Intranets on the merge IntraNet, 2/23/98 Back to the Intranet page

By Peggy Watt
Network World, 2/23/98

In the dance that occurs when companies merge, good communication helps the new partners step to the rhythm. And intranets can help amplify the tune.

When Knight-Ridder Information, Inc. (KRI), a company whose very business is communications, faced acquisition last summer, IT staffers immediately put a merger and acquisition information page on the corporate intranet.

A Java applet scanned KRI's voluminous news resources for mention of the company's sale and posted any findings. Management posted memos and maintained a frequently asked questions list. When the British information services company M.A.I.D. plc became the successful suitor, IT added links to the new parent's World Wide Web site and a live feed of its stock ticker, according to Marck Shipley, vice president of information technology for the merged firm, which is now called The Dialog Corp., in Mountain View, Calif.

KRI's experience is a typical and successful example of how a company with a mature intranet can use the communications power of its internal Web to reassure employees during a usually unsettling time. Eric Benhamou, a master merger of network companies, would not have done it differently.

A merger creates enormous uncertainty among employees, even if it's accompanied by excitement and anticipation. Worse, management has limited time to appease nervous employees, says Benhamou, chairman and CEO of 3Com Corp., which relied extensively on its intranet while integrating its latest acquisition, U.S. Robotics, last June.

"One key reason mergers and acquisitions often falter is the failure by management to distribute a consistent message across locations in a timely fashion," Benhamou says. "Employees are typically willing to stay in limbo for a little while. But if that state prolongs itself, they will check out. Intranets provide a way to very quickly and often interactively communicate across the entire entity."

At 3Com, management posted frequent status reports, took questions and conducted open, online forums on 3Community, the then two-year-old intranet. The policy of a steady flow of information apparently was effective; most employees stuck around for the new adventure, to Benhamou's relief.

In addition to using 3Community internally, 3Com built an extranet for the two companies' management teams to use when making plans and exchanging information. The Securities and Exchange Commission permits joint business planning activities prior to legal merging of assets, so the prospective partners started coordinating their shared business. They assigned cross-departmental teams to tackle issues from manufacturing to combining financial systems and human resources. They pooled ideas, posted meeting agendas and planned the postmerger procedures.

"These teams were composed of people who were literally all over the globe," Benhamou says. "We used a temporary extranet with a firewall and password access. It became the basis for the new intranet launched the day the companies merged."

Prepare to dance

Some Web consultants even recommend sketching out the steps for using an intranet long before the merger music starts.

Mergers and acquisitions happen, so a savvy intranet team ought to have a place-holder plan, even a dummy Web page, as a starting point that can be customized when the time comes, says Shel Holtz, principal of the consulting firm Holtz Communication and Technology, in Concord, Calif. Processes for disseminating information, such as online conference facilities and a way for employees to anonymously submit questions, can be designed in advance.

Consultants for KPMG Peat Marwick LLP, in New York, advise clients to consider the intranet's crisis communications role when crafting the business case for building a corporate Web.

"We suggest that one significant benefit is that as the company proceeds with future mergers and acquisitions, the technology actually facilitates bringing together many different systems," says Robin Palmer, partner in charge of electronic commerce at KPMG. He is experiencing his own advice; KPMG Peat Marwick is winding its way through the legal process required to merge with Ernst & Young LLP.

Technologically and content wise, a corporate Web can act as an effective bridge for new partners, Palmer says. His consultants usually recommend that clients implement a standards-based component-oriented intranet architecture. When firms merge, they can more easily join their technology if they have standard modules that can interact. The more browser-accessible the information, such as legacy data, the more easily users can be added.

One client that didn't follow this practice came to KPMG Peat Marwick for help after several mergers, when it was coping with nine distinct e-mail systems, Palmer says. His team urged the firm to permit diverse e-mail in departments as long as they supported the Internet's Simple Mail Transfer Protocol for bridging among them.

Taking lessons

Even in the short history of intranet technology, a few companies have circled this particular dance floor several times, and they're picking up creative moves with each round.

Corporate Express, Inc., of Broomfield, Colo., for example, actually built its extensive intranet and extranet with acquisitions in mind. Acquisitions are a central business strategy of the office supply giant, which has bought more than 200 companies in the past four years.

An IT project from the start, Corporate Express' intranet is meant to be scaleable. "We developed an intranet infrastructure that could accommodate any number of acquisitions of any size business,'' says Jennifer Maher, director of new media.

Last year, the company assembled a transition team of about a dozen senior managers to build a standard acquisitions strategy that included intranet use. In fact, the team currently meets and reports on activities using an intranet-based conferencing facility, says Mike Meranda, global brand integration manager at Corporate Express.

The transition team wrote a checklist of procedures for any acquisition and assembled a list of standard resources available on the intranet. For example, a document about the Corporate Express brand offers everything from graphics files to policies on color and placement, as well as guidance on when and how to legally adopt the new name. The IS department prepared a questionnaire to take inventory of an acquisition's assets and determine equipment needs.

Despite Corporate Express' degree of experience in managing acquisitions, building a transition team that relies on online resources has smoothed the process, Meranda says. "We know the integration strategy quickly and we can conduct business with the new company more efficiently," he says.

Rweb, the intranet of Rockwell International Corp., of Costa Mesa, Calif., has played an increasingly important role in a series of transitions. In the past two years, Rockwell International has sold its defense and aerospace divisions, divested its graphics systems business, spun off its automotive division and boosted its avionics and communications group by acquiring part of Hughes Electronics Corp.

"It's been a fast and furious couple of years," understates Scott Nelson, Rockwell International's manager of internal communications. "We made a concerted effort to use our intranet to keep our employees abreast of the latest developments in our transformation."

Initially, management posted and printed memos and reference materials simultaneously. But in the past year, Rweb has become a primary information source for Rockwell International's transitions, Nelson says. It has been especially helpful for international employees, who receive electronic dispatches much more quickly than via mail, he adds.

IT staffs at other aerospace firms are flexing their mouse fingers for another merger. Lockheed Martin Corp. and Northrop Grumman Corp. have been through the process before, with varying degrees of Web assistance. Their merger, announced last August, awaits Justice Department approval.

"I hope to connect our intranets quickly. That's when the real exchange of information can occur,'' says Bill Buonanni, Lockheed Martin's program manager of World Wide Web initiatives and director of WebServe, the organization that supports the intranet. Lockheed Martin, of Bethesda, Md., was created by the 1995 merger of Lockheed Missiles & Space Co. and Martin Marietta Corp. It later acquired Loral Corp.

The intranet has become more valuable with every merger, Buonanni says.

"To print policies and procedures and send them out to every new employee after every merger is expensive, and a task we wouldn't be able to do quickly without this infrastructure," he says.

Lockheed Martin also has gained a better understanding of Web capabilities since the last merger, says Art McAnarney, senior staff systems integrator. "We didn't have a clue how beneficial the internal internet would be to us for disseminating information to employees."

With this lesson learned, the intranet team is adding sites intended to be useful after a merger, Buonanni says. For example, WebServe has several new collaborative information sites on which managers can post ideas or proposals and respond to other inquiries. "It encourages interaction," he says.

Filling the dance card

Once the lawyers have shaken hands, regulatory agents have given their nod and the transition team has moved on to the next dance, employees still have to learn to synchronize their moves. Intranets help them get in line, too.

"Intranets enable you to tap into the intellectual capital you have out there and find synergy between employees who might otherwise not even meet,'' Holtz says.

KRI's Shipley points excitedly to a staggeringly large bank of resources available at Dialog, resulting from the merged assets of the two business information suppliers. IT teams are working to combine a M.A.I.D.-developed information management program with a browser-based data search and maintenance tool from KRI. "This is a good customer-information product that can draw on the combined repository we have. We want to show what's good about this marriage," Shipley says.

He also is counting on the intranet to help the new company's far-flung employees work together.

"We have large operations in many locations around the world, so the intranet is going to be key to helping people find who to call for information in our new firm," Shipley says. A priority is building a comprehensive online employee directory.

In KRI's case, employees already had learned to turn to the intranet for resources on the job and about their employment. Firms that have not made that transition find they take a giant step toward it when they merge with such a company (and its intranet).

Rockwell International's intranet was strengthened by its communications role during the company's series of transitions. "It really put Rweb on the map in regard to employee communications and established its credibility as a real-time information medium," Nelson says.

Even an entrenched intranet such as Silicon Graphics, Inc.'s Silicon Junction changed as a result of a merger. The acquisition of Minneapolis-based Cray Research, Inc. taught Sun employees to be less Mountain View-centric, says Kim Daus, a senior communications strategist at Silicon Graphics. Still, SGI literally forced former Cray employees onto Silicon Junction by requiring them to register for personnel benefits online.

"We called it tough love,'' Daus says. "Our goal was to integrate the internal Web into the way employees do their jobs. Silicon Junction is a big part of our culture, and Cray didn't have that.''

SGI allowed some transition, however. Cray employees were e-mail oriented, so the employee communications staff sent memos by e-mail as well as posting them on the Web. An online tutorial trains all new employees on how to find information and resources on Silicon Junction.

Progress is slow but steady. "We see huge spikes of access across all locations when events or news accounts go up online,'' Daus says.

Fancy moves

Some clever maneuvers help lure newcomers to a Web culture and lead them to electronically bond with their new coworkers.

For example, months before The Boeing Co. merged with McDonnell Douglas Corp., Boeing's Webmaster urged departmental intranet page designers to link to a central graphics library whenever they used the corporate logo on their pages, rather than embedding the graphic on each page. The day of the merger, network administrators changed the centrally stored graphics to the new, merged company logo, and the revised design rippled through the intranet, instantly affirming the new identity.

Both firms had intranets, so the merged IT team combined their strengths, says David Weitz, manager of communication for Boeing's Web support team. Boeing's home page, called inside.boeing, provides a strong hierarchical index with many links and references. McDonnell Douglas contributed its storehouse of information on user habits and storage structure.

"If people need information, personal or business resources, they can go to inside.boeing to find out what is available and where to look,'' Weitz says. One of the first pieces of information a user enters is location, and then the server generates different pages as the user drills down through the options. The IT staff added links to McDonnell Douglas sites.

Meritor Automotive, Inc., which spun off from Rockwell International in October 1997, maintained a Web page called Next Steps to apprise employees of the spin-off's status. Its intranet, which was developing as a component of Rweb, sprung full-grown and was renamed InsideAuto with the birth of the independent firm.

"We really used the intranet to promote bonding among our employees," says Laura Bochenek, manager of employee communications at Meritor, in Troy, Mich. The employee communications staff posted photos from many of the new company's 46 facilities around the world, showing employees celebrating simultaneously when Meritor opened its doors.

Corporate Express promotes awareness of colleagues around the globe (especially new family members) by spotlighting one site every month on its intranet home page. The honoree provides an online scrapbook of information about its employees, their work, their community service activities and corporate social events.

SGI has pointedly featured news about former Cray sites, employee activities and personnel on its Silicon Junction home page to help bring the firm into the fold, Daus says. Silicon Junction prominently displayed a tribute to Seymour Cray upon his death a short time after the merger, for example.

Waltzing along

Even firms that have successfully merged with the help of electronic tools acknowledge a cultural challenge.

"It's almost easier if one company has an intranet and the other doesn't, because then you can introduce the employees of one company to the intranet of the other," Holtz says. "But then there's the challenge of making it our intranet instead of their intranet."

The larger the firms, the bigger the challenge, KPMG's Palmer observes. "Sometimes people have emotional investments in the tools and equipment they've chosen. It can be problematic." This is another reason he advises clients to pick standards and build scaleable systems.

Probably fewer than 5% of Corporate Express' acquisitions have intranets, but those that have a large IT staff are immediately brought into the IS council, which includes the chief information officers at every major business unit or site, Maher says. "This goes a long way toward integrating the IS departments of acquired companies.''

Endorsements from management help promote intranet communications any time, but are especially effective with mergers.

"Management has been a strong proponent of the intranet from the start," Meritor's Bochenek says. Since the spin-off, she has obtained staff and funding to expand and redesign InsideAuto.

"It includes more information, not just company background and launch information, but more on employee services, career development and human resources," Bochenek says. And the larger it grows, the more active it becomes, she notes; every day, more employees are joining those on the online dance.