Acquiring a business unit of IBM is a lot like trying to rip an oak tree out of the earth. Its roots are deeply embedded within the resource that has nourished it for decades, making it difficult to break away. That's the experience that Hitachi Ltd. had when it purchased IBM's hard disk drive business in January of 2003.

To ease the transition the newly formed entity, called Hitachi Global Storage Technologies (San Jose, CA), was given the option to license code from IBM and continue using its homegrown production procurement system. But it would be an expensive approach that could cost the company its autonomy.

After a careful assessment, Hitachi executives decided to sever the IBM tie and buy a procurement application from vendor E2open Inc. (Redwood City, CA). It was then that the separation of all IT systems in the IBM disk drive operation -- a 40 year old business, with engineering and manufacturing spread throughout the world -- became inevitable.

Hitachi, like many other companies operating in a Darwinian business climate, has adopted consolidation as a key strategy. According to research analyst firm International Data Corp. (IDC, Framingham, MA), over 25 vendors competed in the hard disk drive market in the '90s. Today there are seven. Hitachi knew this acquisition was vital to its survival.

When it came down to separating the drive business from IBM and uniting it with Hitachi's IT architecture and supply network, it wasn't so much the scope of the project that worried Hitachi executives. It was the project's one-year timeframe. "By the time we made the decision to go with the commercial approach, it was well into 2003," says Ranga Jayaraman, vice president of IT at Hitachi GST. "So we really had about four or five months to do this."

Wasting no time, Jayaraman pulled together a team comprised of an IBM service provider, engineers from E2open and representatives from Hitachi GST's IT, manufacturing, logistics and procurement departments. The group spent many late nights aligning business-to-business (B2B) processes and formulating data sharing methodologies between Hitachi and its band of suppliers. And in the allotted timeframe, the company went live with a system that was self-sufficient and separate from IBM.

Hitachi GST's Web-based solution is hosted by E2open. The setup is based on E2open's Multi-Company Process Management (MCPM) on-demand software, a B2B hub.

The entire IBM-Hitachi integration effort, which entails fusing different versions of SAP ERP installations, combining product lifecycle management (PLM) applications from Agile Software Corp. (San Jose, Calif.) and adding more procurement capabilities, won't be complete until sometime in 2006. But the first phase of Hitachi GST's effort has introduced company-wide common processes using E2open's Web technology, increased visibility across the supply network, allowed the company to balance supply with demand and will save over $3 million in total cost of ownership through 2007, compared to what it would have cost the company to license proprietary code from IBM.

More importantly, the decision to outsource the management of the supply chain process, through E2open's Web-based hosted solution, was key to keeping order and focus during a challenging acquisition.

"Hitachi's merge had to be deliberate and measured without disrupting existing commitments [while] providing clarity for the future," says Dave Reinsel, director of storage research at IDC. The company needed to present a clear roadmap to customers so they were not confused about the new combined product portfolio. "They also needed to make sure ... there was no interruption in supply," he adds.