What the Heck Was HP Thinking?
Okay, so what the heck was HP thinking? I know many other articles have discussed this subject (see below), some critical and some positive on HP purchasing EDS for $13 billion in cash. Cash?!?
Of course, I have no idea what was going on at HP other then some awfully great dancing by EDS officials. And since I have absolutely no idea what was going on, I will of course lend my two cents on the subject.
First of all, IBM seems to have found success from its purchase of Price Waterhouse Coopers Consulting, and many people dissed that move. Of course $3 billion wasn’t $13 billion, and my gut says that HP is no IBM.
I will suggest that there may be troubles for this merger down the road. I am not intimately knowledgeable with HP or EDS, but if my recent interactions are any indication of a larger trend (and it feels like it is), the current professional services business model seems to be in jeopardy. (”I’ll take EDS brings HP down for $13 billion, Alex.”)
In the last year, I have been exposed to numerous large entities, from large corporate fortune 500 companies to federal, state, county and city government entities, whom have begun to completely abandon the old adage “Nobody ever got fired for hiring IBM” (or insert any of the large professional services companies EDS, Accenture…). These entities are crying for specific Content Enabled Vertical Applications (CEVAs) that are specific to their business, but they don’t want to pay the outrageous amounts being charged by the professional service company to custom build these solutions.
These same entities also want to be able to easily configure the CEVA solutions to meet their evolving needs, which just doesn’t happen when professional services companies get paid by the hour or when they make much of their profit on change requests. It seems that some professional service companies are counting on the customer never knowing what they want until they first see what the professional service providers build (6 to 12 months later) and then realize, “it ain’t that!”
My belief is that professional service providers together with Enterprise Content Management (ECM) companies (like IBM, Oracle, EMC, etc.) need to quickly evolve to provide real CEVA solutions that are quickly deployed, maintained and adaptable to specific industries and diverse markets if they want to retain market share.
But, I don’t see it happening.
I will most likely expound on this topic again and again, but I would also like to find out your opinion. Or, share your experience, from any viewpoint. If you want more context, check out my previous posts on the CEVA subject or any post to get more information on Efficient Forms.
HP-EDS Merger Articles of Interest
The Street.com: Big Blue to Meet Its Match in HP-EDS
Fortune: Why HP is smart to gamble on EDS