After the bright lights of the merger pass, it’s left to the operations people to make this marriage work. In the case of infrastructure and data, that person is the CIO. He or she needs to move quickly to identify all strategic assets, then find the best way to get them all to work together.
But here’s the dirty little secret behind M&As: millions, if not hundreds of millions, of dollars are lost in trying to bring this off. Start with the 40% of missing data—and that’s just for ONE company. When a merger doubles that equation, think of the potential lost assets—and bad decisions—made in the process.
- In mega-mergers like Dell/EMC or Oracle/BEA or HP/EDS*, there’s a large write-off built into the acquisition to handle the cost of IT integration (license agreements, networks, service providers, data centers, office locations). But it all depends on accurate data—which is so often missing.
- The impact of bad data is already an issue in corporations today where, according to Forrester Research, approximately 40% of the data is not used to make decisions. And Gartner says data quality affects 20% of the labor cost of an IT organization. Source: Gartner, 2011
- Add to that the actual cost of data integration is typically under-funded in the write-off and has a massive, trailing impact on the combined corporation requiring special staff, cost and time delays.
* You can view a list of mergers here.
- CIOs have been struggling for years to solve the data integration problem of many disparate tools and platforms and silo’ed information across the enterprise.
http://blogs.wsj.com/digits/2015/09/10/adobe-cio-faces-data-integration-challenges-with-saas/
- CIOs have already spent years integrating their infrastructures and in the face of a merger, there are new software applications, servers, networks and data centers to consolidate.
http://blogs.wsj.com/cio/2015/08/05/cios-become-disintegrators-when-companies-divest/
- On top of that, the emergence of IoT is compounding the proliferation of bad data.
- It’s a massive undertaking for the CIO to lead the integration in any merger or acquisition. In today’s world, we see CIOs and CDOs as champions of a process and platform approach to protect the reputation, security and efficiency of the combined company. Until there’s true data integration combined with a platform to unify the IT infrastructure, mergers will be slow and costly.
http://blogs.wsj.com/cio/2015/07/13/the-cios-role-in-mergers-and-acquisitions/
The bottom line: the waste that accompanies any merger is an area of huge potential savings—and a chance for an IT department to show how positively it can affect the bottom line.