the military referred to as “the fog of war.” At the same time that Northrop Grumman Information Technology (NGIT) made integration possible on the battlefield, it also worked to integrate a series of acquisitions at its sector offices in Herndon, Virginia. Anderson, president of NGIT, sought to acquire other companies that would enable it to extend the strengths of its own corporate systems to the future needs of the defense and private sectors. Northrop used an iterative process to develop a merger integration methodology that helped the company avoid the fog. Over the years, the company's approach to integration earned it several accolades. . . .