M&A Integration: New Ways to Contain the IT Cost of Mergers, Acquisitions and Migrations
By Michele Hope
A merger or acquisition creates both opportunity and risk for the companies involved. This is also true for the IT organization tasked with integrating two sets of disparate IT systems into the newly combined company. While much care often covers the consolidation of Messaging, Active Directory and various Line-of-Business applications, secondary systems (like the combined companies' data backup systems) are often consolidated with little thought to the potential risks. What if legacy restore requests are still needed from the prior legal entity? Short of keeping the old backup system running or decommissioning it entirely and having to rebuild it later, is there another option (pre- or post-merger) to help contain IT costs and minimize risks?
On a business level, merging two or more companies can make a lot of sense. However, unless IT is brought into planning at the outset, mergers and acquisitions can quickly run afoul of their intended benefit. Even with early planning, bringing two sets of diverse IT environments together is rarely an easy or inexpensive process, despite the available IT integration playbooks, checklists and expert advice.
With limited IT staff and funds, organizations may wonder what they can do to contain the IT cost of mergers while still successfully fast-tracking their integration of key systems. The following are a few new ways enterprises can manage duplicate back-office systems, especially those associated with backup, data protection and disaster recovery.
Back Office Takes a Backseat, But Data Governance Needs to Continue
In a 2014 survey conducted on behalf of EY GM Limited, most executives identified sales and marketing integration as their top consideration for their most recent major deal, followed by operations-related systems and research and development. Traditional back-office IT functions ranked at the bottom. Based on these findings, it might be safe to assume even the merging of two different data backup systems might be more of a Band-Aid fix than a costly data migration.
Typically, companies decide to consolidate to a single backup system. The retired backup system is then decommissioned without a full risk analysis of what would happen if a legacy restore was then required from the prior legal entity.
When it comes to future eDiscovery and compliance needs, decommissioning and forgetting the old backup system can be very risky. It becomes much harder to restore prior backup data sets unless the organization has access to the same software and disk or tape infrastructures from which the backup data was created. When planning to decommission old backup infrastructure and cut over to the new system, organizations must first build a process that will allows the old data to still be available and restorable. This process should be auditable, defensible and repeatable.
Another option is to power down the old backup system but still keep it on hand in the event of a request. This option is also risky, as there are no guarantees the system will still work later.
Some organizations may even opt to keep the old backup system up and running, with its on-going license and support costs. While this last option may be the least risky, it's also the most expensive.
Unfortunately, keeping legacy systems around just for restoration is not desirable, either. Responding to a quick-turnaround compliance or eDiscovery request, lean IT staff may need to drop everything then painfully sort through volumes of now-unfamiliar legacy backup data from the acquired company. Much of this legacy data is likely on backup tapes stored for seven years or more. According to a 2014 report on preservation costs prepared for the Civil Justice Reform Group, this type of variable cost of eDiscovery performed by non-legal IT staff can account for as much as 90 percent of an organization's total preservation costs.
There surely must be a better way to rein in the IT cost of mergers while still successfully integrating back-office systems.
IT Integration Does Not Have to Mean Migration
After a merger, some organizations may see IT integration as many necessary data migration projects now required to blend data from the acquired company into the acquiring company's systems. Unfortunately, data migration projects remain the most likely for schedule and budget overruns. According to a 2015 Hitachi Data Systems report, 70 percent of customers reported schedule overruns of about 30 percent during a data migration, while 64 percent reported average budget overruns of 16 percent. Such statistics do not lead to fast, post-integration success for most large-scale data migrations. However, despite these potential pitfalls, carefully planned data migrations may still be the best approach to integrate key systems.
For secondary systems like backup systems, however, data migration may not be the best choice, even if an enterprise can afford it. Thankfully, there is another option besides keeping legacy systems on hand or decommissioning them while attempting to migrate their data.
Exploring the Third Option: Managed Restoration
There is a growing trend afoot to use more contained OpEx services for IT. Such services can be billed to companies at a fixed, ongoing rate. For many IT organizations, these types of services have become a welcome change to the steep CapEx costs typically involved in acquiring or managing a company's own IT hardware and software infrastructure.
While much of this trend has occurred with emerging cloud offerings, it also encompasses other managed services. Among them are managed tape vaulting services that store and protect backup tapes offsite in secure, climate-controlled vaults. While some of these services are well established, newer managed restoration offerings are combining traditional tape vaulting with the provider's ongoing ability to search and restore key data from a company's archived tapes. Available for a fixed, ongoing cost, such services now offer a third post-integration option for managing the data from two or more different back-office data protection systems.
Instead of keeping legacy systems on hand, organizations can obtain managed restoration for a fixed, subscription-based cost. With this option, data from decommissioned systems can be saved to tape before being shipped to the managed service provider. Working within the company's existing security, retention and compliance policies, the managed service provider can define an auditable, end-to-end process that is defensible and reliable, with a predictable cost. This provider addresses the use of different tape formats or backup software. When issues or requests arise regarding the data, the organization can contact the provider for fast restoration services. Some providers will even work with the organization to help migrate data to a different format later.
While this third managed service option warrants a closer look for IT organizations that hope to simplify IT integration following their company's next mergers and acquisitions activities. To learn more about storing and accessing your data effectively, watch this video.