All Tied Up

Integration is a goal of many businesses, which dream of cutting costs and increasing productivity by tying together the operations of disparate divisions or subsidiaries. But is it always the right strategy?

For some companies it is. Take Thomson Financial. It was largely built out of acquisitions, including major purchases such as Primark and more recently TradeWeb. For years the acquired companies retained a certain amount of independence in terms of strategy, product development and operations. That has some benefits: smaller organizations are typically more flexible and more responsive to the market. They also tend to be more innovative.

But there are also downsides. Many companies find that decentralization leads to a lack of coordination, duplicated efforts—internally and externally—and incompatible strategies.

Thomson had to learn this lesson a few years ago when it tried to offer content and analytics from across its businesses through a single offering. As the market quickly pointed out, many of its products did not work together, and when they did, it was usually not a smooth process. Even when Thomson One was first launched, there were problems getting the functionality to work seamlessly.

Meanwhile, Thomson tackled its oft-criticized sales and support operations, with top executives making it a priority to improve the pre- and post-sales customer experience through better coordination, among other things. Now, the company and its Thomson One product range are much further along, and customers appear to be happier.

SunGard is facing many of the same challenges as Thomson because it, too, is built upon a series of acquired companies. However, SunGard's different divisions have even looser ties, with some products lacking the SunGard brand and top executives reportedly retaining tight controls over their division or company.

And like Thomson, SunGard is now trying to bring those different units together, most notably to share data and related resources. Will SunGard be able to overcome the obstacles? This has been on the to-do list ever since Rick Snape joined to lead what was then the market data group in 2002, when he said SunGard wanted to "leverage market data services with other SunGard solutions" (IMD, Oct. 7, 2002). Snape has been and gone, as has another leader of the data group, Dale Richards, but this remains a goal, not an accomplishment.

Then again, it doesn't always make sense to integrate. SunGard's businesses are more diverse than Thomson's, ranging from disaster recovery services to software for law enforcement and firefighting departments to wealth management products to, yes, market and reference data. Thomson, of course, has always been focused on real-time market data, fundamental and company information, analytics and research.

Dan Connell, CEO of Xinhua Finance, is following the SunGard model. Connell should know. He was president of ComStock, which is a division of Interactive Data Corp., another vendor built upon acquisitions. Connell argues that while it often makes sense to integrate on the back end—standardizing on a single billing system, for example—sometimes it isn't logical to move to a single brand, much less a single sales team. That's Xinhua's strategy, and it will be interesting to see if the company is more in the mold of a Thomson, which had to integrate, or a SunGard, which has survived despite its silos.

Samara Zwanger