Compaq tightens up its services
By Paula Musich eWEEK
Compaq Computer Corp. is about to start polishing its tarnished crown jewels;the global services operation once considered a major growth engine for the company; but it may never regain its original luster.
The Houston company has put together a strategy to kick start growth in its services operation, made up largely of the Digital Equipment Corp. services unit acquired in 1998, which officials once said would become a $15 billion business by 2002.
The new plan calls for a scaled-down operation focused on ser vices to differentiate and support primarily Compaq products, officials said.
The unit will key on next-generation infrastructure components, such as wireless, security and storage; implementation of Microsoft Corp. enterprise software; outsourcing for help desk, customer care and several management services; critical implementation engagements based on Compaq high-availability hardware and Oracle Corp. e-business software; e-CRM and e-procurement; telecommunications; and financial services.
It's a far cry from the agnostic professional services organization envisioned when Compaq bought Digital. But after reporting this year a 4 percent second-quarter decline in services revenue, at $1.6 billion, and a 10 percent decline in professional services revenue, not even Compaq's loftiest professional services goals could stave off the reorganization.
Still, the strategy, described by one industry observer as modest, is not a great departure from Compaq's plans, according to Laura Farnham, vice president of marketing at Compaq Global Services, in Stow, Mass.
"One of the attractive points of the Digital acquisition was professional and customer services," Farnham said. "Over the last six months, the focus has been on how to best leverage that for Compaq's differentiation and growth in the enterprise market. That's not a deviation from the original intent. Now it's about getting focused on making sure it happens."
Focus is something Compaq officials acknowledge has been lacking in the company's services operation.
"We were doing too many different kinds of services work broadly across the market," said Jeff Lynn, vice president and general manager of Compaq Professional Services, in Stow. While the new plan calls for fewer service lines, it will result in greater depth in those areas, according to Lynn. He added that the vendor has eliminated some professional services positions but would not say how many.
The new Compaq-centric services view will keep the vendor from going head-to-head with giant IBM Global Services, which takes a technology-agnostic approach to services and outsourcing to the tune of $32.2 billion annually. The strategy also keeps Compaq out of the type of implementation engagements that Big Five consulting companies such as Andersen Consulting take on.
One Compaq professional services customer said she believes in the new strategy.
"When they came in to do our assignment, they became one of us. With that philosophy, you can attack a bunch of midsize companies that can't afford those big guys and quickly become a world-class organization," said Margo Weeks, vice president of MIS at Radio Shack Canada, in Barrie, Ontario. "We want to use the newest technology, want to be able to compete with [Fortune 500 companies], but we don't want to reinvent the whole environment to do it. They fit in with what we have and make it work."
But will Compaq ever see services revenues on the order of $15 billion? "That kind of money was overly optimistic to begin with," Weeks said. "Many of my peers don't even know Compaq is a professional services provider."
Compaq services time line
1997-1998
1/26 Compaq announces merger agreement with Digital
6/11 Compaq completes merger with Digital
1998-1999
7/1 John Rando, senior vice president and general manager of Compaq Services, resigns
9/30 Compaq records services revenue of $1.6 billion, a 7 percent increase over the year-to-year quarter; professional services revenue up 17 percent over the same period
1999-200
3/1 Compaq names Jeffrey Lynn vice president and general manager of Compaq Professional Services
10/02 New launch of Compaq's professional services strategy |
