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When multi-billion companies are involved in an acquisition with 100,000 employees and more than $10 billion in combined revenue, executives typically must use statesman-like diplomatic phrasing to show that both sides are valued equally. But with the fierce backdrop of Las Vegas and casino giants Harrahs and Caesars, little is typical.
The CIO of the acquiring firm—Harrahs Entertainment CIO Tim Stanley—began his meetings with the acquiree (Caesars) staff on the typical assumption, which is that both sides want to retain as much of their technology, procedures and culture as possible.
But like a blackjack veteran deciding to hit on a hard 19, that first meeting had surprises for Stanley.
“We went into this assuming we were going to blend the two companies” from an IT perspective, Stanley said, but the Caesars people didnt want that. “They actually didnt feel that great about their technologies,” he said, adding that after a briefing on the Harrahs systems, the Caesars people said, “Screw it. Lets go with your systems.”
Why? “Part of the reason was technical but a lot of it was technological and managerial. They saw the upside: The systems that they had didnt really enable things very well,” Stanley said. “Their reliability wasnt perceived very well and IT wasnt seen very well.”
The reason for the merger had little to do with technology, though, and everything to do with the power of the combined revenue.
“The revenue upside is so compelling that it made sense to be running off the secret sauce that Harrahs has developed over the years, but it doesnt mean its not messy as hell,” Stanley said.
The start of that messiness was the merger and cleanup of backoffice systems, including payroll, financial and human resources. Although it may not be crucial to getting more gambling and entertainment dollars into the operations bankbook, it needs to be solid to support everything else. “What do we compete on? Its not back-of-house prowess,” Stanley said.