EDS Must Follow IBMs Lead

By Chris Preimesberger  |  Posted 2008-05-13 Print this article Print


Nobody questions that HP certainly will play a major role in forthcoming EDS contracts.

"Certainly we can expect that in the big outsourcing contracts that EDS has, that the sales guys and account reps are going to be including HP more and more in the conversations. Also, in the conversations with the CIO and IT managers who are looking at the next wave of technology investments," Ben Pring, a Gartner analyst in the IT services group, told eWEEK. "But the truth is, look at what IBM has already done-they manage products from a whole range of technology providers. And, to be honest with you, HP will have to play the game in that way. If they overemphasize their own products, they could shoot themselves in the foot."

The reality is, Pring said, is that "banks, the airlines and telecommunication companies have very complex heterogeneous environments and you simply cannot play a single technology card."

In the long run, HP's and EDS's services should fit together pretty well, Greg Schulz, founder and senior analyst at The StorageIO Group, told eWEEK.

"HP has had a services arm for some time-some of it being hosting, some of it being managed services, including backup, some of it being on-site break/fix/install/maintain and some of it being consultative-while EDS is known for hosting or being a managed service provider and outsourcing firm," Schulz said.

EDS has increasingly over the years taken on more projects ranging from desktops to data centers, servers and storage across different applications and business sectors, Schulz said.

"Consequently, a combined HP-plus-EDS enhances each other's opportunities and capabilities to collaborate and compete as a combined entity versus competing with each other," Schulz said.

Culture clash

Certainly, cultures and lines of business will need to be ironed out, Schulz said. "What will be interesting to see [is] if HP aligns some of their traditional services and hosting solutions under an EDS business unit model, or, [if it will] force EDS to fit in under an HP managed services model, not to mention what the head count and integration synergies will be," he said.

If HP plays this smartly, leveraging EDS capabilities and skill sets while equipping EDS with more services and solutions capabilities, the combined company could be a force to reckon with, Schulz said.

"It could enable more effective solutions for their customers and partners; if not, then two organizations could become bogged down enabling their combined competition to take the advantages," he said.

Infrastructure company with a services arm

It was no secret that HP was looking to add to its services group, and this move was rumored for months, analyst Zeus Kerravala of The Yankee Group told eWEEK.

"When they looked at the landscape for who would give them the biggest bang for the buck, it obviously was EDS," Kerravala said. "Overall, I think it's a good move for HP."

He continued, "I've always thought of HP as an IT infrastructure vendor that happens to have a services arm, and I've always thought of IBM as a services-led company that happens to have an infrastructure division.

"And the two are different: One's trying to sell you a product in support of the services, the other is actually trying to improve your business and they happen to have some product to fulfill that, where they might go use somebody else's."

EDS will remain its own division at HP and report directly to CEO Mark Hurd.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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