Mergers & Acquisitions
- 1. Mergers & Acquisitions: Data Management Strategies That Support Business Growth Information Management Rick Buglio Dave Chiou TPM, IBM Information Management Client Technical Professional © 2011 IBM Corporation
- 2. Information Management Agenda Keys to Successful M&A Activity Understanding Enterprise Data Management Managing Data Growth Maximizing Development Efficiencies Protecting Data Privacy 2 © 2011 IBM Corporation
- 3. Information Management Mergers and Acquisitions: What does it mean to you? A) A time to celebrate B) A time to jump ship C) A time to prepare for one of the biggest challenges of your life D) A chance for you and your organization to evolve 3 © 2011 IBM Corporation
- 4. Information Management IT Integration Approaches to Promote Successful M&A Activities 1. Co-existence • Distinct product lines and customer needs • Operations will continue to run independently • Limited opportunities for IT migration • Low-cost integration 2. Absorption • Two companies in the same industry align to eliminate competition and reduce costs • Most opportunity for IT integration • Significant savings can be achieved by consolidating applications, etc. • Which systems to choose? 3. Best of Breed • Usually small companies aligning to increase market share • Longer integrations/timelines/complexity issues • Choose the best systems to support the new organization • Can be costly 4. Transformation • Two small companies in the same industry or supplier/customer • Companies come together to form new joint technologies • Opportunities to retire older apps from both companies • Timelines are long; can be risky and expensive • Opportunity can lead to big rewards, new technologies, etc. Source: Forrester Research, “The Impact of M&As on IT, 3/31/05, Julie Giera 4 © 2011 IBM Corporation
- 5. Information Management Why is Early IT Involvement Essential? Successful IT integration can truly make a Merger/Acquisition succeed – But, IT is often left out of the initial stages of M&A activity!! IT can bring operational efficiencies not even considered! A recent CIO Insight article revealed, “From our vantage point, viewing numerous integrations across industries, it is clear that senior management still tends to approach IT integration in a perfunctory, arms-length manner. This both tempts fate and misses out on the very real benefits a well-planned and effectively executed IT integration plan can bring.” 5 © 2011 IBM Corporation
- 6. Information Management Failures Caused by Lack of IT Involvement 1) IT does not provide accurate estimates of time required to achieve IT synergies 2) IT does no provide an accurate estimate of costs But Success is important! “$2 of every $5 of merger synergy comes from IT” 6 © 2011 IBM Corporation
- 7. Information Management IT Strategies for M&A Success CIOs need to make clear decisions about three important synergies: 1) Applications 2) Infrastructure Technology 3) Business Processes Examples: • Consolidate data centers • Rationalize vendor contracts • Renegotiate vendor licenses for a larger base • Customer Service Centers • Security Development 7 © 2011 IBM Corporation
- 8. Information Management Don’t Forget About the Data 8 © 2011 IBM Corporation
- 9. Information Management Data Issues to be Aware of during M&A Application Decommissioning Data Growth Data Retention Data Privacy Application Development 9 © 2011 IBM Corporation
- 10. Information Management How Can I Remove Older applications? Application Decommissioning – Definition: Remove a system from active service but … retain access to its business-critical data • Retire an application • Consolidate redundant systems into a single “enterprise standard” • Migrate portfolio to lower-cost platform • Consolidate and eliminate unsupported databases and versions – Benefits • Reduce IT infrastructure costs (hdw, sfw, labor costs) • Reduce infrastructure complexity (eliminate confusion) • Reclaim assets 10 © 2011 IBM Corporation
- 11. Information Management Lawyers ... Ya Gotta Love ’em Legal Costs of E-Discovery Identify Appropriate Data $200/hour Preserve the Data $100-$300/hour Collect the Data $200-$300/hour Review the Data $120-$350/hour Produce the Data $1000-$2100/hour Debra Logan, “Mapping Technology and Vendors to the Electronic Discovery Reference Model,” GartnerResearch, ID Number: G00153110, November 9,2007. 11 © 2011 IBM Corporation
- 12. Information Management Application Decommissioning the Data Reports Archive Retire Archived Data Decommissioned Files Data Universal Access to Application Data ODBC / JDBC Excel XML E-Discovery 12 © 2011 IBM Corporation
- 13. Information Management Have a Storage Plan for the Entire Lifecycle of Data Current Active Online Offline Data Historical Archive Archive 1-2 years 3-4 years 5-6 years 7+ years Non DBMS Offline Retention Platform Retention Platform Production Archive Database Database ATA File Server CD EMC Centera Tape IBM RS550 Optical HDS Compressed Compressed Compressed Archives Archives Archives © 2011 IBM Corporation
- 14. Information Management Application Decommissioning Benefits Reduce Business Risk: – Reduce risk and cost by retiring obsolete or redundant technologies. – Reduce reliance on aging technologies, unsupported versions, scarce technical skills and diminishing know-how by retiring obsolete applications. Minimize Compliance Risks: – Enable application-independent access to historical business data for retention compliance – Preserve business records in audit-ready, immutable, point in time format; produce on demand Reduce IT expenses: – Reduce hardware, software, (Application, Data Base and OS), software maintenance, human resource and infrastructure expenses. – Reclaiming IT assets and resources for other business purposes. Infrastructure Today Infrastructure after Sunset 14 © 2011 IBM Corporation
- 15. Information Management The Digital Data Explosion The volume and variety of digital information is exploding as our Planet becomes more instrumented, interconnected and intelligent This year, the amount of digital information is expected to grow to Today, the average car has 100 Every week, the average more than 988 Exabytes – the million lines of code. The information worker spends equivalent to a stack of books from Airbus A380 alone contains 9.6 hours searching for the sun to Pluto & back over 1 billion lines of code. information 15 © 2011 IBM Corporation
- 16. Information Management Challenges of exponential data growth Missed SLAs and declining customer satisfaction due to eroding or unpredictable application performance Transaction & data volume growth drive up infrastructure costs Multiple instances of production data – back-up, training, testing – can compound data growth Archival processes are complex requiring full business context for e-discovery Are you controlling your data, or is it controlling you? 16 © 2011 IBM Corporation
- 17. Information Management How are organizations responding to data growth? Use database Performance partitioning Use database Database Size vendor compression Buy more Storage & CPU hardware Hardware Capacity 17 © 2011 IBM Corporation
- 18. Information Management Customers Are Asking Archiving Questions What data should I be saving, for how long and for what reasons? What data should I be deleting? How am I going to find the data when I need it? What do I do with the data when I no longer need it? What is the most appropriate solution to meet my archiving needs? What is the cost/benefit analysis to support an archiving solution acquisition? 18 © 2011 IBM Corporation
- 19. Information Management How does archiving work? Production Data Archives Archive Reference Data Inactive/Historical Data Retrieve Historical Data Can selectively Active Data restore archived data records Universal Access to Application Data ODBC/JDBC Application E-Discovery Data Find XML Report Writer Data Archiving is an intelligent process for moving inactive or infrequently accessed data that still has value, while providing the ability to search and retrieve the data. 19 © 2011 IBM Corporation
- 20. Information Management Complete Business Object Order Represents application data record – orders, invoices, customer – Referentially-intact subset of data across related tables and applications; includes metadata Provides “historical reference snapshot” of business activity 20 © 2011 IBM Corporation
- 21. Information Management Archive a complete business object and retain integrity Production Databases Archive Files Customer Customer Number Name 8675309 John Smith 5025202 Jane Jones Customer Customer Customer Order Order Product Number Name Number Amount Number CRM / Oracle Unix 50505 Product A 306959 Product B Archive Order Number Product Customer Number Order Amount Order Entry POS / 8675309 $1,056 DB2 for z/OS 5025202 $5,690 Account Receivable / DB2 Linux 21 © 2011 IBM Corporation
- 22. Information Management Comparing access methods for archive data Mashup Center XML Application • Reporting • Industry standards • Native look and feel • Known requests • Messaging services • Existing skills used • Requirement for executives • Customizations • Support vendor ERP solutions Ensure access & restore capabilities based on functional user and business process requirements. ODBC/JDBC Data Find • SQL • Ad hoc requests • Custom application access • Web based for anytime, 22 • DBA and developer access anywhere access © 2011 IBM Corporation
- 23. Information Management Benefits of data growth management Reduce/Control Costs: – Storage costs – production level data is typically one of the most expensive storage platforms – Administrative costs – software license fees, hardware costs & the labor to manage data growth – Upgrades/Migrations – reduce the downtime during the data conversion – Application consolidation/retirement – move the data needed while maintaining access to the original data in its business-object form without the original application Improve Application Performance: – Improved availability – no downtime caused by batch process overruns; meet SLAs – Improved/faster backup and recovery – bring up important/recent data first, bring up older/reference data as conditions permit 23 © 2011 IBM Corporation
- 24. Information Management Gartner Key Findings “We believe the market for database archiving and application retirement is vibrant and dynamic, and will see continued solid growth over the next five years” “Organizations are looking to database archiving vendors that offer packaged and custom application support in order to control storage growth, improve application performance, and support compliance, audit and e-discovery activities” Vendor Market Share by Vendor Market Share by 2010 Revenue Total Number of Customers Source: Gartner, Inc., “Market Trends: World, Database Archiving Market Continues Rapid Growth, 2011”, S. Childs & A Dayley, September 2011 24 © 2011 IBM Corporation
- 25. Information Management Data Multiplier Effect Actual Data Burden = Size of production database + all replicated clones 200 GB Production 200 GB Test Total 200 GB Development 1200 GB 200 GB Backup 200 GB Disaster 200 GB Quality Recovery Control 25 © 2011 IBM Corporation
- 26. Information Management Current Approaches Clone Production Request for Copy Wait After Production Production Database Database Copy Copy Changes Manual examination: Right data? What Changed? Correct results? Unintended Result? Someone else modify? 26 © 2011 IBM Corporation
- 27. Information Management Test Data Management: Current Challenges Infrastructure Costs – higher HW storage costs Development Labor – higher costs Defects – Can be expensive – Cost to resolve defects in the production environment can be 10 – 100 time greater than those caught in the development environment Data Privacy/Compliance – Data breaches can put you out of business 27 © 2011 IBM Corporation
- 28. Information Management Employ effective test data management practices Production or Production Clone Relational subset Extract Gold Master 2TB 25 GB • Create targeted, right-sized test environments 25 GB Development • Substitute sensitive data with Unit Test fictionalized yet contextually accurate data • Easily refresh, reset and maintain test environments 50 GB 100 GB • Compare data to pinpoint and resolve Training application defects faster Integration • Accelerate release schedules Test © 2011 IBM Corporation
- 29. Information Management Subset: Key Capabilities Precise subsets to build realistic, “right-sized” test databases – Application Aware – Flexible criteria for determining record sets – Business Logic Driven – Complete Business Object: Referentially intact subsets – Across heterogeneous environments Legacy Oracle ERP CRM 29 © 2011 IBM Corporation
- 30. Information Management The Latest on Data Privacy 2008 statistics – $202 •Cost to companies per compromised record – $6.7 Million •Average cost per data breach “incident” – 40% •% of breaches where the responsibility was with Outsourcers, contractors, consultants and business partners – 253+ Million •TOTAL number of records containing sensitive personal information involved in security breaches in the U.S. since 2005 * Sources”: Ponemon Institute, Privacy Rights Clearinghouse, 2008 30 © 2011 IBM Corporation
- 31. Information Management The Latest Research on Test Data Usage Overall application testing/development – 62% of companies surveyed use actual customer data instead of disguised data to test applications during the development process – 50% of respondents have no way of knowing if the data used in testing had been compromised. Outsourcing – 52% of respondents outsourced application testing – 49% shared live data!!! Responsibility – 26% of respondents said they did not know who was responsible for securing test data Source: The Ponemon Institute. The Insecurity of Test Data: The Unseen Crisis 31 © 2011 IBM Corporation
- 32. Information Management The Easiest Way to Expose Private Data … Internally within the Test Environment 70% of data breaches occur internally (Gartner) Test environments use personally identifiable data Standard Non-Disclosure Agreements may not deter a disgruntled employee What about test data stored on laptops? What about test data sent to outsourced/overseas consultants? How about Healthcare/Marketing Analysis of data? Payment Card Data Security Industry Reg. 6.3.4 states, “Production data (real credit card numbers) cannot be used for testing or development” * The Solution is Data De-Identification * 32 © 2011 IBM Corporation
- 33. Information Management A Victim of Their Own Success Supply and Demand Model – The sheer amount of stolen information being sold in the cyber-underground has pushed down prices Prices for Stolen Credit Cards on the web are down to $2/US Visa Card Prices for Credit Card Numbers/Bank Account Numbers with PINs down to $10- $20 (2008) from $500 (2006) source: Eweek 8/20/09 Brian Prince 33 © 2011 IBM Corporation
- 34. Information Management What is Done to Protect Data Today? Production “Lockdown” – Physical entry access controls – Network, application and database-level security – Multi-factor authentication schemes (tokens, biometrics) Unique challenges in Development and Test – Replication of production safeguards not sufficient – Need “realistic” data to test accurately 34 © 2011 IBM Corporation
- 35. Information Management What is Data De-Identification? AKA data masking, depersonalization, desensitization, obfuscation or data scrubbing Technology that helps conceal real data Scrambles data to create new, legible data Retains the data's properties, such as its width, type and format Common data masking algorithms include random, substring, concatenation, date aging Used in Non-Production environments as a Best Practice to protect sensitive data 35 © 2011 IBM Corporation
- 36. Information Management Data Management Yields Stronger Business Outcomes Optimize Performance Improve application performance by segregating historical transaction records to a safe, secure archive Achieve Service Level Agreements (SLAs) consistently Accelerate delivery of revenue-generating applications Mitigate Risk Manage and access archived data; enable prompt, accurate responses to audit or e-discovery requests Protect data privacy and safeguard shareholder loyalty Control Costs Reduce infrastructure costs; enable cheaper tiered storage Minimize cost of compliance; reduce opportunity for fines & penalties Isolate application errors early in the lifecycle, where they are cheapest to fix 36 © 2011 IBM Corporation
- 37. Information Management 37 © 2011 IBM Corporation