Wednesday, 23 September 2009

HP Enterprise Services and the changing face of the global IT services sector

(By Richard Holway 6.00pm Wednesday 23rd Sept 09) Further to the post and announcement below re: HP dropping the EDS name in favour of HP Enterprise Services, let's add a bit more flesh after our conversations with HP's senior execs this afternoon.

Many readers have asked where Nick Wilson, who took over last month from Steve Gill, fits in. Nick is HP's UK MD but he doesn't have any P&L responsibility for any of the units that operate here - HP Enterprise Services (the old EDS) is still headed by Craig Wilson (who took over from Sean Finnan a few months ago - See my 21st May 09 post Sean Finnan leaves EDS for IBM). Craig will report into Mike Nefkens when he takes over from Bill Thomas when he leaves at the end of the month - see our 13th Sept 09 post Bill Thomas to leave EDS. Mike reports into Joe Eazor in the US. HP Enterprise Services is in Joe's words "a $24b IT services powerhouse" whose clear objective is to take the #1 IT services slot from IBM. This same P&L line responsibility applies to the other HP units operating in the UK - HP Enterprise Business, HP Software, HP Tech Services and HP Servers, Storage and Networking. They (together with HP Enterprise Services) all come under the newly renamed HP Enterprise Business group (was HP Technology Solutions Group) and report ultimately into Ann Livermore. The group is now responsible for 47% of HP's revenue and 60% of its operating profits.

In a way, Nick's role is at the heart of the new HP organisation. His job is to ensure that HP maximises what it sells into its accounts. HP reckons that IBM gets 'twice the wallet share' in its big accounts as HP. HP wants a similar share. Put bluntly, it wants 'old' EDS accounts to buy more HP kit, software and other offerings and vice versa in 'old' HP accounts.

And that, as they say, is the rub. 'Old' EDS clients maybe rather liked trusting 'old' EDS salespersons to recommend 'best of breed'. On top of that the 'old' EDS had many partnership relationships with HP's competitors in storage, servers, software, PCs etc. They would be right to be concerned. The clear intent - indeed the whole raison d'etre of the EDS deal - is to sell more HP 'stuff' into every account. Readers no doubt know my concerns over this. I was at least heartened that HP understood and empathised with these concerns. That is better than pretending that the problem doesn't exist!

Maybe this is one of the really big changes going on right now in the IT sector. Maybe the day of the 'independent' supplier of this 'stuff' (hardware, software etc) to the enterprise are numbered. IBM has already gone that way. Fujitsu believes that the 'solution' rather than 'services' led sale is the most appropriate for the future. Oracle clearly believes that it must 'own' more of the solution that it sells to clients with its Sun acquisition. Dell has seen the writing on the wall and, for better or for worse, has bought Perot.

This leaves the remaining 'independents' in an interesting position. We have already seen CSC almost going the same way as EDS. Maybe someone will try again? Capgemini looks an even more attractive target with its strong European coverage. Then there is Atos, Logica, Steria etc - all possible targets for your now diversifying hardware/products company. I doubt if Accenture would go that route - but 'never say never'.
I suspect the 'old' IT services world of my last 40 years will never be the same again.

No comments:

Post a Comment