What IT leaders need to consider during mergers and acquisitions
by Peter High
CIOs have a complex undertaking during mergers and acquisitions:
They often have to reconcile people and systems of multiple companies
while being a driver of cost reduction once a merger is completed.
Most mergers fail to deliver anticipated value due to risks that
are not fully contemplated and mitigated.
Harrah's Entertainment has seen tremendous growth over the past
decade, much of it fueled by acquisitions. In 2004 the company
announced it would acquire Caesars Entertainment. Previously its
acquisitions had been mostly one or two properties at a time,
but Caesars owned 15 casinos worldwide and the merger would nearly
double the company's size.
Harrah's IT department has long been a significant driver of
business value for the company. In the years before the Caesars
acquisition, the department focused on projects that enhanced
the bottom line. As a result, other important projects became
lower priorities, such as increasing the high availability of
systems, knowledge management, and training initiatives.
Faced with doubling its size, Harrah's IT confronted critical
risks associated with systems availability and business process
knowledge. IT leadership used the acquisition as a catalyst to
push forward on initiatives that had value beyond the acquisition.
Heath Daughtrey, Harrah's vice president of IT services and integration,
was ultimately responsible.
He says, "If planning and execution are done well, these
landmark events should incubate competencies that transfer beyond
mergers and acquisitions to serve the everyday operations of the
company."
In order to integrate Caesars, Daughtrey focused on innovation,
process, and partnerships. Innovation came in areas such as training
and testing automation. In the past, training concentrated on
the systems, specifically the online menus and reporting. Daughtrey
decided to incorporate more business process training. He realized
that in order to train more than 5,000 Caesars property staff
members about Harrah's capabilities, the training should focus
on the end-to-end business process.
Now, rather than just providing training on the system menus
and reporting of a casino management system, training materials
explain the flows and logic through all systems on the gaming
floor, tailored to each casino's unique operational model. New
hires can obtain a broader understanding of business processes,
automated versus manual processes, intradepartmental dependencies,
and customer touch points.
Daughtrey also realized that in order to integrate all Caesars
properties over a five-month period, there needed to be a focus
on automating data conversion and data validation. Harrah's ran
multiple automated data integrity queries and checks. These routines
verified accuracy of more than 90 percent of all data, allowing
the property data validation teams to focus on a smaller subset
of the data and important nuances.
Harrah's chose to invest in the high availability and scalability
of systems. After the integration, all of Harrah's properties
benefited by improved uptime in the core operational and marketing
system. Harrah's campaign management system and Harrahs.com now
have full business and system resumption in less than one hour
versus 72 hours previously. Harrah's also used the acquisition
to evaluate strategic partnerships and forge relationships with
others that could assist with Caesars and also with more long-term
global expansion. Specifically, Harrah's needed partners who could
help open and convert dozens of properties worldwide.
A merger or a joint venture is a major business challenge. To
ensure that the acquiring organization is positioned to absorb
the acquired entity while minimizing risk, it is vital to consider
previously neglected areas.
CIOs should view such events as a reason to find ways to improve
the outcome of the acquisition, while also creating longer term
value for the combined entity.
Peter High is president of Metis Strategy, a Washington, D.C.-based
consulting firm specializing in the intersection of business strategy
and IT.
Originally published in CIO
Digest, July 2007 , Copyright © 2007 Symantec
Corporation, republished with permission.
