Streamlining IT operations, possibly at the expense of free beer

Computerworld - The IT department at St. Louis-based Anheuser-Busch Cos. is considered the employer of choice in that city for its benefits, which include two free cases of beer (or a nonalcoholic beverage) per month. The overall working environment is fine, too. And with an IT department of more than 700 people, including consultants, it is easily one of the largest technology employers in the area.

But what will Anheuser-Busch's IT department look like after Belgium-based beverage InBev NV/SA completes its $52 billion acquisition (download PDF) of the company later this year?

The future for Anheuser-Busch's IT may be in outsourcing. In 2005, InBev outsourced its IT functions, including its data center, to IBM and its global communications infrastructure to BT Global Services. More than 160 InBev IT employees were transferred to IBM. InBev followed that move a year later with further consolidations as it moved to shared services.

InBev's decision three years ago to outsource its IT department fits with a general trend of companies deploying IT outsourcing to help prepare for mergers and acquisitions, said Linda Cohen, an analyst at Gartner Inc. "It just makes the deal easier," she said. And unless an acquiring company is experiencing problems with its current outsourcing relationship, merging firms will often extend their outsourcing arrangements to the acquisition. "Once you start outsourcing, you tend to do more of it," she said.

InBev said it expects that the two companies will reduce costs by combining certain aspects of the businesses. The merger, said InBev, "will yield cost synergies of at least $1.5 billion annually by 2011." It said it will accomplish this through "sharing best practices, economies of scale and rationalization of overlapping corporate functions."

How much of those cost savings will be IT-related is not known. A spokeswoman for Anheuser-Busch said it is too early to discuss the IT implications of the move and in an e-mail wrote, "The deal itself is not expected to close until the end of the year. As a result, it's premature to talk about specific integration plans."

ERP systems are one obvious area for cost savings. Both companies use SAP, and the merger means they will likely be able to consolidate licenses and systems management.

Although the St. Louis location will remain open, the IT operations may end up being run from an outsourcer's data center or even managed from Europe. Those are the kinds of steps that firms sometimes take in mergers, said Cohen.

Two consultants who previously worked at Anheuser-Busch IT said the company was considered a highly desirable employer -- if you told someone that you worked for the company, "they were very impressed," said one consultant, who didn't want his name used. Another noted that the free cases of beer also meant that Anheuser-Busch employees were often invited to parties.

Read more about outsourcing in Computerworld's Outsourcing Knowledge Center.