Hybrid Cloud Infrastructure Helps Address M&A Challenges

Hybrid cloud infrastructure is ready for your M&A challenges

Ongoing complications from the COVID-19 pandemic have taken their toll on businesses. While October 2021 saw a rebound, with 85% of small businesses reopening after temporary closures due to the pandemic, the most recent Small Business Pulse reported that 43.8% of businesses experienced a moderate negative effect from COVID-19 on their business, while 22.1% of businesses experienced a large negative effect.

The sectors hit the hardest were accommodation and food services (45.8% said it had a large negative effect), educational services (39.8%), and arts, entertainment, and recreation (39.7%) Even with businesses reopening, things are still in flux, and many “non-essential” mid-sized enterprises lost a significant portion of their revenue that will take a while to recover.

While many businesses experienced negative setbacks due to the pandemic, 25.1% of respondents said it had little to no effect on their business. Some even felt a positive effect – 7.2% experienced a moderate positive effect, and 1.8% saw a large positive effect.

This is to say that COVID-19 hasn’t and won’t impact every business equally. Businesses deemed essential early on, especially those that were able to pivot based on needs they identified in the market, may have a strong cash position now.

If you experienced success during a time of uncertainty, you may be looking at opportunities for expansion in the year to come. While you’re assembling your due diligence teams and performing your cost/benefit analyses, you’ll want to remember to include the cost of adopting a hybrid cloud strategy.

What is hybrid cloud infrastructure?

A hybrid cloud model encompasses multiple cloud platforms, like public cloud services (Amazon Web Services or Microsoft Azure), hosted private cloud, cloud storage, and multitenant cloud.

If you’re leveraging cloud resources, you probably already have workloads deployed across multiple clouds, often from different cloud vendors. It’s not uncommon for an acquisition to leave you with a true hybrid infrastructure, including private and public cloud resources that are unfamiliar to your team.

Company A: Stuck on Tradition

Imagine this scenario: Company A has weathered the ongoing storm, and finds itself in a strong position by the end of the year. They have some money to spend, but they’re not sure where to go with it. Company A is an older organization with a somewhat traditional approach to business and IT.

In the back office, they’re running financial applications that haven’t been updated in 20 years. In fact, the core application is still green screen, running on AS/400 hardware. The company, in short, is the opposite of the poster child for digital transformation. What they could use is help from a company that isn’t afraid to try something new.

Company B: Ready for Innovation

Knowing they need to innovate to survive long-term, management is taking a good look at Company B. They’re a young organization in the same market with a deep talent pool and a lot of cutting-edge ideas. Unfortunately, they lost funds and are actively looking for an infusion of cash to keep their dream alive.

Sounds like a match made in heaven. Company A can provide the cash to continue to fuel R&D, as well as a ready-made customer base for upsell opportunities. Company B has a small, but no insignificant, customer base already.

They provide the talent and the innovative spirit to propel the combined organization into a market leadership position. Culturally, the companies are different, but with a strong, top-down direction, these minor differences can be easily overcome.

So, what can go wrong, outside of the obvious hurdles that come from the management complexity of navigating cultural differences during an acquisition?

Hybrid cloud infrastructure on accident

The odds of these two diverse organizations having a similar approach to IT are extremely low. We already know Company A has legacy applications and data. Company B, on the other hand, sees IT as a strategic advantage. Every application they use is in the cloud, and most of it is subscription-based.

Company B’s strategy of empowering employees has served them well in R&D, but it’s led to a hodgepodge of solutions in IT and an overall lack of control. In fact, they’ve never quite gotten around to creating a configuration management database (CMDB), and they’re not really sure how many applications the organization has deployed.

Post deal, the combined IT organization will be tasked with managing a hybrid environment, with a mix of cloud and non-cloud resources, such as on-premises resources, virtual machines, public cloud environments, and operating systems.

Consolidating IT into a centrally managed, or at least consistent, environment, across divisions can have several benefits, including tighter hybrid cloud security and compliance, greater resiliency, and lower spend. The challenge in this situation is that no one on either team has the expertise they need to lead such a consolidation.

Also read: The Cloud’s Importance in a Hybrid IT Strategy

Working with a Managed Cloud Hosting Provider

The newly combined organization could benefit from what Gartner calls a Managed Hybrid Cloud Hosting (MHCH) provider, which is hosting that includes a cloud-enabled system infrastructure (CESI) platform and cloud infrastructure framework software. An MHC provider has broad experience across multiple types of clouds. They also provide common tools and services across resources to create a unified experience for the customer.

The unified experience provided by an MHCH provider gives the customer visibility into the resources that they need to manage them more effectively. Here are some recommendations for finding and working with the right MHCH:

• Assess what is and isn’t covered in the managed service provider’s (MSP’s) offered statement of work (SOW) and service-level agreements (SLAs) to minimize operational risk.
• Proactively and frequently review the market for changes. Don’t wait for contract breakpoints to reassess provider options.
• Examine the providers’ hyperscale partner certifications and how they can assist your organization. Third-party certifications are more reliable.
• Actively manage the division of operational and support responsibilities between in-house staff and the MSP to minimize disruptions.
• Have a strategic exit plan or multi-cloud strategy in case of a change in vendor status and viability to mitigate risk.

How TierPoint can help with your hybrid infrastructure

As a Managed Hybrid Cloud Hosting Provider, TierPoint has helped dozens of clients consolidate unfamiliar IT systems after a merger or acquisition. This often involves a significant re-platforming effort, for example, migrating from on-premises infrastructure to public and private clouds with time for development and testing.

Sometimes, we’re just called in to assess the situation to give our client a clear view of the challenges that lie ahead. Occasionally, we’re even called in pre-acquisition to assist in the due diligence efforts. To learn more about our services that can assist with your hybrid cloud architecture, reach out to one of our cloud experts.