Last year broke records for the number of mergers and acquisitions, and this year is when IT managers have to step up and make sure their data centers can help make those deals a reality.
"A well-run data center with reduced complexity makes mergers and acquisitions much easier," says Andi Mann, senior analyst at Enterprise Management Associates.
Last year, announced worldwide merger and acquisition activity hit $3.8 trillion. This not only beat the previous record set in 2000 of $3.4 trillion, but it marked a 38% increase over 2005, according to Thomson Financial. Big names like Mellon Financial took over the Bank of New York for $16.5 billion and Google snapped up YouTube for $8 billion.
According to FactSet Mergerstat, more than 11,700 deals were done. As the dust clears, experts and IT managers agree that companies will feel the full impact of this M&A frenzy directly in their data centers. And they advise organizations to prep now or risk experiencing downtime if they have to merge mission-critical assets.
"Today, the most downtime companies can afford for critical data center infrastructure is measured in minutes." Merged and acquired infrastructure "has to be available right away," says Ryan Osborn, president of the Omaha, Neb. Chapter of AFCOM, a data center industry group.
Observers agree that the key to M&A success from a data center perspective is to focus on virtualization, documentation and logistics.
Osborn, who has been through numerous acquisitions as IT infrastructure manager at a company he can't identify by name, says these three areas will help companies get ahead of the game and turn a time of crisis into one of opportunity. "You won't spend your time just moving infrastructure from one data center to another. You can actually do a technology refresh, get newer equipment and come out ahead," he says.
Infrastructure logistics
For John Musilli, data center operations manager at Intel in Santa Clara, Calif., the most critical piece is knowing about basic logistics.
"I don't always have to know what a server does, but I do have to know how to keep it alive," he says. "It's getting something moved from Point A to Point B and it doesn't matter whether the logistics deal with putting servers on a truck or transferring data over a line."
Musilli has been through a handful of acquisitions in his eight years at Intel and says that he has it down to a science. "As part of the acquiring company, it's my job to provide the skeletal environment to accept any company's assets that come to us," he says.
As such, he keeps a healthy amount of generic racking, generic cabling, extra bandwidth on the network and generic power. "I go generic because I probably won't know what servers, how many slots or what type of power we'll need beforehand. With generic, I can configure whatever I need in minutes," he says. For instance, he uses a universal busway for power so that he doesn't have to be concerned about the particular electrical needs of the acquired equipment.
"We acquired a company and needed to integrate them in a short period of time because their building lease was up and they had to get out of there," Musilli says.
One team was sent ahead of time and spent a year trying to identify each server on 30 to 40 racks. "None of their applications matched our operating systems," he says. As time dwindled, Musilli told them to pack up all the servers and send them to him. "In the end, it took two man-days to move them intact and get them up and running in our data center," he says.
Process, process, process
As companies begin to contemplate future mergers or acquisitions, they must look inward at their own processes and procedures. "Just as important as technology is documentation of processes -- you have to know what people are doing with the systems," says EMA's Mann.
He warns that one of the first obstacles to having a successful merger or acquisition is the reliance on what he calls 'tribal knowledge.' Companies that have data centers where the employees hold all the knowledge suffer greatly when, after a merger or acquisition, those people are let go.
"You have to document the knowledge from those people and figure out how to make the processes work with only a handful of employees," he says.
Mann recommends creating a workflow chart that outlines who's responsible for what parts of the data center. He suggests considering who handles network management, systems management, application management and storage. "This will also help you spot redundancies in skill sets or areas where you are lacking in the event of a merger," he says.
John Burke, senior analyst at Nemertes Research in Minneapolis. says that in addition to knowing who is responsible for what, IT groups must know what systems perform what processes. Though there are several frameworks for documenting this information, the Information Technology Infrastructure Library, or ITIL, is the most popular. ITIL outlines best practices for high-quality delivery of services to support users in terms of financial and business value.
"You have to have really good information about what goes on in your data center in terms of systems and how they interact with each other and how they interface with the business. You should always know what services you offer and how much it costs to offer them," Burke says.
As part of ITIL, many organizations employ a configuration management database and asset management tool to help track elements within the data center. "You need a clear and concise view of the data flow within the data center. If you don't know what has to move together, you might disrupt business during a merger or acquisition," he says.
Companies must also develop guidelines for governance to be referenced during a merger. For instance, if two law firms are merging and have competing clients, then IT groups must ensure that data is protected and there is sufficient access control.
AFCOM's Osborn says good documentation helps the discovery process that companies go through before a merger or acquisition. "If the company you are acquiring has good documentation and good processes in place, the acquisition goes much more smoothly," he says.
For instance, organizations can easily see if application licenses are up to date or if they will have to budget for new software. Also, documentation allows the acquiring company to see how large a processor the application needs and if there is adequate infrastructure to support those requirements. "In some cases, you might be able to lower your software costs if you use a more robust server with fewer processors, but if the application license doesn't allow for that, then you can't," Osborn says.
Osborn adds: "How much money you're going to have to spend on to merge technology can weigh heavily on the decision to acquire a company," he says.
Virtual ease
Nemertes' Burke suggests that one major step to M&A success is to make sure your data center has virtualization tools running on both servers and storage.
Virtualization is important not only for scaling the data center but also for creating a standardized execution environment. "With a well-virtualized data center, you can hide the fact that things are moving around multiple servers and storage devices," he says.
Rob Laurie, CEO at virtualization-software provider Dunes Technologies in Stamford, Conn., says virtualization is useful for companies that want to test application and infrastructure integration before they put their merged or acquired assets into production. It's also helpful for companies that must integrate assets that can't be physically moved, he says.
But he warns that for virtualization to be most effective, merging companies must decide on a uniform platform for their virtual environment. "That way, whatever is virtualized in one company could run in the other company's data center without problems," he says. If they don't have the same environment, they must at least have a compatable data format to gain any benefit.
Intel's Musilli suggests that ITers' natural attention to detail can sometimes overcomplicate matters. "Mergers and acquisitions aren't always as difficult as people make them. They're simply about the ability to assimilate any two environments," he says.
Gittlen is a freelance writer based in greater Boston and the author of Computerworlds "Networking Know-How" column. She can be reached at sgittlen@charter.net.