Taking on new technologies, end users and IT workers from acquired or recently blended companies present myriad challenges for CIOs.
A corporate merger can resemble a high school lab experiment, where labels on vials of volatile elements are removed or switched. To avoid messy explosions, the steps that IT executives take in integrating hardware, software, end users and IT staff can be among the most critical elements to the successful outcome of a merger.
While merging disparate networks, applications, databases and directories is challenging enough, decisions on IT personnel and strategies for pairing newly acquired employees and curent infrastructure are just as important as making sure all the new and old boxes talk to each other.
One IT consulting firm based in the Southwest recently went through the growing pains of two mergers that grew the company from about 400 employees to about 700. The first was an acquisition of a smaller consulting company, while the second was the addition of an entire office of former Arthur Anderson employees.
The smaller acquisition brought in new systems, hardware and staff, says the CIO at this consulting firm, who requested anonymity because of the nature of the personnel decisions. “We went through a fairly extensive due diligence on each of the major IT systems they had in place and we had in place to determine which ones were best,” he says. The company ended up adopting some of the acquired company’s back-end systems and converted a Lotus Notes-based employee review process to a browser-based application.
“The acquired company had put a lot more effort into review workflow, so it was easier to say that it was better,” he says.
Overall, the CIO says merging the two companies’ network hardware and payroll, accounting and back-end software was less challenging than consolidating the IT staff. “I had a staff of three and the acquired company had a staff of three,” he says. “And I was told, when all is said and done, that I would have a staff of three.” It helps that end users of the highly dispersed firm install and support IT for a living.
This forced the CIO to put his staff through a re-interviewing process “which was really tough and unpleasant.” Two staffers took jobs at other companies, and the consulting firm ended up replacing one of its own IT staffers with one of the acquired people.
“There is a natural bias to think that the people you hired are better than the people that are coming in,” he says. “You really have to concentrate on saying ‘OK, I’m going to give these new people a fair shot.’ “
The biggest overall merger integration challenge happened after the firm took on an office of around 500 employees from a larger company. The new company had to adapt to the acquiring firm’s technology, but still had an opinion about what the business should be using. It took more than a year for the acquired consultants to be integrated into the firm to the point where they felt like one company.
“One of the mistakes I feel we made wasn’t that we gave them no choice on technology but that we let them do certain things the way they used to,” the CIO says. For instance, the acquired employees were allowed to set up workflows, network-based file-shares, and other ways of using the network to do things that did not fall in line with the consulting firm’s standard practices. ” That fosters the idea that ‘we’re not really a part of you.'”
Another firm that has seen significant IT changes brought through mergers is CareGroup Healthcare Systems in Boston, which manages four hospitals and seven affiliated healthcare organizations, including Harvard Medical School.
As CareGroup’s IT organization grew larger after each acquisition, John Halamka, the group’s CIO, decided to overhaul the structure of how IT services were delivered via the organization’s 50-person IT staff.
“One of the things that tends to happen if you start to keep islands of individuals, you get little fiefdoms, stovepipes and lack of communication,” Halamka says.
Instead of keeping IT staff at the acquired organizations intact, Halamka consolidated all the groups into one entity. “This gave us one layer of accountability and one team, instead of five to seven different teams.” It also facilitated adoption of standard practices and technologies, which can rollouts.
The reorganization also aids in career development, he says. “It’s easier to get promoted and learn new things in a [large group] than it is in a group of 10, where everyone is kind of set in their niche.”
Amid the acquisitions, Halamka learned about network consolidation the hard way. “You can’t just simply bridge a variety of former campus-based networks to create an enterprise network,” he says. “I had taken all of these campus networks and said, ‘Let’s just glue them together.'”
As CareGroup grew at the beginning of this decade, hospital networks were plugged into each other in a large, flat network. The Layer 2 spanning tree protocol was not strong enough to tie together CareGroup’s sprawling switched network connecting campuses. In 2003, CareGroup’s flagship hospital, Beth Israel Deaconess Medical Center, went through a widely publicized network outage that lasted three days; a fault in the spanning tree protocol was to blame. CareGroup has since overhauled its architecture to include Layer 3 switching with distribution, aggregation and LAN core layers for redundancy.
Since CareGroup overhauled its IT services, Halamka is using a centralized approach to network architecture and directories. CareGroup recently collapsed separate directory technologies such as Lightweight Directory Access Protocol, Novell Directory Services and Microsoft Active Directory into a single Microsoft Active Directory schema.
“We had to go through a couple-year project and go through every one of those directories,” he says. CareGroup now has one main directory of its 14,000 employees, along with subdirectories by categories such as hospitals, doctors, nurses and administrators.
“That allows you to do things like common e-mail and common security,” he says. “It’s really hard to do this unless you have a directory with all of your users.”
