HP beefs up bid for IT services business
The computing giant is expected to announce on Tuesday an alliance with a "major" professional-services provider. Details will be released in a conference call Tuesday led by Ann Livermore, who was recently appointed as president of HP's services division, according to a company announcement.
HP for some time had its eyes set on the lucrative services sector, but analysts say the company needs to quickly form tighter partnerships with third-party services providers, or possibly even make another acquisition play in order to grow fast. Such a move would help HP better compete with IBM, which has built a successful consulting and services arm with IBM Global Services, as well as give HP an edge over rival Sun Microsystems.
"Having a very coherent services partnership will be very useful for HP," said Meta Group analyst Michael Doane.
Doane said that for the most part HP gets services business primarily through bundling its products with services and support, but the company needs to move beyond that and bolster other, more lucrative pockets of services such as outsourcing and management consulting.
Tom Rodenhauser, who heads Consulting Information Services, agreed.
"HP needs to emulate IBM and build up a services capability that is perceived as (product) neutral," said Rodenhauser. "HP's problem is that the only way to do that is to buy an outside company, to buy, in a sense, objectivity."
"Objectivity is the trait that categorizes a true adviser," he added. "If your services business is tied too closely to your products business, then that's not a real consulting business."
HP has made it known that it's still interested in expanding the company's services business, possibly through future acquisitions.
The Palo Alto, Calif.-based company failed in its high profile bid to acquire PricewaterhouseCoopers' global management and consulting organization. Some analysts have said the company would possibly scoop up one of the many troubled Internet consulting companies, which have had the most difficult time during the economic downturn. HP had evaluated a strategic fit with Net consultant Scient in the past.
The media advisory noted that HP's alliance will center on outsourcing, which is one of the biggest revenue generators for many service providers. Traditionally, companies have often looked to a large service provider such as EDS or IBM Global to hand off a number of their technology needs such as desktop support, maintenance, data center capabilities, which all fall under the outsourcing umbrella.
The company launched HP Services earlier this year as a new division centered entirely on accelerating the growth of its IT services business, and as a recommitment of sorts to the idea of service as a priority for HP. Although the company already partners with a number of the biggest names in professional services including Electronic Data Systems, KPMG Consulting and Accenture (formerly Andersen Consulting), analysts are hoping to see even tighter, more exclusive services deals in the near term.