(By Anthony Miller – Thursday 27th August 2009 6:45pm). It’s a bit tricky trying to piece together exactly who is doing what to whom and for how much in all the media flurry, but the bottom line is that BP has awarded a five-year megadeal variously valued at $1b, $1.5b and even £1.5b to IBM, Accenture, and the top three India-based SIs, TCS, Infosys and Wipro (I’d plump for the $1.5b number, by the way).As best as I can surmise, the workload is apportioned thus:
- Accenture: SAP development.
- Infosys: AD&M for BP’s Integrated Supply and Trading and Exploration and Production businesses.
- Wipro: AD&M for BP’s global Fuels Value Chain and Corporate businesses.
- TCS: AD&M for BP’s refining, manufacturing and corporate IT businesses with the possibility of future AD work in BP’s upstream and trading businesses.
- IBM: The overall winner, to manage and run all of the oil giant's enterprise applications and integrated service desk responsibilities, including global SAP maintenance and its system development centre.
BP was already a substantial client of all these players, but my sense is that Accenture has been the net ‘loser’ among the incumbents. Mind you, BP apparently had some 40 IT suppliers prior, so it’s the other 35-ish that are really hurting. It was also reported that BP expected to spend $2b on the deals, which shows how effectively they were able to screw down prices to bring the contracts in $500m under budget. Much more for much less it seems, and another perfect example of how a deal that might be perceived by some observers to indicate an IT market in rude health is one which, in truth, is just as likely to see it reduce in size!
The other thing to bear in mind is that this is likely to be a framework agreement where the ‘winners’ still have to bid for the various pieces of business. This is how other major vendor consolidations, such as with GM and ABN Amro, were conducted (India-based majors also took a fair slice of these too). It appears that some of the incumbents’ current work with BP is ‘assured’, but the rest, it seems, is to play for.
Nonetheless, all – perhaps bar Accenture – must be feeling rightfully pleased with themselves after 12 months of hard bargaining!
BP was already a substantial client of all these players, but my sense is that Accenture has been the net ‘loser’ among the incumbents. Mind you, BP apparently had some 40 IT suppliers prior, so it’s the other 35-ish that are really hurting. It was also reported that BP expected to spend $2b on the deals, which shows how effectively they were able to screw down prices to bring the contracts in $500m under budget. Much more for much less it seems, and another perfect example of how a deal that might be perceived by some observers to indicate an IT market in rude health is one which, in truth, is just as likely to see it reduce in size!
The other thing to bear in mind is that this is likely to be a framework agreement where the ‘winners’ still have to bid for the various pieces of business. This is how other major vendor consolidations, such as with GM and ABN Amro, were conducted (India-based majors also took a fair slice of these too). It appears that some of the incumbents’ current work with BP is ‘assured’, but the rest, it seems, is to play for.
Nonetheless, all – perhaps bar Accenture – must be feeling rightfully pleased with themselves after 12 months of hard bargaining!
By the way, it looks like next cab off the rank will be Exxon, which is reported to be negotiating with the usual Inida-based suspects, this time including L&T Infotech and HCL, on a similar deal mooted around $1b. One report quoted an employee advising, "ExxonMobil wants to work with fewer, large and medium-sized vendors at lower rates.” Yet again, vendor consolidation at work, with huge spoils for the few winners, wooden spoons for the many losers, but less total spend in the market.
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