Know the Risk: Digital Transformation's Impact on Your Business-Critical Applications REGISTER >
Meticulous preparation is the key to Stanley's confidence. "We look at the organization in question and consider their technology approach," says Stanley. "We look at potential sticking points and consider the different functional areas, decide at a high level whether we would want to keep some of their systems or convert them all, so that we don't look up in the middle of the integration and say, 'Uh-oh, how do we do this?'"
Stanley does due diligence on potential acquisitions with a staffer who is sworn to secrecy in order to avoid leaks that could move the stock market or cause problems with the SEC. When he can, Stanley reaches out to his counterpart at the target company, often speaking with the tech executive on the phone, and sometimes meeting in a clandestine location (for one deal, the rendezvous was at an airplane hangar).
But one thing that's no secret to anyone who's going into a Harrah's deal is where the center of gravity in the merged IT organization will be. Like the Borg on Star Trek, Harrah's assimilates its acquisitions, and the surviving IT entity is going to be Tim Stanley's shop. "[Leadership of the merged organization] has not been an issue, I don't know that I've worried about it," says Stanley, a onetime consultant and former CIO of National Airlines. After two years as Harrah's vice president of information technology, Stanley replaced longtime CIO John Boushy in early 2003.
Harrah's knows what it wants out of its acquisition deals before it ever launches one. "Based on the results of previous acquisitions, we would like to see at least a 20 percent improvement in the revenue and operating margins of acquired companies," says Stanley. "We have rules of thumb, having done this so many timeswe can tell on the back of an envelope whether or not a deal is likely to work."
Casinos are information-rich environments, with the data that is captured at slot machines, retail outlets, restaurant points of sale and hotels being constantly warehoused and analyzed in hopes of goosing both the top and bottom lines. Former Harrah's CIO Boushy, who stepped down from the top tech post but stayed on as senior vice president and chief integration officer, has credited technology, such as data-warehouse software sold by Teradata, with powering the successful Total Rewards customer-relationship-management program that has helped drive consistent sales growth at the company's existing properties.
A customer who enrolls in Harrah's Total Rewards program acquires "frequent gambler" points every time she plays any game at a Harrah's casino. Accumulate enough points and she is comped for dinner, drinks, even hotel rooms, with Harrah's knowing just what to offer her, based on its analysis of its customer database. The player will seek out Harrah's properties in order to accumulate more rewards. And in the end, the house always makes it money back and then some. Harrah's has seen same-store revenue growth in 21 of the last 22 quarters.
Stanley wants to impose the same formula on the acquisitions. "We look for the opportunity to apply our technology-driven capabilities to make the business perform better under us than its current owners," says Stanley. "We want to bring efficiencies to the back of the house, the financial and payroll system, and to juice the performance with marketing and branding too."