Merging Systems after the Mergers

Getting From 23 to One

David A. Gordon, PMPThe Practicing IT Project Manager LLC

• The Time: 2006. After a decade of mergers and acquisitions, MGM Resorts International was the second-largest gaming and hospitality company in the world.

• The Place: 23 resorts located in Nevada, Michigan, Mississippi, New Jersey, Illinois, and Macau

• The People: 70,000 employees vertically organized by resort

• The Challenges: • 23 islands of automation, with no standards

• Duplication of business functions, without common policies

• High operating costs

Case Study: The People Systems Portfolio at MGM Resorts International

• E Chaos, Unum: How we mapped the consolidation to a single suite of applications

• How we used portfolio management as a framework for reducing exposure to risk

• How we partnered with the Business(es) in getting to Shared Services

• What we learned along the way to Data Unity

• How we handled the disruptions associated with additional divestitures and new construction

• What we’d do differently (and do again)

Key Points of this Case Study

• Construct new, world-class resorts leveraging strategic partnerships

• Develop a common brand without diluting the existing brands

• Shed underperforming assets

• Reduce operating cost of back-office functions and infrastructure

• Focus talent on customer-facing positions

• Improve talent development and retention

• Empower the employees and managers

Understanding the Business Strategy

• Facilitate divestiture: Preserve ability of the smaller resorts to stand alone

• Prepare for the future: Design the end state for the new resorts, and retrofit the rest to the same standard

• Build on existing intellectual property

• Eliminate obsolete and unsupported technologies

• Standardize data models and business processes

• Facilitate business functions move to shared services

Aligning to the Business Strategy

• HR Operations

• Compensation Management

• Recruiting

• Learning and Development

• Benefits Administration

• Payroll and Timekeeping

• Compliance

Supported Business Functions

The People Systems portfolio included:

• IT solutions, using in-house applications

• Outsourced technical and administrative services, including SaaS

• Business operations support for surge activities

• Software and hardware maintenance

• Operating and support contract management

• Capital projects

• Staff for O&M and project execution

Elements of the Portfolio

• Merged units retain “old ways”

• Few common systems

• Faux duplicates

IT Systems in Merged Companies: A Continuum

• All embrace “new ways”

• Few unique systems

• One way – resistance is futile!

• Inventory all of the people systems in all business units

• Develop a portfolio matrix: business function by resort

• Identify “at risk” systems: obsolete, unsupported, unreliable

• Collaborate with the business to determine the end state for each business function: shared services, consolidation, or as-is

• Define needed capabilities and select solutions for the end state

• Characterize each system in each resort as keep, update, or replace

• Prioritize, based on risks and opportunities

E Chaos, Unum: Getting to Borg

Stakeholders for the portfolio included a variety of groups and interests:

• HR Operations, Recruiting, Learning and Development

• Payroll and Finance

• The IT Department PMO, CTO / Operations, and executive team

• Business Operations in each resort

• Purchasing

All of these groups lent people, time, and influence to achieve our goals. We spent a lot of time with the leadership and their teams, keeping them informed and getting their feedback. Any success we had came from staying in their good graces.

Getting Stakeholder Buy-In

The portfolio would require a mix of activities and talents, from operations management and software maintenance to business analysis and project management. Over a period of months, we hired or “adopted” the best talent we could find:

• Program manager for the HR system standardization and timekeeping system replacement

• Three project managers for capital investment and maintenance projects

• Two business analysts

• A software development manager and on-shore / offshore development capabilities

Assembling the Team

• Business cases for the portfolio were driven by reducing operating costs while improving service to the employees and managers

• Capital investments spread over several years, leveraging current staff and new hires

• Minimize use of outside talent to areas where specific product knowledge was required

• Justify future capital investment based on success in reducing operating costs

• “Maintain with one hand, build with the other”

Capital Investment & Cost Reduction

A portfolio-level risk assessment provides justification for investment and facilitates long-range planning. Investment priorities should driven by risk responses

• Avoid: Replace unreliable or unsupported solutions before they fail

• Transfer: Outsource solutions with compliance risk to specialists

• Mitigate: Move data from spreadsheets to database solutions

• Accept: Make conscious choices

The portfolio matrix allowed us to make trade-offs and communicate them to the stakeholders. As we got their input, the quality of our risk assessments improved.

Portfolio-level Risk Management

Based on risks and opportunities, we developed a multi-year plan. Now, we had to go shopping:

• Partnered with the Purchasing department to manage the process

• RFP where there were multiple qualified vendors

• Sole source where we already owned part of the solution

• After each vendor selection, update the capital spending plan and re-assess the business case

• Identify success metrics and KPI’s, and communicate them to the vendor and the business

Moving from Plan to Procurement

We started from what can only be described as chaos:

• No two HR systems with the same action codes or business processes

• Multiple vendors for similar solutions, multiple unsupported products

• 23 different job descriptions for a guest room attendant

• Multiple employees assigned the same employee ID

• Data records in the system long after the purge date

• Hundreds of custom reports, applications, and interfaces

• Critical compensation data maintained in spreadsheets(!)

Getting to Data Unity

Much of the data in the HR portfolio is subject to compliance with state and federal law. Other components were subject to compliance with gaming commission regulations.

• First priority: Re-badge those “sharing” an employee ID

• Second priority: Ensure all records for those with an interrupted history are traceable to the employee under their current identity

• After that: Standardize definitions, classifications, and action codes

• Finally: Purge old records, and schedule annual purges of records that have reached the end of their retention period

Driving Data Rationalization Priorities

One of our key strategic goals was getting to a single payroll department, serving all U.S. employees

• Merged the HR Systems to a single product on one server

• Standardized data definitions and purged old records

• Replaced multiple unsupported timekeeping solutions with one modern solution, using modern time clocks

• Business acquired office space large enough to put the consolidated staff under one roof

• Transitioned customer-facing responsibilities to a single team

• Co-located the program manager with Payroll for several months

Getting to Shared Services

In March, 2009, MGM Resorts sold the Treasure Island resort. This proved to be a year-long distraction:

• The contract required that we stand up systems to replace the enterprise systems we had just installed, as the resort would be run as an independent property

• One of our largest data centers was housed in the basement, with servers for a number of enterprise solutions

• Virtually every member of the IT department was involved in some aspect of the divestiture, in some cases full-time for months at a time. For a time, every other project ground to a halt, and every capital project was re-examined

• We got through it by constant internal and stakeholder communication, adjustments to project schedules, and good vendor relationships

A Disturbance in the Force

City Center began a phased opening in December, 2009. At the time, it was the single most expensive privately funded construction project in the western hemisphere, and employed 10,000 people. Our people solutions:

• Managed over 100,000 applications from job seekers all over the world

• Recruited new employees, rehires, and transfers, and replacements for those employees who transferred

• On-boarded 8,000 employees in six weeks

• Paid everyone correctly, with the right benefits and deductions, correct taxes withheld, and deposits to the right accounts

• Managed the right-sizing of the ten properties in Las Vegas

Opening City Center

We made a lot of decisions in the course of four years, in the presence of uncertainty and a crumbling economy. Some of them were less than optimal. Things we’d do differently:

• Pilot solutions in one business unit, with input from the rest of the practitioners. Once the pilot is proven, then roll it out to everyone

• Purge old records, and then rationalize the remainder to the new standards

• Avoid weighting license discounts (capital budget) over support fees (operating budget) in procurement decisions

• Budget for additional “utility players,” so that we have the staff to handle the next merger, divestiture, or opening

What We’d Do Differently

Some of our decisions have stood the test of time. The following principles stood us in good stead:

• Prioritize spending based on risk, as well as ROI

• Maintain usable solutions to get a few more years of life from them

• Set a sustainable pace, for both the spending and the people

• Be willing to pick the fruit that’s ripe, rather than just low-hanging

Things We Did Wisely

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