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Change is the one constant – and nothing has more change than the world of information technology. Recently we’ve seen epic mergers and divestitures — Hewlett Packard splitting into Hewlett Packard Enterprises and HP Inc (HP Ink – so close!), Dell acquiring EMC, and Google creating multiple companies under their Alphabet umbrella.
Organizational changes of any kind can be challenging, but on this scale the risk and IT headaches reach a higher plane. Splitting up a company’s IT infrastructure is not as easy as replicating it or just drawing a dotted line down the middle. What’s the key to success?
To take a closer look, I spoke with Richard Donaldson, director of Infrastructure Management and Operations, eBay. Having recently undergone the divestiture of PayPal, Richard explained that the main challenge for their team was how to separate the compute resources and the data between the two companies.
This was no small task. eBay and PayPal had 125,000+ assets and hundreds of vendors providing business services across a company.
Luckily four years ago eBay undertook an inventory management project to understand what they had and what it was used for, and what was allocated and what was not. They established that a portion of the infrastructure was unallocated and they realized they could make better gains by having more of a just -in-time concept, so they looked to optimize what they had as unallocated assets.
From our work in helping firms divest of or merge IT systems, here’s a summary of ServiceNow’s best practices:
1) Audit all IT processes – Look at each process and establish what actually happens. Once you understand what you are dealing with, you can make more informed decisions. Do you know what assets or inventory you have globally, who owns them, how they were purchased, what business units they are allocated to and even if they are still used?
You might think that you do, but if you really had to untangle a business service—such as employee onboarding– and divest it, could you honestly say that you knew all the components that made up that service? I’d wager most people do not. This lack of visibility can lead to replication and uncertainty. I’ve see companies with infrastructure still in commission that was originally used to support a service that is now outsourced!
2) Decide to “fix it now” or “clone it” – You need to make a choice to clean out what you found in the audit and build a system that allows you to manage things right. The clone-and-go option replicates the architecture you already have to just lift and shift it. The downside – you might be replicating something that is redundant and simply providing a short-term fix without addressing the long-term issues within IT processes. eBay chose the “Fix-it-now” route and took the first step of upgrading their IT management system, initially using ServiceNow as a foundation for the divestiture and then as a platform for more sustainable future success for both companies.
3) Plan for three stages – First create an intermediate system that both companies could use as the divestiture built up. In this way both companies are using the same data and process to manage the way they work by replicating the intermediate system to two new company instances. Second, flip the switch and split the networks. Third, delete the intermediate system. Once the divestiture happens you can remove the linking system allowing both companies to work independently on system that they have designed and optimized together
Richard added that companies need to take a rigorous approach to standardization and enforcement. Service management is a clutch player in these key aspects:
- Standardization – We all manage servers, routers, workflow, etc. Service management helps you standardize on a platform and see what you have.
- Discipline and operational rigor – A functional CMDB gives you much-needed accuracy in the asset tables.
- Visibility to cut costs – Don’t overprovision! Know what you have and need. Right size inventory and support agreements.
“Divestitures become a lot easier when you have a good service management philosophy. Get your arms around what you have and how it’s used. It’s not sexy, but you need to do it. There is no point in recreating something that is not used or decommissioned,” Richard said.
Wise words from a man who could probably write a book on this!
With this insight and control, you’re in a powerful position to absorb or divest business—on any scale.
If you want to go deeper, check out how Rio Tinto and Pacific Aluminum sped their split.