HP is writing off about $8bn as a result of the drop in value of the EDS business it acquired in 2008. See this article I wrote.
Robert Morgan, director at sourcing consultancy Burnt-Oak Partners, gives us ten reasons why HP ended up devaluing EDS by $8bn.
1 – This was a takeover and not a merger. The HP management hierarchy reigned supreme and ensure that the highly paid EDS exec was swept away
2 – HP’s culture is not one of services, it is of product. New HP management could not relate to EDS client’s and their service related contractual needs
3 – Big accounts withered on the vine due to a complete lack of understanding of the size, complexity and criticality of these systems – name any government account where this is NOT true – you cannot
4 – HP pushed HP product when EDS was hardware agnostic – this upset clients
5 – Commercial models deployed by HP do not cater for one off deals, they have not room for flexibility against certain changes and funding needs
6 – HP Margins are inflexible in spite of scale
7 – HP views risk as a major corporate “no-no” EDS embraced risk based on their competency and ability to contain and mitigate it
8 – and probably most important Meg Whitman has ZERO understanding of services and treats HPES like a child in need of discipline and restraint
9 – HP is totally focused on a quarter by quarter basis of reporting
10 – HP has driven all the Business metrics and criteria for success out of the system and allow technobabble to rule – cloud everything rules
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