Joseph Farrelly, CIO of Aventis PharmaBy Joe Farrelly | Posted 2003-05-01 Print
In the age of consolidation, making systems work may require you to take some systems out.
I was Nabisco's first CIO, arriving just as the firm was centralizing its information technology systems out of four different operating units. Seagram was just going through a series of acquisitions and divestitures when I was brought in. Then Vivendi acquired Seagram, and I became CIO of the larger corporation. Later I came to Aventis, which was itself just a few years removed from the fusion of Hoechst and Rhône-Poulenc.
Senior technology experience can shift from financial services to food manufacturing, from movies and music to liquor and wine to pharmaceuticals. This is more true today than ever before due to a fundamental change: information technology organizations have become system integrators. We buy hardware, software and expertise—and then match it all to our business plan. Being competent at developing software was once a priority—now you buy that off the shelf, maybe 85% of the time. It's not about developing the best technology anymore. It's about mastering project management in the implementation of technology.
The financial systems at Aventis, for example, are essentially the same as those at Vivendi or Nabisco. So the skill with which you integrate or disintegrate technology becomes the key issue. During my stay at Seagram, the company was intensely focused on big-business transactions: selling Tropicana, buying Polygram, being acquired by Vivendi, selling the spirits-and-wine business—four years of business-transaction intensity. But is it harder to buy or to be bought? Is it more difficult to add systems to what you have, or to separate existing systems? The truth is, it's equally tough. The activities of separating a business are equal to bringing it together.
Ten months after Seagram sold Trop- icana, it purchased Polygram. Accounts receivable or order processing may be distinctly different for selling orange juice than it is for selling CDs, but many of the same systems are used. A lot of integral technology did not have to change. But we still faced a dilemma: We weren't simply shedding non-core assets—we were changing what our core assets were.
This process was even more complex during Vivendi's divestiture of Seagram Spirits and Wine, a business associated with distinguished brand names—Chivas Regal, Crown Royal, Absolut. We had to both logically and physically separate the businesses. For security and confidentiality reasons, the technology infrastructure itself had to be altered: People sitting in adjoining cubicles might have to be on separate LANs and e-mail systems. Human-resource and financial applications had to be split to serve both the divested and the divesting companies.
Whenever you make an acquisition and have to integrate—or make a sale and have to disintegrate—that may mean becoming less operationally efficient temporarily. But if it enhances the value of the company, you do it, because you always have to be increasing both the top and bottom lines.
The initial projects are simple enough. You consolidate data centers, consolidate the network. Those can be done with a reasonable lack of intrusiveness. But soon you'll want to integrate applications. That's going to be intrusive to the business—there's no way around it. But you can't disrupt the company simply to make your systems better organized or more pristine. The business is king.
The process was easier at Aventis, thanks in part to openness and transparency. Our corporate values—trust and respect and courage, a sense of urgency and networking—contributed to quicker integration. But there was one critical move: To support integration efforts and avoid business interruption, we set aside significant funds to enhance help desk services, collaboration resources and training services. People may have to radically change what they're doing, and it may hurt, but you don't have to make them pay for their own pain.
Written with Joshua Weinberger
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