Hewlett Packard's desire for PricewaterhouseCoopers' global management and information technology consulting practice is another example of the ever-blurring line between technology and business strategies.
But it is also a move fraught with many perils that could test the strength of HP's recent reorganisation.
The two companies are still likely weeks away from completing an agreement -- if it even happens. But the combination of PricewaterhouseCooper's 30,000 management and IT consultants and HP's own 6,000-strong services force would dramatically alter the competitive landscape.
"We see a very clear and growing connection between understanding the dynamics of business transformation and understanding how technology is implemented to achieve that transformation," said Carly Fiorina, HP's CEO in an interview this week with eWEEK. "We think that the capabilities we see at PWC give us a lot of additional skill in that regard."
The acquisition talks, HP confirmed, centre on a combination of cash and stock valued at about US$17 or US$18 billion.
"If successful, this catapults HP into a position where they can compete with IBM [Global Services], with Cisco [Systems] and its investment in KPMG, and where HP can try to have a big advantage over Sun, which has a much smaller services organisation," said Joshua Randall, an analyst with Kennedy Information Research Group.
The deal would follow a string of similar alignments of technology and services-focused companies, including Microsoft and Andersen Consulting's Avenade joint venture, Cap Gemini's acquisition of the Ernst & Young IT consulting practice and Compaq Computer's acquisition of the professional services arm of Digital Equipment.
And the list is likely to lengthen, Randall said.
Two different cultures
Still, observers said a direct acquisition would combine two drastically different cultures during a time when demand for IT talent has never been stronger.
"One culture is a [Silicon] Valley company run by the seat of the pants, the other is extremely formalised," said Frank Dzubeck, president of Washington consulting firm Communication Network Architects.
Thorny integration issues include dealing with two very different pay structures, creating incentives to retain consultants in a highly competitive job market and convincing customers that the combined services organisation is objective.
"Now they have to do a lot of packaging to make themselves look independent, and they'll have to sell the independence. They may end up having to reorganise [the professional services operation] as a wholly owned subsidiary," said Dzubeck, who compared such a move to the predecessor to IBM's Global Services unit.
At least one observer noted that independence among the so-called Big 5's IT consulting practices is not what it seems. "Vendor agnosticism is not what it used to be," said Stephen Lane, professional services research director at Aberdeen Group.
Such independence, or the perception of it, may be less important than the ability to execute quickly and effectively on a strategy, Fiorina said.
"Every single one of those [consulting] companies have relationships with technology providers where they are given bounties to bring in hardware," she said. "It happens all over the industry" because consulting companies need help with the technology, and because they "recognised that time-to-solution is everything now."
For current PricewaterhouseCoopers clients, as long as the communications channel stays open, there shouldn't be any problems, according to a spokesman for General Motors' Covisint Internet trading exchange contribution and a PWC client.
"As things move forward, the communication with the organisations will have to be maintained or perhaps increase," he said. "If things start occurring that may be off track, then there will be discussions. But I can't imagine why it would pose problems."
