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Ovum on: EDS Joins HPs Spring Jamboree


by Ian Brown, senior analyst at Ovum

This is the first concrete example of HP and EDS merging around their services 'go-to-market' strategy

Both HP and EDS have offered application management and managed (infrastructure) services before. What's new with this announcement is that EDS is unbundling its services to attract a broader, global range of customers and drawing on its global delivery capabilities to reduce the cost of its managed services. The HP influence is in the unbundling and targeting of a wider audience; EDS brings a scale to global delivery, offshore capabilities and multi-vendor expertise that HP didn't previously have.

So what's on offer? With the Application Management Services, EDS is targeting customers that don't want to fully outsource their applications development and maintenance, but want a short-term tactical solution to running their existing applications efficiently and cost-effectively. EDS comes in, conducts an application profiling exercise and on the basis of that enables the customer to select the level of support (and price) appropriate to the criticality of the application(s). Not all applications need the highest levels of support, so the new tiered-pricing levels allow customers to lower the cost of running less-critical applications, while maintaining the highest levels of support for their critical applications.

The new EDS-branded Managed Services portfolio initially covers server and storage operations, service desk, 'flexible computing' and managed messaging. Additional services will follow later in the year.

If server and storage operations sound like something HP Technology Services might have already been doing, the difference with the EDS version is that it's 'truly' multi-vendor and includes proactive remote management services that EDS already provides for all of its outsourcing clients. Service desk is also a core EDS competence, but in addition to its expertise, it brings global scale and delivery capabilities. 'Flexible computing' again sounds like something more akin to HP's portfolio. Essentially infrastructure as a service, this is like HP's utility computing of old the ability to buy chunks of dedicated, hosted computing capacity from HP for short periods of two months or more. Managed Messaging is a hosted Exchange messaging service targeted at midrange clients up to the lower foothills of the Global 2000.

HP is putting EDS to work on increasing share of wallet with its customers

HP is clearly targeting existing mid- to high-end local accounts and the low end of the Global 2000+ enterprises, hoping that the cachet of the EDS brand will encourage them to bite. HP has many such customers customers that buy its hardware, software and support services, but not much else.

EDS certainly has the scale to deliver its services globally in a way that HP didn't have before. Its global delivery capabilities should enable it to deliver competitively priced services for service desk and tiered application management, for example, but no details of pricing were available at the announcement. However, the unbundled services are recognition that the environment has changed and that there's a whole section of the market for which services 'mega-deals' are irrelevant.

EDS heads into new territory

We have a few concerns. EDS's view of the mid-market has been quite different to HP's. Mid-market in EDS parlance still meant, as a minimum, full-on outsourcing of a particular service tower, rather than the function-based out-tasking that HP has targeted. We question whether EDS will be flexible and agile enough to scale down its service delivery to provide the individual unbundled services efficiently to a higher volume of clients. This will test its ability to deliver 'service as product'.

We also wonder how EDS will manage the overlap and relationship with other HP business units, notably Technology Services, and HP partners serving specific customer segments. EDS will have to tread carefully to integrate its multi-vendor server and storage managed services with the HP-focused services on offer from Technology Services.

Last but not least, HP/EDS will have to counter customer perceptions that the vendor's ulterior purpose is to take over their data centres by stealth.



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