Can EDS Remain Vendor-Neutral Under HP`s Thumb?

Industry analysts contacted by eWEEK generally say they believe that Hewlett-Packard's forthcoming $13.9 billion acquisition of Electronic Data Systems—announced officially on May 13—is a good move for both companies, although there will be the usual integration snafus over vendor neutrality issues, business lines, culture shock and layoffs.

Analysts have also said it is a good move overall for customers and potential customers, because the combined company will offer them a greater palette of products and services from which to choose.

A combined HP-EDS will certainly put a new kind of pressure on IT services leader IBM. IBM's $54 billion-per-year Global Services arm—by far the largest in the world—will start to feel the heat from the combined HP-EDS entity, which will start out at a net worth of $38 billion per year.

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For high-end enterprise IT services before this merger, the market consisted of IBM and everybody else. Afterward, it will be IBM, HP-EDS—and then everybody else.

IT Swiss army knife is all can openers

The biggest unanswered question on people's minds involved vendor neutrality for EDS and its current customers. EDS for years was a sort of IT Swiss army knife in that it used whatever products and services from other vendors were needed to complete its job correctly and within budget constraints.

With its impending new ownership by one of those key vendors, that picture may change.

"We don't know what will happen with EDS' vendor neutrality," Rick Sturm, founder and president of Enterprise Management Associates, told eWEEK.

"Overall, my take is that this transaction sounds great in theory, but there many potential pitfalls. This is one of them. For example, EDS has largely standardized on management software from CA. Will they migrate to HP software now? That would take a long time and a lot of money," Sturm said. "On the other hand, it doesn't make sense to help support a competitor with license and maintenance fees. That is just one small point regarding neutrality."

EDS, in fact, has a large current contract with CA for network and systems management in direct competition to HP's OpenView. CA had no immediate comment May 13.

At least initially, Sturm said, there will be little noticeable impact on customers from the deal.

"There will probably be some service impacts once the organizations truly merge and consolidate resources," he said. "[HP CIO] Randy Mott has been driving data center consolidation and standardization. I expect that effort will be renewed with EDS. Disruptions are inevitable with such migrations."