In early April 2017, DXC Technology launched. Many were asking; Who is DXC Technology? It is simply the combination of Hewlett-Packard Enterprise Services and CSC, by way of EDS, UXC, Compaq and others, following the merger announced in 2016. Simple, no baggage of complexity, history and in recent years, unfulfilled potential.
Perhaps not. For those employees who made it through all the years of trauma, condition cuts, layoffs and general mayhem, it must be sweet relief to have the past behind them.
The reality is that DXC Technologies must put the past behind them incredibly quickly. No Red/Blue/EDS battles that hamstrung HP Enterprise Services. No talking about where individuals were, it has to be all about the future of the organisation and creating the momentum for it to have any chance of leading the future IT services market.
The new business will have global revenue of US$25B; this puts it behind Accenture, who has a trailing 12-month revenue of US$34B. That fact alone is a stunning comparison of the ongoing success that Accenture has provided shareholders vs. the components of DXC Technology. Accenture revenue is significantly larger than the combined CSC, HP Services (removing Technology Services, which is part of the new HPE), and EDS in 2017. Accenture used to be in each firm’s rear view mirror. No longer.
What is more stunning is the fact that EDS alone had revenues of US$22.1B in 2007 before the acquisition by HP. The decline in particular at the legacy EDS business has been dramatic, and frankly sad, acknowledging the number of employees who lost their jobs resulting from the lack of leadership, understanding, and capability of HP leadership, led by Mark Hurd, towards EDS and services. This was exacerbated by the CEO’s and boards that followed him.
Just a little more of the past to explain the future. DXC Technology has taken the structure of CSC before it from a geographic perspective. Asia-Pacific is broken into two separate entities, Asia and ANZ. The split reflects the traditional strength of CSC and legacy EDS/HPE, in the ANZ region. It also reflects that the market down under is different from most of Asia, although this is only a secondary consideration, as no Asia Pacific market is uniform in requirements, outcomes or capabilities.
UXC is the key reason as to why Australia is so important for DXC Technology? UXC was the largest Australian owned IT Services provider before acquisition by CSC in October 2015 – for capioIT’s analysis of that transaction, please see – https://capioit.wordpress.com/2015/10/07/csc-acquires-uxc-boosts-capabilities-in-australia/. More than just an acquisition, UXC provides insight into what the future for DXC needs to be, and how to get there. DXC in the current form is well set for infrastructure integration, management and consulting, particularly with AWS and Azure partnerships aligned with Private Cloud capabilities.
By contrast, it is relatively light in capacity, resources, and revenue in the application space, both in legacy apps such as Microsoft, SAP, and Oracle as well as applications such as Salesforce, and organisational analytics requirements. This is where UXC provides the roadmap. It has a strong capability, resources, and revenue in the Oracle, SAP and Microsoft ecosystems. In fact, this is the strength. Furthermore, it has valuable resources and capability in the Big Data space. This is where the broader DXC Technology business must evolve once it beds down the merger of the two parent entities.
Another key advantage is that it will enable DXC Technology to have deeper organisational relationships. IT services vendors do not win with only having relationships with the IT Director. It needs to develop business relationships outside of IT, and relationships that create business measurable outcomes, not just SLA’s.
The importance of UXC for the ANZ business is further underscored due to the fact that it ensures that DXC Technology is the largest IT Services provider in the Australian and New Zealand market. For DXC Technology to replicate the Australian experience, it will need to undertake further acquisitions. As the application services market struggles with the impact of the shift to automation, immigration tightening, and other growth-related issues, finding suitable acquisition targets should not be that difficult for DXC Technology. The likes of CapGemini, Infosys, and Cognizant have to be on the radar at some stage, if course, the price is Ok.
DXC Technology is finally here. It will be a relief for employees of all the merger entities to get this out of the way and have a refresh. To fulfill the potential and meet more market challenges the new entity needs to look to the ANZ business to get an understanding of how the business must evolve. This is the what the future has to look like if it wants to answer enterprise issues for technology.
If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world.