In mid-May of 2008, just a few weeks back, HP‘s CEO Mark Hurd announced an agreement to buy EDS for $13,9 billion and stated that it fulfills their strategic objective of expanding in the services area.
This is major news because this agreement means that HP’s and EDS’ combined revenues reaches a whopping $38 billion a year, a bit behind IBM at $54 billion but clearly ahead of Accenture at $21 billion.
According to the merger plan that’s been released, EDS CEO Ron Rittenmeyer will lead a new organization called “EDS — an HP company” and report directly to HP’s Mark Hurd. EDS will still employ 210,000 people but Wall Street is abuzz with rumors of downsizing.
While HP’s IT services unit was already managing P&G‘s global consumer products’ tech operations (a 10 year, $3 billion contract, started in 2003), EDS brings blue-chip customers to the table, such as American Airlines, Bank of America and Royal Dutch Shell.
So EDS’ vast vertical and operational expertise which is especially strong in the financial services, health care and government sectors could finally help HP break into the IT services major leagues. The biggest threat to the success of this deal might come from HP’s somewhat “computer and printer” culture that’s still (proverbially speaking) lightyears away from SaaS, cloud computing and other new-wave IT trends for which EDS has proved to be more comfortable with.
HP hopes that with EDS now on its team, big multinationals will look to outsourcers more often to collect, secure, integrate and deliver software and other IT resources over the web.
Of course, the future will tell if giant system integrators, like HP’s newly acquired EDS, will still be required at a time when the SaaS and cloud computing super-efficient duo are removing complexity from many IT activities, across the board.
Tags: hp, eds, operations, merger plan, it, it services, saas, cloud computing, outsourcing, it resources