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Skills shortages in IT - the irony is real
Able now to pry myself away from HP-EDS, I have been spending some time looking at the skills shortage issue, in a discussion about this with a major vendor it was clear to me the key irony of the skills issue in IT, and perhaps why we cannot avoid it. Simply, (and I hope I am the first to say this, I did google it), - IT does not have the people to develop the technology to take the people out of technology.
The Springboard Research Focus Point - HP and EDS
Due to overwhelming demand, please see the link to the Focus Point I wrote on this. We believe that Springboard was the first analyst firm to blog at depth and to get a detailed analysis out to the market for insight and comment.
http://www.springboardresearch.com/content/sampleresearch/hp_eds.pdf
Integration of HP and EDS - Why it should work
I realise it is will be measured by hindsight, but the integration on a unspecified as yet day later this year of EDS and HP will be watched closely. It is true though that both companies should have the process in place, EDS has grown on the basis of integration of employees through outsourcing deals, HP has lived through and learnt from the lessons of Compaq.
The other factor is that in effect the only part of the HP business materially impacted is the Outsourcing and to a lessor extent Consulting and Integration business. The printing (IPG) and PC (PSG), as well as servers, storage and software are not directly involved and free to go on in a business as usual fashion. Whilst this does not make the integration of 140,000 people an easy task, unlike the Compaq transaction, the people are in a smaller part of the business.
EDS has agreed to be bought by HP - EDS a HP company is the branding
Official word today of the acquisition, on the back of a good preliminary release from HP number wise.
http://www.hp.com/hpinfo/newsroom/press/2008/080513a.html
HP and EDS - ANZ Impact
By my reckoning the combined HP/EDS will be the largest IT company in ANZ, it will definitely be the largest in New Zealand, and in Australia, will beat IBM as the largest local provider, with revenues in excess of AU$4 Billion, this gives it enhanced credibility in the market as well as the opportunity to shape the market locally. Interstingly with the recent resignation of Chris Mitchell as CEO of EDS ANZ, there is perhaps not going to be a formal EDS CEO in ANZ again, changing times in the industry quite clearly
HP and EDS - Losers
Losers
· IBM clearly are the target of the transaction, and will need to have even more competitive focus on the merged entity. In many ways, IBM did not really take the HP Services business with the credibility that it may have deserved. Now it will be aware of HP/EDS in each and every infrastructure transaction
· Sun, Dell and EMC can expect a risk of a staged transition out of EDS and the Agility Alliance, they will need to respond to this, and perhaps look to acquire services providers to maintain relationships
· CSC, Fujitsu, Unisys and other smaller services companies are challenged. If the merged entity is able to maintain the HP culture of customer satisfaction, and EDS’s capability of significant IT transformation, it will make it harder for these smaller entities to engage with large Fortune 500 organizations
HP and EDS - Winners
Winners and Losers
The caveat of appropriate integration is clearly attached to this.
Winners
· Clients who will get more integrated services and end to end capabilities
· Accenture – Whilst the love between Accenture and HP will largely be further smothered, Accenture will know that IBM has to focus more on the merged HP/EDS entity from a competitive view allowing them a little breathing space. The risk is the depth of HP/EDS relationships in infrastructure may block Accenture out from related discussions
· Microsoft, SAP and Oracle will be able to focus more on a broad range of scaled solutions reflecting the best of HP and EDS.
· Corporate banks and lawyers who specialize in Mergers and Acquisitions. Springboard Research believes that this deal may spark further consolidation, scale is clearly key here, and aside from IBM, HP/EDS, and in the Applications space, Accenture, the rules for what scale is have been recast. It may occur that as Oracle has sparked massive consolidation in the Software space, this deal will do the same for services.
HP to acquire EDS - No surprise really - Game shifter for IBM and HP
HP are looking to acquire EDS for about 13B dollars, this is not surprising, HP needs the scale in the services business, and it needs incremental momentum in the outsourcing space that it could not get on its own, I am sure millions of pages will be written on this, but from my point of view, it is not a bad fit, though partnering wise EDS is definitely in the Dell/Sun side of the game, I can see benefits around scale, it also allows HP to be a genuine threat against IBM, it may be the major transaction that I have been waiting for many years to give scale to the business.
From a business point of view, overlap between EDS and HP services is not that high, they have played in different markets.
I will have more on this as the days come to pass
Apologies for the quiet contributions - Travel and leave
Hi Apologies for not having much content lately, between being deliverables, travel and the like I have not had the bandwidth. I am on leave for about 12 days then I promise to have regular contributions there is a lot out there to speculate and comment on, so I look forward to firing things back up soon.
Regards
Phil
We are not really Clashing - Greater China will be the largest market by 2011
We released the Asia Pacific IT Services report today, this has been exciting for me to get it up and running at Springboard Research. The media and client interest is very strong, I do not think I have had such interest in a report in many years. One view from Australia was interesting. See the link below.
http://www.computerworld.com.au/index.php?id=721475774&eid=-6787
Andrew is friend of mine, so we have managed today to have a laugh about it. Honestly the article does misconstruct a couple of issues, the core thing is the growth in China. It is not coming from outsourcing however, China will not outsource, rather from support services and integration services. The traditional model of support moulding to outsourcing does not appear to work in China.