US government studies HP merger to learn lessons on smooth integration

White House officials are studying the merger of Hewlett-Packard and Compaq to enhance their chances of success with the...

White House officials are studying the merger of Hewlett-Packard and Compaq to enhance their chances of success with the formation of the US Department of Homeland Security.

But while the HP/Compaq merger can offer the US government important tips about how to manage IT integration on a massive scale, officials warned that the homeland security reorganisation and integration would take years to complete.

Speaking last week at Infosecurity 2002 in New York, Robert Shepherd of the Office of Homeland Security said White House officials have met with HP executives as well as executives from other companies. But HP and Compaq "had six to nine months to investigate each other to see what they were getting their hands on", said Shepherd, who is director of information integration.

"Then they had a full year with a transition team of 1,000 of the best people working full time to stand it up," he noted.

In contrast, the homeland security bill was passed at the end of November, and the headquarters will be operational by the end of February, giving the government 90 days to have everything in place. "This is going to be an evolutionary process. It's going to be continuous," said Shepherd, adding that the enterprise architecture being studied as the basis of the nationwide homeland security effort "is never complete".

As a result, the White House is taking a phased approach consisting of several near-term projects, such as consolidating terrorism watch lists, developing an integrated e-mail and directory system, installing a secure videoconferencing infrastructure and expanding secure network connectivity.

There are now more than 22 human resources systems within the 22 federal agencies that will become part of the new department, said Shepherd. Dozens of databases from law enforcement and intelligence agencies, the US Customs Service and the biomedical and health community "are not mutually accessible", he added.

HP chief security strategist Ira Winkler said the government was more likely to be focusing on how to reduce redundancies and streamline staffing, rather than from a security perspective.

"In the case of HP and Compaq, we had duplication of effort, which was the big thing that Wall Street was watching," said Winkler.

But the more formidable challenge remains the potential clashes that could occur between the "22 distinct cultures" that must come together to form the headquarters, said Shepherd. "We need to make all of these people in the shortest possible time frame feel that they are integral parts of the new department," he said.

Given these and other challenges, a nationwide homeland security information-sharing capability that encompasses federal, state and local governments plus the private sector could take as "as long as never", said Steven Aftergood, an analyst at the Federation of American Scientists in Washington.

"The technological, procedural and security obstacles can all be overcome in a reasonable period of time," he said. "But as long as individual agencies feel they are in competition with one another for budget dollars, official favour or public esteem, there will be a temptation to hoard information or to disclose selectively."

The challenges could require several rounds of new legislation from Congress to solidify the agency's role, said John Woodward, a former CIA officer who is now a senior policy analyst at Rand.

For example, the new department will absorb 17 unions, 15 pay systems that are different from the standard civil service system, and at least 10 distinct hiring systems, Woodward said. "The implementation of the new department will be an extremely complex task and will, ultimately, take years to achieve," he warned.

And while studying the HP/Compaq merger is a good idea, no amount of preparation guarantees success, said Mark Lobel, a senior analyst at PricewaterhouseCoopers.

"We will have a functional structure and, hopefully, better integration and information-sharing by 1 March," said Lobel. "But I know from watching very large corporate mergers that some of them take years to realise the full benefits."

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