There's big news in the entertainment world. Viacom and CBS have struck a deal to recombine after 13 years apart.
While the two industry heavyweights may share some IT DNA, the fact is, mergers and acquisitions take time and energy as their IT systems have likely evolved independently during the time they were apart.
If these two industry giants do merge at the end of 2019, without proper planning, recombining potentially divergent systems and applications could result in issues like outages for viewers or advertisers.
The most resilient companies get ahead of those issues before they become embarrassing outages in front of unhappy customers.
That goes for any companies merging their IT, not just broadcasters.
Here's a look at what organizations should consider during the M&A to minimize the chance of outages and other disruptions.
The Choice You Need to Make During a Merger
Nearly every merger includes a meshing of IT systems to some degree. There are several options for how to do this, and the choice should be made with customers, partners and employees in mind.
Sometimes companies keep systems separate if there's a potential issue with them not working well together (at least initially taking a gradual path toward integration). Others might view this as an opportunity to implement a new system from scratch post-merger – by doing away with whatever each company brought to the table. This option is typically the most expensive and involves migrating from two systems. Most companies, however, fall somewhere in the middle, picking and choosing the best systems from each organization. If one company has a better CRM system while the other has better back-end systems, they'll integrate the two along with the best elements of each system.
Of course there's always risk when integrating existing systems with new and unfamiliar ones when the two aren't necessarily designed to work together. The dependencies and compatibilities of the new system might not be clear, and could hinge on assumptions made years ago by the original developers. Bringing a second company's volume of traffic into a database, for example, can be problematic unless it's upgraded to handle the new workload – especially under peak conditions.
How to Minimize the Chances of IT Outages After a Merger
When you merge IT systems, you're asking parts of the infrastructure as well as applications to communicate in ways they probably weren't designed to. What's worse, changes to those applications often go undocumented.
Having the right information, in the right hands at the right time is important to maintain business as usual, but it can be a game changer during times of transition and uncertainty. Agile response requires situational awareness and situational awareness requires information.
In the case of CBS and Viacom, the merged company will have a library of 3,600 film titles and 140,000 TV episodes. It will also start with 22% share of the U.S. television audience, which is currently larger than Comcast, Disney, Fox Corporation, Discovery or WarnerMedia. Not to mention its increased ability to introduce new advertising technology and ad-friendly streaming video.
Unfortunately, during a merger, given the added pressure, interest and visibility from the board and executives, shortcuts may be tempting.
How do you uncover these areas of risk during a merger? In the end, resilience comes down to planning and testing. There are four components to this:
- Align IT with long-term goals and strategies. Is this a one-off merger or the first in a series of acquisitions/ mergers? How you merge IT environments depends on and should be aligned with your overall strategy. If you're considering a phased approach to merging IT, make sure you follow through on the future phases. It can be easy to let a temporary fix stand, but it becomes an ongoing risk for failure.
- Map application dependencies. When you tie together multiple systems, you can't rely on the documentation of different applications' dependencies. Invest in the effort to properly map applications, understand their interdependencies and tier them based on their importance to your business. You might find it more effective to leverage automated discovery technologies and consultants or providers with experience in mapping dependencies.
- Test, test, test. One of the major differentiators between those who just scrape through uncertainty and disruption and those who turn them to their advantage is planning. The more you can plan out the integration, the more you're able to test it before it goes live. The more you test it, the better your chances of finding and fixing issues in production systems before they become embarrassing public failures.
- Make sure DR planning is part of the process from the start. Don't wait until a later phase as you rush to complete the integration. Make disaster recovery (DR) part of the plan from the start. It can aid in mapping dependencies and provides a failsafe in case anything goes wrong -- whether an issue with the integration, a natural disaster, a cyberattack or some other kind of outage. But don’t just set it and forget it. Be sure to test your DR plan at least twice a year and update it throughout the integration process as systems and dependencies change.
Change can create fear and anxiety. In a world of 24-hour news cycles and social media, even relatively minor changes or disruptions now have the potential to upset the money-making capability of the wider, and often delicately balanced, commercial web in which organizations operate. But M&A can also unify IT systems, open new opportunities and create economies of scale when handled correctly.
We are in board rooms across the globe helping executives prepare for uncertainty such as M&A activity, cyberattacks, severe weather and more. Not only do we understand organizational strategy in dealing with uncertainty, we also see these incidents as an opportunity to make an organization's business operations more agile and resilient.
By focusing on planning, testing and integrating DR from the beginning, organizations working to merge their systems can enter the market as a unified company more resilient to the outages and issues that can accompany M&A.
Have questions about ensuring resiliency during M&A activity? Contact us.