HP Services Named First Global Prime Integrator for.net

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1 Gartner Dataquest Alert HP Services Named First Global Prime Integrator for.net On 24 September, HP and Microsoft announced a significant expansion of its long-standing alliance program with Microsoft in the area of.net solutions. Together, Microsoft and HP Services will invest $50 million between in establishing Microsoft.Net service capabilities, solution sets and joint sales teams. Through this expanded relationship, HP Services becomes the first global Prime Integrator for.net technologies, building on Compaq Services' heritage as the worldwide Prime Integrator for Windows 2000, Biztalk Server 2000 and Microsoft Exchange Already a leader in Microsoft enterprise services in terms of bench strength, by 2004 HP Services will add 1,800 dedicated.net consultants to its.net Practice within its consulting and systems integration business. These additional resources will join 3,000 dedicated consultants that already reside in HP Services Microsoft Consulting practice. In 2001, this practice produced $700 million in revenue for HP. Additionally, HP Services introduced five horizontal services-led solutions based on.net: mobility, collaboration, business intelligence, Internet business and enterprise application integration. HP Services is also taking a phased approach to introducing vertical industry versions of these.net solutions. The first phase will focus on financial services, manufacturing and telecommunications. The second phase will focus on e-government, healthcare and retail. The alliance features a joint effort between the two companies for marketing, selling, delivering and measuring the results of the program. HP and Microsoft field management will have joint goals on the alliance and its targets. This alignment will exist across both companies from the corporate level down to region, sub-region and country levels. Local field managers may decide to cascade the structure further. In addition, HP Services announced that it will create a new group of.net solution architects during the next several years, and it will collaborate with Microsoft to develop a certification program for.net solution architects. HP Services plans to contribute some of the intellectual property from its own solution architect certification program, which the company has already used to certify 150 solution architects over a five-year period. Over time, the intent is to turn this joint effort into an open program for all integration partners of Microsoft, perhaps with customer bodies playing a role in the process. September 27, Gartner, Inc. 1

2 An Impressive Track Record HP Services, combined with the Microsoft expertise it inherited from Compaq Global Services, has 28,000 Microsoft trained professionals and 7,000 specialists who have reached the following levels of Microsoft certification: MCP (Professional), MCSA (System Administrator), MCSE (Systems Engineer), MCSD (Solution Developer), MCAD (Application Developer) and MCDBA (Database Administrator). Of these 7,000 specialists, 3,000 are dedicated consultants within HP Services' Microsoft Consulting practice and the balance is distributed between HP's Customer Services and Managed Services organizations. HP Services has migrated over 9 million users to Windows NT and Windows 2000 and has implemented more than 8 million Microsoft Exchange and Exchange 2000 seats. In addition, HP Services runs Microsoft's internal help desk, supporting 11,000 Microsoft employees in 35 countries. HP Services revenue from Microsoft-related services reached $1.8 billion in 2002, making it the leader in Microsoft services on a global basis. HP Services expertise goes beyond Microsoft technologies. HP Services has more than 18,000 Unix specialists covering multiple flavors of Unix beyond HP UX and Tru64 Unix. Three thousand of these resources are Linux specialists. Gartner Dataquest Perspective HP, which had a strong relationship with Microsoft in its own right, inherited through its acquisition of Compaq a vast array of Microsoft-focused services, solution sets and an army of expertise. HP's announcement is a logical next step in its growing relationship with Microsoft, making it a leading integrator for.net and a contender for the role of premier infrastructure aggregator for Microsoft and Unix technologies. Microsoft also needed this expanded alliance to move.net into the enterprise. In June 2002, Gartner Dataquest foreshadowed exactly this model for future alliances of Microsoft Services in the Gartner Dataquest Focus Report "Company Profile: Microsoft Services, 2002 Update" (SPRP- WW-FR-0022). The mission of Microsoft Services is to enable and support the rollout of Microsoft products and technology. We predicted that alliance strategies that would evolve would center on specific Microsoft technology or sets of products such as.net. This type of alliance is essential to Microsoft to assure successful implementations of new products, and therefore, growth in market share. With the this alliance, Microsoft capitalizes on its long-term relationship with HP and leverages the field expertise and reach of HP. Microsoft does not have the field resources to engage customers directly on the same scale as HP and has no plans to aggressively ramp up its services organization. As with every other area of services, Microsoft is dependent on its partners and alliances to gain market share. However, Microsoft contributes its success in consultative sales as an enabler for its alliance partners. September 27, Gartner, Inc. 2

3 Although Microsoft needed to expand its alliance with HP Services, Microsoft is by no means makinganexclusivearrangementwithhp.whilehpservicesmaybethefirstprimeintegrator for.net, nothing prevents Microsoft from using that designation with other service providers. To entrench its.net leadership position, HP Services will need to quickly establish.net bench strength and deliver a raft of solid.net references before its competitors do. And although HP noted that.net would be its primary development and integration platform, it will also continue to develop its capabilities in J2EE. This expanded alliance is clearly a competitive move by Microsoft to move product, but it also makes HP more competitive with other Microsoft-focused integrators such as Avanade and Unisys. The.Net solution sets introduced by HP Services are likely to be well received by large enterprise accounts within their installed base that are looking to make their first forays into.net. Likewise, these packaged solutions should appeal to smaller companies typically served by valueadded resellers (VARs) and Tier 2 system integrators (SIs). Accenture, which has majority ownership in Avanade, should consider a stronger partnership with HP Services that would cement the joint superiority of both companies in all things Microsoft. Unisys should capitalize on its strong vertical industry focus and forge a similar relationship with Microsoft, particularly for e- government and transportation solutions. The expanded alliance will not make HP Services more competitive against the overall threat of IBM Global Services and PwC Consulting because HP lacks the vertical industry and business and management consulting skills to compete head on. However, HP Services'.Net solutions may indirectly affect some of IBM's consulting partners who target the small and midsize business (SMB) market. One of the most promising aspects of this alliance is the joint engagement model that will encompass everything from business development and marketing through sales and delivery. Both companies have jointly aligned goals and metrics for the alliance at multiple levels, from corporate to individual account managers, and because both companies are splitting the $50 million alliance investment equally. This double-vests each company in the other's success and helps assure solid communication. In addition, HP Services plans to create 60 dedicated sales teams worldwide with a trio of people: a.net Solutions seller,.net systems engineer and.net practice principal. Microsoft did not disclose formation of a similar sales team dedicated to assist HP in selling.net. Consequently, HP Services is more likely to be a channel for.net than Microsoft is to be for HP's services. Furthermore, it may take quite some time before both companies realize major returns on their alliance investment in.net. Gartner Dataquest research shows that Web services usage in consulting and SI projects is in a nascent state, with 70 percent of SI projects using XML to integrate applications within the enterprise, and less than 25 percent using more advanced standards such as Simple Object Access Protocol (SOAP), Web services description language (WSDL), and Universal Description, Discovery and Integration (UDDI) (please see the Gartner Dataquest Perspective "Consulting and Systems Integration Users Adopt Web Services" [ITSV- WW-DP-0378]). While lack of.net expertise is one factor in the immature adoption of Web services standards, Gartner Dataquest believes that lack of business process standardization and technologies to dynamically address business process discrepancies will also impede the progress of Web services, and hence,.net. September 27, Gartner, Inc. 3

4 Another potential challenge to this extended alliance is the HP/Compaq merger. The track record of success for IT services mergers is poor, often because individuals in the merged organization are allowed to pursue their own interests. However, the solutions' focus on the.net offerings may act as a unifying theme. In particular, the business intelligence (BI) and collaboration solutions marry the latest in application technology with integration concerns and serve as a focal point for the post-merger services organization. The expanded alliance outlines a common technology platform strategy, establishes resource targets and identifies measurable goals helping to bring disparate HP and Compaq services together. Nonetheless, Gartner Dataquest has some qualms about HP Services' ability to make serious inroads with its newly announced vertical industry.net solutions. While HP Services possesses technical expertise about.net solutions, it lacks the deep business process and vertical industry knowledge that will be necessary to tailor these vertical industry solutions. Today, HP Services has expertise in select markets (financial trading and exchanges, manufacturing, and telecommunications). The timeline and content for launching the vertically focused.net solutions is ambitious and will stretch HP Services' capabilities in other vertical industries to the limit. Gartner Dataquest suggests that HP Services partner with other SIs that possess the requisite vertical industry and business process knowledge to promote.net solutions in those verticals where HP services has a secondary focus. A partnering approach would also help mitigate the concerns of other SIs that may feel threatened by HP Services' expanded alliance with Microsoft. Bottom line: Services firms looking for alliances that provide rich Microsoft capabilities should look to HP Services to play the role of Microsoft-Unix integrator. Customers who are looking for.net expertise should put HP Services on their short list and should definitely evaluate HP Services for large global deployments requiring significant Microsoft and Unix content. By Michele Cantara, Bob Igou and Alex Soejarto September 27, Gartner, Inc. 4

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