In the third and final part of our interview with HP Enterprise Services (the former EDS) UK MD and VP Craig Wilson, we talked about ICT services after the impending general election and Wilson’s view on a radically new model of services that he believes is coming.
On the forthcoming national poll, the 15-year veteran of EDS and now its new owner was typically forthright and, perhaps surprisingly, bullish.
“Irrespective of which government is in, you have a public-sector borrowing requirement which is unprecedented and there is a huge amount of debt to sell,” he said.
“The characteristic of new governments is stopping things so projects will stop and for the remainder of the year after the election our business will be flat or negative [in the public sector]. If you’re a new minister coming in you need [the support generated by] primary legislation so inevitably there will be a hiatus. Then there’s a period of sober reflection when they realise just cutting things is not going to be enough to get things done. Different agendas will lead to new IT opportunities.”
As for HP Enterprise Services, he contended that the company was less exposed than some others.
“I don’t want this to sound complacent but the nature of what we supply to government is [largely] in the non-discretionary camp. Two thirds of it is keeping the lights on.”
Wilson also holds strong views on the changing face of IT services, many of them in common with the likes of Nicholas G. Carr who view IT becoming more utility-like and undifferentiated, and IT becoming more of a “power station”.
“The impression most people have is that we’ve just lived through a dreadful economy,” he says. “In my mind, there’s something much more interesting going on, which is the consumerisation and commoditisation of IT. Today, all the big companies have their own IT infrastructure just as in the old days all the mill owners had their own steam engines and I suppose in the evenings the old buffers would compare the size of their steam engines. This is going to be a sea change. People just want to buy a computer and the smart’s stuff in the middleware.
“Second-generation outsourcing is nearly all about using a blueprint. All the first wave was ‘your mess for less’ — taking over an existing patchwork and turning it into something half decent. Now they give some sort of Itil service boundary and specify a desktop integration layer and hosting layer.”
This, he says, will lead to a requirement to build scale or find unique differentiation in service provision. Get big, get niche or get out, in other words.
“The independent services companies are going to struggle,” he predicts, noting recent large deals such as Dell’s acquisition of Perot Systems and Xerox’s purchase of ACS could put pressure on the likes of Logica and Capgemini.
“We were quite worried about where this was going without that HP muscle behind us. The thing EDS still felt quite strongly about was [hardware] agnosticism but increasingly the technology is not important. Customers want [technology decisions] taken away and not worry about it. My view is that there’s only going to be a handful [of large IT services survivors]. The regional players are caught between the two stools. They’re very capable companies but they do have to choose [to grow or specialise].”
While any shift to identikit technology platforms would appear to play into the hands of low-cost, offshore service providers, Wilson suggests that the “journey” to that new world of IT could still be lucrative.
“It’s still a high-tech sort of endeavour moving to a commodity. If that’s the state we’re moving to, don’t underestimate the task of moving there. A lot of the infrastructure is not built out yet. That won’t happen quickly and, of course, we still want to supply the power station.”
And of course, he’s optimistic about what HP can do now the former EDS is not culturally opposed to selling its erstwhile rival’s kit and can lean on lots of cross-selling opportunities.
“EDS used to rack its brains to see where their next client was coming from,” he says. “And at least now when I tell people the name of the company I work for they’ve heard of them!”
Craig Wilson interview Part One on the BSkyB court case
Craig Wilson interview Part 2 on the ticklish issue of government and public-sector IT service contracting