EDS, HP, Booz, Carlyle - Additional Perspectives

                        Handicapping Recent Acquisitions

I wrote about the HP/EDS deal in the Software Safari blog last week. But Frank Hayes over at ComputerWorld has a pretty jarring post about the deal. He opines that:

• a sizeable number of EDS personnel will be let go. HP may accelerate EDS' plans to move more jobs offshore. The merged firm may have more services personnel than it needs. Hayes wonders whether 20, 40 or 60 thousand employees could be cut loose.
• service levels for EDS customers could fluctuate during and after the merger. HP may automate data centers more to reduce operating costs. They may also ship more data center management activities to offshore centers/workers.
• HP may cull the more demanding customers from its ranks.

It's an interesting read, particularly if you're an HP or EDS employee or customer. It's even interesting if you're a competitor of the merged firm.

Another good read is Phil Fersht's piece on the EDS deal. His chief observation is that it might stimulate a number of BPO deals to get done.

The Booz Allen Hamilton/Carlyle Group deal is getting some attention from Washington D.C. types. In a New York Times piece, the $2.5 billion deal is resurrecting feelings that Carlyle Group is using its political connections, etc. again to grab a significant amount of government contracts. The Booz deal makes it easier for them to complete the work as the part of Booz they bought was a such a top notch brand in government consulting.

What's not getting much discussion is the remainder of the Booz business: the commercial consulting practice. This firm, which may not get to use the Booz name, will be a shadow of its former self. It will have to compete with far larger competitors like McKinsey and they won't make it easy for them either. If I could bet on this, I bet that the remaining practice will also be acquired, soon, by another competitor but not until after the remainder loses a lot of good people.

I'd recommend BearingPoint (BE) go after the remaining fragment of the Booz business and do it now before people voluntarily defect in any quantity. BE could use the strategy talent and access to additional clients and client executives. Moreover, the addition of this strategy practice could be quite helpful to both organizations. Interestingly, BE has a pretty large government practice but their commerical sector could benefit from more help.

I don't see most Indian based firms interested in the commercial side of Booz. Contrary to their claims of wanting to build out more high-end services, the Booz commercial business may not fit their business model. It should but I doubt any of these firms will give it a serious look-see.

At the right price, I could see Accenture (ACN) go after the commercial piece of Booz but it would have to be at a really low price and might require the acquisition of the Booz brand. In Gartner parlance, I'd only give that one a 0.02 probability.