The merger of Chase Manhattan and J. P. Morgan, in December 2000, created the second-largest US bank, with $800 billion in assets. The formal announcement was just the starting gun in a race to mesh together the pieces and build a leading financial institution. Executives in every merger look to bring the results from consolidation to the bottom line. For managers at J. P. Morgan Chase, gloomy economic times made the pressure more intense.

Merging these institutions involved a massive effort to identify each heritage firm’s "centers of excellence," to reduce complexity and inefficiency, and to reconcile different approaches to business. The two firms had thousands of employees as well as operations that spanned more than 50 countries. Chase was both a retail and a wholesale financial-services firm, Morgan a wholesale one. Their cultures, too, were distinct.

Bringing technology operations together effectively in a single entity was particularly crucial. Premerger technology costs were estimated at 10 to 15 percent of each bank’s revenue, so tackling them would generate some of the largest cost savings in the deal. The cuts had to be managed very carefully, however—systems problems can be highly disruptive for companies that depend on technology to serve...