A Springboard To Services

IBM to acquire Sun - WSJ report - lets see how it works

Wed, 18 Mar 2009 04:21:00 -0900

Reports that IBM is taking a serious look at Sun, clearly a lot to read about on this in the next 24 hours. The following is assuming that it goes through and the transaction develops. Clearly anything could happen to accelerate this, or to put the brakes on it.
From a services point of view, it is less strategic, Sun services is Sun product based support and consulting, could be some partner issues for services.

Positives
- Both have a strong research and lab culture

- IBM will pick up strong software assets with a genuine sense of community which IBM SW traditionally has lacked

- Strong and in some cases dominant market share in the server environment

- Sun gets resolution on its future

- Sun was starting to get it's mojo back

- Whilst both have strong Green Credentials, IBM is going to be able to integrate strongly the Sun ideas into it's offerings

- Both have realised the importance of the Data Centre in the future IT environment, HP has had some strength in this space, this positioning will be a clear improvement in the capability

Negatives
- There will be cultural differences, both at a management and at a workforce level

- IBM and Sun have flat or stagnant traditional product businesses. The reliance is on emerging offerings, still not making up the shortfall in the decline of traditional value points

- The next 12 months will be very difficult for hardware, hard to develop momentum when you are fighting for share.

- The Sun model is highly reliant upon a channel model, IBM has of course the sales force reach that is so very broad. Reconciling this will be a key challenge for them.

Impact on the competitive environment
Clearly this will have an impact upon HP. They are suffering with some internal issues and the economic downturn, having two of their largest, if not largest, competitors merge will provide some opportunities for them to act on the distraction and transition, but a well integrated IBM/Sun is an even more considerable threat to HP. The recent decision of HP and Sun working together around Proliant would be interesting to say the least.
Microsoft will also be impacted, both IBM and Sun are clearly pushing away from the Microsoft platform and heavily investing in open standards.
There will be an impact on Accenture which is a big Sun SI partner as well as with EDS, and perhaps the beleaguered Unisys.
Will this spark further consolidation, Dell and Sun were never a good match, but Dell needs to do something, perhaps swallow ego and tie up with EMC, but there will be some radical plays that could come out of this.

Impact for the CIO

Finally, and most importantly, the impact on the CIO and IT department. As with all of these situations, the first point of activity is to wait and see. It could be over as a deal before I write this. If it does go ahead, you will of course need to be ensured of continuity in the first instance, then of the product road map for both Sun and IBM products as integration occurs. If you are buying servers, then the next 6 months may be the best buying time that you will ever experience as HP looks for competitive share. Keep informed and keep your relationships at IBM, Sun and the competition informed as you need to be in a position to maximise your benefit from this and be assured of continuity.

Longer term, there is of course less choice, but as that becomes an issue, there is also the shift towards cloud computing, and hosted services that removes potentially some of the need for direct engagement and leaves the choice as an issue for the SAAS provider

Lobbying by IT in Australia - to quote U2 - Get on your boots

Tue, 17 Mar 2009 18:55:00 -0900

http://tinyurl.com/ctn7qp

Really, this is a case of too little too late. Why has it taken several months since such a stimulus plan is released for IT in this country to send a letter to the PM and request a meeting. Really it is an indictment on the poor level of IT lobbying in this country. The previous government did not understand IT, the current one has some patches of awareness but is for some not surprising reasons too telco focused.
Australia is not really alone in this, the US and Europe have poor outcomes for IT as a political lobbying community. At least the US has a president who understands IT and technology.
What the industry needs to do is learn from the sinners of the world. The best lobby groups in this country and globally are for activities that include guns, alcohol, oil, and gaming. Not IT. Even within business if you compare the activities of the CPA (accountants) in Australia with AIIA or the ACS there is a wide gulf in the level of societal awareness and of outcomes.

Unisys appoints an SVP to perhaps look at divestments

Wed, 11 Mar 2009 21:59:00 -0900

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20090311005802&newsLang=en

This appointment does not surprise, in one way or another Unisys will be a changed company by the end of 2009. Which way this will move is hard to judge right now. From talking to various people the uncertainty over their fiscal direction is not having a significant impact yet, but it is in the back of the minds of the clients in the market, and needs to be part of any due dilligence.

Unisys appoints an SVP to perhaps look at divestments

Wed, 11 Mar 2009 21:59:00 -0900

If I were a large IT services firm and bought Satyam

Mon, 09 Mar 2009 18:58:00 -0900

If I had the money, and the due dilligence, regulation and other factors all lined up I would buy Satyam. I would be the perfect base for a low cost selling and delivery arm for emerging markets such as Indonesia, Thailand, let alone India. As well it could fill the mid market cost requirement of the more mature markets. Unhinged from the relatively high cost of IBM and Accenture labor it would provide a lot of capability for relatively little outlay.

If it is good enough for the Airline, financial services, FMCG and telco industries to offer sub brands, I cannot see why IT is any different.

Personally if I had the money I would be in the Maldives by now, so it is a chance for those who have the money ......

Merger and Acquistion News

Sun, 08 Mar 2009 15:55:00 -0900

Whilst no more news on IBM and Satyam, there is still a few M&A issues floating around.
Accenture is looking at Bearing Point in Asia Pacific, Japan is of course key here, and some public sector insight. It would create the very interesting (insert more descriptive word) of David Hunter returning to Accenture perhaps given his role as COO of Bearing Point and location in Sydney.
Unisys is now worth about $120M or a Banking CEO's mortgage, so whilst market capitalisation is not the only factor in determining how a company is travelling it is worth reviewing. At that price unless the fundamentals of the business have collapsed it will be really attractive for a Telco I would expect to snap it up.
As ever we live in interesting times. Lets see what happens.

Is IBM set to acquire Satyam

Fri, 06 Mar 2009 15:59:00 -0900

Rumours that IBM Is going to acquire Satyam.http://tinyurl.com/am4cms
Clearly a lot will be written about this by me and others. It is clear what is in it for Satyam, but what is it the key for IBM. Access to more low cost resources, a serious of new or under penetrated clients and a few processes that Satyam will posess seem like the key things. They could leverage it as well from the point of view of a pivot company to enter the mid market customers with an IBM "Lite". I have been suggesting this to anyone who will listen for several years now.
Clearly some water to go under the bridge before this is signed and delivered (if it proceeds at all), but an interesting acquistion none the less.

UPDATE Accenture layoffs in the Philippines

Wed, 04 Mar 2009 03:24:00 -0900

Tough news for Accenture, this centre has been around for years, a bit of a surprise to be honest http://tinyurl.com/dmsoya. It has been a real legacy centre for them, a lot of work done there.

Speaking with Accenture overnight the initial story was off, there have been reductions but not to the extent claimed by the government.
A not surprisingly speedy clarification by Accenture
http://tinyurl.com/d7esnd

The Crux of the HP response to the market - how will growth customers react

Sun, 01 Mar 2009 23:37:00 -0900

A lot has been written about the HP cut in salaries, I personally think that Mark Hurd taking a $1 salary like some others would have gone down slightly better.

However in talking to a range of enterprises, partners and yes, competitors of HP in recent days there is a telling aspect to it. The HP negative view (perhaps justified) is in effect a save money to save money approach. Whilst they are being prudent, many other firms have taken a more positive approach. We are seeing others such as IBM, even Sun and Accenture taking a spend money to make money approach.

The positive approach is very important when looking into the mindset of the current and future customers of the services and IT providers. Culture is of course so important for the IT Services space. What this means is that a culture that is positive and dynamic is going to synch well with those enterprises who see the current market environment as a chance to be dynamic and make their mark as it were. IBM can garner this, HP unfortunately will struggle.
I was meeting with the CIO of an on-line travel provider, the first question I asked them was how they viewed the two conflicting approaches. The response was quite clear, they would be much more comfortable with a services partner who whilst not looking at the world through rose coloured glasses, was at least looking to change the market as it moved, instead of taking an internal focus and the save money to save money approach.
Perhaps HP will be correct as history is written, however for dynamic companies, particularly in emerging markets the desire for a front foot approach will be shown up in their choice of service provider (and services model, eg SaaS, though that perhaps is for another day). This along with a key drop in employee morale is the crucible of HP’s problem.

Fujitsu finally buys Kaz

Sun, 01 Mar 2009 21:45:00 -0900

News today that Fujitsu finally has bought Kaz, the biggest winners of this are the employees of Kaz, who were not happy at Telstra. It will be good for Fujitsu in Canberra and WA. More later, I have a call with Rod Vawdrey to discuss it soon