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on 26 September 2012

Open cloud computing: mergers and aquisitions

Welcome to our new blog series. Over the next couple of months (at least) we’re going to take a look at the open cloud and what it means for businesses like yours.

We believe there are lots of benefits to a genuine open cloud solution. And we’re going to start with a subject that always comes up in tough times: mergers and acquisitions.

Don’t be shy to let us know what you think.

Mergers and Acquisitions

In August Thomson Reuters CIO Jane Moran might have been forgiven for exhaling a sigh of relief. Although she had done the hard work in integrating the IT organisations of two global business information giants following a 2008 merger, it took four years until these expenses were finally wiped from the company results, contributing to a strong increase in earnings per share.

As the Reuters’ case proves, mergers and acquisitions give IT a chance to shine with strategic and tactical contributions. Equally, they can expose IT strategies unable to adapt. Too many businesses take IT integration lightly during mergers, according to Forrester principal analyst George Lawrie. In a 2010 report he says merging companies struggle to achieve a sought-after enterprise-wide view from mutually incompatible systems.

That’s why CIOs need to be involved in merger discussions early to avoid integration nightmares. And they should be prepared for possible takeovers even if no discussions are currently taking place. It’s just good practice.

Cloud’s Silver Lining

Part of the problem in combining IT organisations is incompatible applications managing a range of business activities including HR, finance or enterprise resources. CIOs may choose to adopt one or other of the existing incumbent systems, or migrate both to a new option. Sadly any of these approaches can result in ugly data management problems and exceed the capacity of supporting infrastructure. A question emerges: can server infrastructure be consolidated into fewer datacentres?

Cloud computing’s inherent agility may provide part of the solution. By expanding out to a public provider, applications can rapidly get the additional capacity they crave during mergers. Similarly, applications hosted on an internal cloud infrastructure can benefit from the resources freed up when redundant apps are retired.

But to get the most out of cloud computing in during merger periods, CIOs may want to consider the technology underpinning the cloud and whether it can keep up with rapidly changing business needs.

Where infrastructure, platforms or applications are hosted in the cloud, using open interfaces and common platforms can allow organisations to build solutions that integrate public clouds, private clouds and current IT systems.

Beware closed cloud standards

CIOs should be wary of proprietary standards because they may not help during period of change. Vendors use their own APIs, image formats and storage formats, which mean their clouds are fundamentally incompatible with anyone else’s. It can be complex and costly to change cloud suppliers or push workloads out to public clouds.

Businesses building their cloud infrastructure on an open platform that uses de facto industry standards such as OpenStack will find it easier to move between private cloud platforms or push workloads out to public clouds during a merger programme.

Bloomberg research shows finance available for M&As has reached its point highest since 2008. It’s another reason why CIOs should consider the benefits of open architectures during the deployment on cloud technologies, whether or not a merger is currently on the cards.

Of course, mergers and acquisitions are just one form of change. It’s just one reason why the flexibility of open cloud standards provide the agility that modern businesses require.

In our next installment we’ll take a look at the impact on time to market.

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