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How CIOs tackle change management amid mergers and spin-offs

Clint Boulton | Dec. 8, 2016
Printing giant R.R. Donnelley recently capped a nine-month sprint to divide itself into three businesses, while Western Digital merged with HGST and SanDisk in a short period of time. Here’s how their CIOs did it.

Communication is paramount. O'Brien says they almost couldn't communicate enough as they set expectations with leadership about potential pitfalls so executives understood why things unfolded the way they did. R.R. almost communicated their progress with customers, which helped minimize impact on them.

"We had to get from one side of the ocean to the other and the only path was through the Bermuda Triangle and so we were going to experience rough waters," O'Brien says. "Once people got comfortable with that they just handled it and we didn’t have a lot of meetings on what went wrong, we had a lot of meetings on what’s next. We solved the problem and moved on.”

Gartner analyst Ansgar Schulte says that disentangling assets in a split can be challenging because of the tight timeframes under which they must be completed. It’s also notoriously hard to command businesses’ attention.

When M&A’s are announced IT and business employees tend to treat the combination as a “burning platform,” working quickly to follow their managers’ marching orders until the integration is done. Mergers are difficult because of the degree of change required for business processes and applications, data integration, talent overlap and the reconciliation of assets such as software licenses. “Change management is definitely paramount,” Schulte says, adding that CIOs’ roles in such endeavors are often elevated. “I see it as an opportunity for CIOs to who want to branch out into other capabilities.”

Migrating in a cloud-first world

If R.R. Donnelley’s nine-month separation happened in a relative blur, Western Digital’s business transformation has been a slow burn. In 2011, it agreed to merge with HGST, a move that required approval from China’s Ministry of Commerce (MOFCOM).

Although MOFCOM approved the deal in March 2012 it forbid the sales staffs to integrate until October 2015. Two weeks later Western Digital agreed to buy SanDisk in a deal that closed in May. As 2016 draws to a close, Phillpott is combining the IT assets from the three companies to support IT for 75,000 employees. It’s a Herculean feat, considering that the companies largely operate different software systems. “We really have three of every application,” Phillpott says.

For instance, when Phillpott began his integration Western Digital was using custom human resources software, HGST was using three versions of PeopleSoft, while SanDisk was (and remains) on SuccessFactors. Philpott is in the process of consolidating HGST and Western Digital’s HR systems to cloud software from Workday, to which he eventually plans to also migrate SanDisk employees. There were also different applications for ERP, email and collaboration, among other systems.

Phillpott says he chose to move as much software as he can to the cloud, using, WebEx, Box, ServiceNow and Amazon Web Services, because they provide better self-service and mobility options that on-premises software.


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