Posts Tagged ‘HP’

HP and IBM rated top IT outsourcing service providers

October 7th, 2015

HP and IBM have received the highest industry Net Promotor Scores, meaning IT outsourcing customers are much more likely to recommend them than other service providers.Outsourcing40

A company’s NPS is considered a measure of customer loyalty and has been proven by some to be a leading indicator of corporate growth. Customers are asked to rank the likelihood they would recommend a brand to a friend or colleague on a scale of 1-10. Those who answer 9 or 10 are considered promoters: loyal enthusiasts who will keep buying and refer others to the company, thereby fueling growth. Respondents who answer 7 or 8 are considered passive customers: satisfied, but unenthusiastic and vulnerable to competitive offerings. Those who answer between 0 and 6 are detractors: unhappy customers who can damage a brand and impede growth with their negative word of mouth. The NPS is a straightforward calculation achieved by subtracting the percentage of detractors from the percentage of promoters, ranging range from -100 (all detractors) to 100 (all promoters).

HP Outsourcing had a score of 52, according to the Temkin Group, which has been evaluating NPS results for 62 vendors for the past four years. The top IT vendor overall was SAS Institute, which scored a 57. Other outperforming IT service providers were IBM Global Services, Oracle Outsourcing, and Dell Outsourcing, all of which scored at least five points above the IT vendor average.

HP, particularly the company’s legacy EDS outsourcing unit (which HP acquired in 2008), and IBM Global Services have had consistently high NPS results relative to their peers for some time, says Bruce Temkin, managing partner of the Temkin Group.

Accenture finishes at the bottom

Accenture Consulting had the lowest NPS score, not just among IT service providers but among all the technology vendors in the report, with a score of just one. In fact, the other four lowest scoring vendors were also IT service providers: CA Technologies, Hitachi, Wipro and Deloitte all had NPS scores below 10.

While the scores for IT vendors overall improved to an average of 31.8 in 2015—an increase of more than eight points after two straight years of declining scores—many IT service providers (including Unisys, Capgemini, CSC, Cognizant, Infosys, ACS and Tata Consultancy Services) ended up on the bottom half of the list, according to Temkin.

The Temkin group also surveyed 800 IT decision-makers from large North American firms to learn about their relationships with their technology providers in order to determine the link between NPS and customer loyalty, customer satisfaction and other aspects of a good customer experience. “We often find a strong correlation between NPS and satisfaction if the satisfaction score is calculated in a similar manner to the NPS score. What’s a more telling question is whether or not NPS correlates to customer loyalty,” says Temkin.

The research revealed that promoters are much more likely than detractors to spend more money with tech vendors, try new products and services when they are announced, and forgive their tech vendors after a bad experience. The report also revealed that SAS Institute and Cognizant were the top companies for purchase momentum and customers of HP outsourcing and Intel were most likely to forgive them for mistakes.

“If tech vendors use NPS to identify and do less of what causes detractors and identify and more of what causes promoters, then they should see a lift in both NPS and sales,” Temkin says.


Managed Private Cloud on the Rise as Data Center Outsourcing Service

August 28th, 2015

Managed virtual private cloud services are gaining popularity as part of data center outsourcing contracts enterprises make with the likes of IBM, HP, or Dell.Outsourcing31

That’s according to the market research firm Gartner, which published its annual Magic Quadrant report on the North American data center outsourcing market published late last month.

Gartner puts managed private cloud in the category of “Infrastructure Utility Services,” or services that companies pay for based on resource usage or number of users served. “Increasingly, IUS are based on managed virtual private cloud services,” the report read.

Industrialized infrastructure services are what is going to drive future growth in the data center services market in general, according to the analysts. That growth will come at the expense of growth and margins for traditional services, which Gartner expects to face further pressure.

This category of services includes both Infrastructure-as-a-Service and Platform-as-a-Service.

IBM and HP remained top data center outsourcing providers on the latest Magic Quadrant for North America, ahead of everyone else in terms of both vision and execution. Other providers Gartner named leaders were Dell, HCL Technologies, and CSC.

Here’s Gartner’s 2015 Magic Quadrant for Data Center Outsourcing in North America:

Gartner Data Center Outsourcing MQ NAM 2015

While it named HP one of the leaders in the category, Gartner estimated that its data center outsourcing and infrastructure utility services revenue in 2014 was down about 5 percent from the prior year.

HP’s key strengths in the outsourcing market are its infrastructure scale – close to 80,000 physical servers across about 30 data centers – its ability to provide just about every kind of data center outsourcing service imaginable, and strong management and budget oversight in service engagements.

While a leader in every other respect, however, HP’s cloud services haven’t done as well as the company may have hoped, according to Gartner. HP says its managed cloud server offering called Helion has seen double-digit growth, but the penetration of its virtual private cloud, utility, or managed private cloud offerings remains below 15 percent, according to the analysts.

HP’s rival IBM is the largest player in the market for both cloud and traditional enterprise data centers. Gartner estimates that Big Blue makes about $3 billion in annual sales on its data center outsourcing services.

Its main strengths are focusing on solving specific business issues for clients rather than simply providing standard technology and support services, breadth and depth of resources, and willingness to switch to new service models.

One of Gartner’s cautions about IBM was the potential for impact on existing interfaces and processes of the company’s recent restructuring, which included melding of its former Strategic Outsourcing and Integrated Technology Services. The new unit, called Infrastructure Services, combines everything from networking to mobility.

IBM’s Global Technology Services segment, which includes Infrastructure Services, lost more than $1 billion in revenue in 2014, according to Gartner’s estimates. The analysts attributed this loss to new and emerging providers in the market who are agile and extremely competitive.

Gartner said IBM needs to review its strategy and be more open to enabling its clients to use competitors’ cloud services, such as AWS and Azure, as opposed to driving them squarely to its own SoftLayer cloud.


HP re-energises NHS Trust with complete IT systems overhaul

June 30th, 2015

Computing has reported that the ITO partnership between Cambridge University Hospitals (CUH) and HP has been a resounding success, acknowledged by both sides of the outsourcing relationship.Outsourcing24

HP has digitalised CUH’s services in a way that allows frontline staff to quickly and securely access data and patient records.

“All of our IT is now managed by HP – and the system is already delivering real benefits,” commented Dr Afzal Chaudhry, CUH’s chief medical information officer.

However, some of the NHS workers have struggled with the transition, particularly those that are less “tech-savvy” than their younger colleagues. Chaudhry continued: “If you take some of the senior consultants who’d never left notepad and books.

“They’d trained as a student, used them as junior doctors all the way through and some of these people, they’d been there for years. Then overnight we took everything that they knew, then threw it away.”

Nevertheless, the majority of staff have transitioned well and are working more efficiently as a result of HP’s input.

The new platform installed by HP is being widely adopted and utilised, with 3,200 people using the system onsite, and further staff using it offsite, on a daily basis. Even during its quietest periods in the early hours of the morning, CUH tends to find 300-400 individuals logged in at any given time.


Why Companies Opt to Insource for IT Innovation

March 20th, 2015

Companies are increasingly taking a multisourcing approach to IT outsourcing, signing shorter, smaller deals with a mix of providers. At the same time, some are pulling certain pieces of the IT portfolio back in-house.Outsourcing11

“As you get into the second and third generation renewals, each renewal sees a bit more work being sliced off and taken back in-house,” says Mike Slavin, Managing Director of outsourcing consultancy Alsbridge. “And those functions being repatriated are often related to innovation.”
Outsourcing customers seek innovation

Lack of innovation remains one of the top complaints about outsourcing. Outsourcing customers say that providers fail to bring any new ideas to the table. Providers protest that clients don’t know what they mean by innovation and aren’t willing to pay for it. And traditional outsourcing bidding and contractual processes aren’t designed to drive innovation–in fact they thwart it.

“Because of competitive pressures, providers have to do internal cost take-outs to win deals. That squeezes margins and profit expectations, and means that most of the upside for the service providers is during the latter portion of the deal,” says Slavin. “This gives account management teams little room to provide creative ideas and fund innovative pilots and projects.”

In addition, few outsourcing agreements call for a standing innovation committee or an innovation fund, for example.

Traditional IT service providers — like IBM and HP — built their businesses on the transfer of both human capital and physical assets to the supplier, creating an environment that discouraged innovation, says Slavin. Indian vendors developed business models on a foundation of labor arbitrage and price competition, which also obstructed innovation.

Little has changed about either approach in the last decade. “Rather than hiring and training a new style and culture of technical talent to support what IT looks like in 2015, clients often see 20- and 30-year veterans who have survived the many layoffs and workforce reductions being rebranded as cloud or mobility experts,” says Slavin. “But the reality is that these veterans have little grounding in those technologies.”

Innovating for customers vs. supporting in-house customer innovation
Traditional players with significant infrastructure assets are digging in, arguing that their years of experience running those systems makes them best suited to innovate on behalf of their customers, Slavin says. In addition, they employ various “handcuff” strategies that make the process of exiting agreements and moving operations back in-house difficult for a customer, according to Slavin.

Some Indian firms, however, are encouraging their clients to take some services back in-house, even offering their staffing resources to support in the transition to and management of the new model, says Slavin. “These providers do not have the large asset base in fixed assets such as data centers and are happy to provide services to a client in their own data center or perhaps a [co-located center].  Several pitch this strategy as something that mitigates the traditional sourcing risks, allowing the clients to potentially move services more readily if they are not happy.”

Meanwhile, consultancies like Accenture and Deloitte are pitching themselves as sources of IT innovation to companies. “These players have generally stayed out of the highly price-competitive and sometimes asset-heavy infrastructure marketplace,” Slavin says. “These consulting firms have a business model built on human capital, one that focuses on skills and experience and is better-suited to deliver technology relevance and alignment with the client’s business. They’re also committed to ongoing training and are willing to carry out needed trimming of non-performers. Finally, they’re able to avoid the episodic large mass workforce reductions that plague the large outsourcing firms.”

It’s too early to say which approach will win out long term.

“The most challenged players will continue to be firms like IBM, HP and CSC,” says Slavin. While they are trying to reorganize to provide vertical solutions like mobility, cloud and analytics, they remain desperate to hold and serve their big clients to avoid revenue run-off.

“HP and IBM have great hardware, and clients expect innovative solutions that take advantage of that great hardware,” Slavin says. “Unfortunately, the outsourcing organizations seem to be lagging at enabling and accessing the emerging technologies needed to drive innovation.”

Indian providers will continue to grow their market share, says Slavin. “The challenge for this group is to grow into more profitable markets and expand footprints in clients fast enough to stay ahead of aggressive pricing, which is built into their deals as an investment to win.”

In the short-term, IT outsourcing customers will either be looking to providers who can provide real business outcomes or taking their innovation-related business back in-house to run themselves.

“Innovation is always in the eye of beholder. It’s hard to argue with something that aligns with the client’s business and moves that business forward,” Slavin says. “So the winners will be those who can provide applications and the supporting infrastructure and link them together as a product, service, or offering that focuses on and is tied to the business.”


HP Lands Multi-Billion Dollar Outsourcing Deal with Deutsche Bank

February 27th, 2015

Deutsche Bank has outsourced a large part of its IT infrastructure to Hewlett-Packard in a deal that will help it cut costs, besides injecting agility into its operation. It is a multi-billion dollar deal spanning 10-years, according to the company’s statement.Outsourcing4

The deal paves the way for the bank to cut back on investment in hardware and move most of its IT applications onto the cloud.
Under the agreement, the financial firm will use use HP’s Helion private cloud to buy HP’s on-demand data center services, including storage, platform and hosting. Deutsche Bank will however retain activities such as IT architecture, application development and information security.

The bank has claimed that the deal will also help it upgrade some of its IT applications.
“Having a more modern and agile technology platform will further improve the bank’s ability to launch new products and services and lay the foundation for the next phase of its digital strategy,” stated Henry Ritchotte, Chief Operating Officer of Deutsche Bank.

It seems HP was waiting for a deal of this magnitude to bolster its Enterprise Services division, which is struggling to compete with IBM, whose SoftLayer platform has seen a lot of demand of late. Amazon is also vying hard to win clients for its cloud service.

Launched in May last year, HP’s Helion is based on the open-source cloud operating system OpenStack.

Deutsche Bank had already signed a similar but smaller deal with IBM, but that was limited to the bank’s operations in Germany.
Across the world, large financial firms are increasingly restructuring their operations as pressure rises on the financial sector to cut costs while remaining agile.


HP’s Split: A Sound Strategy Or A Rabbit Pulled Out Of A Hat?

October 8th, 2014

Anyone following HP’s corporate developments closely in the last three decades has seen many rabbits pulled out of a hat.

First came outsourcing, which was supposed to cut cost and limit corporate size.Outsourcing52

A press release by HP back in 2002 says it all:

“Hewlett-Packard HPQ -4.48% Company today announced it is planning additional outsourcing of its PC manufacturing facilities worldwide, in keeping with its longstanding strategy to decrease operations costs and improve profitability. This move will allow HP to take advantage of the flexibility (my underlining) and cost benefits associated with using non-dedicated factories. . .

In the past decade, HP has consistently taken measures to ensure profitability in the PC market through increased operational efficiency, expanded build-to-customer-order capabilities and supply chain improvements. Outsourcing PC manufacturing allows HP to focus (my underlining) on strategic core competencies, including supply chain design, new product and services development, supplier management and customer relationship management.”

In the short-term, outsourcing probably had all these consequences. In the long-term, it had an unintended consequence, however–the fragmentation and disintegration of a company’s supply chain.

This made entry of new competitors into HP’s turf easier. And that’s how the company ended giving its competitive advantage away, piece-by-piece.

Second came a string of bad acquisitions– in an attempt to fight ‘the last war’ in a number of segments of the technology industry — which drained Hewlett-Packard’s resources. The purchase of Compaq Computer in 2001 was supposed to provide HP with a scale advantage in the PC market and allow it to compete effectively against Dell  Computer, IBM IBM -1.76%, and all sorts of emerging Asian competitors. The purchase of near-bankrupt Palm in 2010 was supposed to help the company enter the fast growing mobile devices market, which began to replace PCs. And the acquisition of enterprise software maker Autonomy in 2011 (at a hefty price of $10.3 billion) pitted the company against three major competitors – CRM -2.38%, Oracle, and IBM.

Each strategic move, which was followed by scores of layoffs of talented employees, helped leadership buy time, but it didn’t help the company produce the right innovations and catch up with emerging trends in the high technology industries. As a commentator put it in response to one of our previous pieces on Hewlett-Packard’s and Dell’s outsourcing strategy: “Dell and HP both snored through the whole wireless smart device revolution of the last decade and hitched their wagons to the PC market (which is dying). It would not have mattered whether or not they kept their PC supply chains in house or not. I don’t see Dell and/or HP overly outsourcing product design/branding/marketing – it’s just that there is a lack of innovation and vision in those areas for both companies.”

That’s why each of these strategic initiatives turned out to be rabbits pulled out of a hat.

Now comes a split of the company into two separate public companies: Hewlett-Packard Enterprise, which “will define the next generation of technology infrastructure, software and services for the New Style of IT,” according to a company press release.  And HP Inc.,”which will be the leading personal systems and printing company.” Is it a sound strategic move or another rabbit pulled out of the hat?

Leadership thinks it is a sound move, as it will help each company to better focus on its own industry segment, while maintain sufficient scale: “Hewlett-Packard Enterprise will define the next generation of technology,” so goes the official announcement.

“HP Inc. will be the leading personal systems and printing company delivering innovations that will empower people to create, interact and inspire like never before. This strategic step provides each new company with the focus (my underlining), financial resources and flexibility (my underlining) to adapt quickly to market and customer dynamics while generating long-term value for shareholders.”

Wall Street thinks so, too, at least the first trading day following the announcement of the split, sending the company’s stock 4.7% higher.

Obviously, corporate splits are back in fashion. But there is one thing that isn’t clear to me: How each of the two corporate pieces, which maintain the HP brand name, will eventually return to the company’s old innovation trait.

Until I see a clear answer to this question, I’ll be very skeptical about the nature of HP’s latest strategic move.


Worcestershire to appoint HP for managed ICT services deal

September 26th, 2014

HP expected to oversee transformation of council’s IT service delivery model and migration from legacy platformsOutsourcing32

Worcestershire County Council is today expected to approve an agreement with HP Enterprise Services UK to oversee managed ICT services for the authority.

The agreement, which will see the company taking responsibility for the council’s IT needs, along with migrating its legacy telecommunications platforms to a unified communications system, follows on from a review conducted by the authority between 2013 and 2014 into overhauling its service delivery model.

The council has said that the agreement is expected to lead to overall revenue savings of £3.4m over a seven year period through a focus on flexible service provision.

According to council documents , HP was selected as the preferred bidder for the contract based on the company proposing a shared approach to risk, as well as having the lowest cost of three shortlisted bidders.

Should the council approve the contract, which is expected to begin by December of this year, the transition of the council’s operations to the new service provider is expected to take around three months.

Under the proposals, while Worcestershire “retains the risk” from any potential reduction in service volumes – whether from changes to user, devices and server numbers – HP would “assume” possible risks resulting from operational performance and efficiencies.

“HP Enterprise Services UK is a highly recognisable and mature ICT Service Provider which will be a household name to many,” said the council.

“They have an increasing presence within the local government marketplace and extensive experience of delivering large scale ICT managed services across multiple sectors.”

According to the council, the agreement with HP is expected to provide additional service value through considerations such as through supporting key sector industries and skills like cyber security and advanced manufacturing in Worcestershire.

HP has also pledged to:

Support local small and medium-sized enterprises (SMEs) in being “more successful”.
Providing young people with skills and helping individuals classed as not in employment, education, or training (NEETS) to gain certification and training for the workplace.
Alan Mo, research director for public sector analysis group Kable said that the agreement reflected the growing pressures on local authorities to deliver service improvements without significant costs, that can minimise longer term financial risk.

Mo added that given current uncertainty facing councils and the possibility of a decline in required service volumes over the lifespan of the council’s agreement, HP’s proposal for managed services took into account the possibility for changing volumetrics.

“It’s unsurprising that all local government outsourcing deals – including this one – emphasise the importance of including measures to deliver social value and boost local economies. With outsourcing being such a politically charged topic, and one that is invariably surrounded by negative press, any scheme or commitment by suppliers to generate social value, create jobs and deliver local economic value will always help appease some of the objectors,” he said “But as councils increasingly emphasise these needs when setting their key procurement objectives, suppliers need to be much more creative in order to stand out from the competition.”

“HP managed this in Norfolk (although not theoretically an outsource agreement), and it’s done it again here, especially with its commitment to promote and support ‘key sector industries and skills for Worcestershire such as Advanced Manufacturing and Cyber Security’.”


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