Big Blue Gets Bigger

What does the IBM acquisition mean for PwCC clients?

In a generally unstable and shifting IT terrain, IBM Global Services' July acquisition of PricewaterhouseCoopers Consulting (PwCC) was a seismic event so much larger than the existing melee that it caught everyone's attention. And the natural science metaphors don't stop there. Thomas Bittman of Gartner Research says that, for the same reason meteorologists are said to love storms, industry analysts are loving this disruptive acquisition.

But current customers of IT services might not love it as much, at least not in the short term. Take, for instance, one of the most obvious concerns a PwCC client may have: the inheritance of an IT services provider that also sells enterprise hardware and software. Will clients lose the vendor neutrality they had with PwCC?

John Connolly, general manager of strategy and change within IBM's Global Services division, argues not. "IGS goes out of its way to be technology agnostic," Connolly says. "That's how we grew our services practice over the last decade into a 150,000-person, $35 billion business. The solutions we offer customers are a reflection of what's in the marketplace. In fact, in our data centers, 45 percent of the servers are not IBM brand."

Analysts who take a position support Connolly's. Stephanie Moore of Giga Information Group writes, "IBM Global Services is pretty objective in terms of its approach to technology implementation for clients — much to the dismay of the IBM software and server groups in some cases." She also contends that PwCC's "objectivity" was illusory anyway: "Note that PwCC's former partnerships with the likes of HP compromised PwCC's objectivity at least as much as this acquisition will" (IdeaByte, July 31).

None of this means that clients shouldn't be wary. Although CEO Sam Palmisano is new leadership, IBM's track record isn't good when it comes to the "people" aspects of bringing acquisitions into the fold. And this acquisition is all about the people involved.

IBM is on the right track, immediately offering incentives to PwCC employees and partners to encourage them to stay. And the current economic climate and labor market provide an assist. Still, the Yankee Group issued a media advisory with the following user recommendations:

• Have the names of specific project managers written into the project [contract]
• Establish a concrete set of project milestones that will be aggressively monitored
• Withhold payments based on failure to meet project milestones
• Write flexibility into contracts so that the user can react to changes in the provider's situation.

At press time, the deal was expected to be legally complete by October 1, with the organizational merger projected for February 2003.

— Jeanette Burriesci

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