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Acquired Knowledge

Every acquisition has involved its own challenges and lessons for Harrah's. An early deal for the Rio Hotel and Casino, for example, taught Harrah's to address integration issues before the ink dries on an acquisition. "Their systems were a rat's nest," says Stanley. "We didn't change much technologically, and that ended up being a big thorn in our side for a couple of years. Finally, we went back and looked at the problems again, and we bit the bullet and took on the job of converting their systems."

Currently, Harrah's is busy integrating the assets of Horseshoe Gaming. Stanley says Harrah's "got smart" about technology integration by investing in integration middleware, such as Tibco Software Inc.'s Business- Works, which allows Harrah's to use acquired systems "even if the backend is still ugly." The ability to show its workers modern-looking graphical interfaces, instead of the old-fashioned green screens, on an otherwise workable system is a confidence builder, he says. "It gives us more flexibility about an acquisition like Caesars, because we know we won't have to gut all their properties."

The investment in middleware may be valuable beyond the Caesars acquisition, too, as the gaming industry continues to consolidate. For all of IT's prominence in the sector, many casinos still run their technology onsite at each individual location, instead of running large, centrally managed, networked systems. With the cost of converting each acquired property to Harrah's standards running as high as $10 million, Stanley needs to make the process efficient for the deals to pay off.

Some things have gotten easier with practice. While the 2000 purchase of Players International required 18 "fairly painful" months to fold a single property into Harrah's systems, the 2001 acquisition of Harveys Casino Resorts involved four properties and was done in just five months.

Harrah's has even been able to mine Harveys for some technology, including a coupon system—now being introduced in many Harrah's properties—that allows customers to feed a promotional coupon directly into the bill validator on slot machines. Slots can provide up to 80 percent of a casino's profit from gaming revenue. "We're buying better-quality competitors these days in terms of technology, so there's more for us to keep," says Stanley. Integrating acquired technologies should help Harrah's meet its larger goal of developing new capabilities faster, says Stanley, whose IT team is now evaluating Horseshoe's proprietary slot system and other casino-floor systems (including those for table games) at Harrah's Las Vegas tech lab.

This article was originally published on 10-15-2004
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