IBM’s PwC Purchase Complicates Vendor Alliances
3:26 PM EST Fri. Sep. 20, 2002
Expect a fast-paced round of vendor-integrator musical chairs to play out in Q4 as IBM's $3.5 billion acquisition of PwC Consulting forces Big Blue's competitors from all corners of the market to rethink their relationships with the former Big Five consulting firm. The way we see it, here are a few of the once-strong alliances that stand to fall apart once the deal is done:
Sun Microsystems: Late last year, PwC Consulting made a move to get closer to Sun Microsystems, becoming a preferred systems integrator and naming the vendor as its preferred provider of Unix-based servers. A Sun spokesperson we contacted said that until the acquisition goes through, the PwC relationship will be "business as usual" and that further actions will have to be decided at a later date. But because Sun and its CEO, Scott McNealy, see IBM as a major competitor in the server space, we can only assume those preferences will change.
Oracle: PwC Consulting has become one of the largest Oracle Alliance Partner companies, with more than 1,400 trained Oracle consultants working on projects in areas ranging from CRM and ERP to data warehousing and e-business. While an Oracle rep told us the company will continue its relationship with PwC Consulting, considering the fact that Oracle9i is battling tooth and nail against IBM's DB2 for database dominance, and its Oracle 9iAS is up against WebSphere in the application-server race, we expect Larry Ellison & Co. to pull back most of their affections pretty quickly.
Hewlett-Packard: In light of HP's recent acquisition of Compaq, it's clear the newly merged entity is gunning for IBM in both the hardware and services arenas. HP reps have already noted in published reports that the company is in the process of reviewing its PwC Consulting relationship. In our opinion, "review" is just a formality. The relationship is already dead and buried in CEO Carly Fiorina's eyes.
BEA Systems: The software vendor, whose WebLogic product has been in a fierce battle with IBM WebSphere for dominance in the application-server market, really started pushing its relationships with Big Five consultants during the past two years, looking to them to provide the consulting muscle it needs to battle IBM Global Services. Now it looks like CEO Alfred Chuang & Co. are going to lose one of the strongest members of that team, PwC Consulting, which has been building vertical-specific solutions based on WebLogic in various areas like CRM and enterprise solutions.
So, who stands to benefit the most from the chaos? At this point, it's still tough to tell. On one hand, some say IBM's acquisition of the 30,000-person strong PwC Consulting will make the technology giant less reliant on outside consultants, cutting alliance opportunities for the likes of Accenture, KPMG Consulting and other large integrators. On the other hand, those large integrators, who traditionally competed with PwC Consulting for lucrative business and technology development work, are hoping to make the most of the consultant's strained relationships with other vendors.
Take KPMG Consulting, for example. During a recent analyst presentation in New York, KPMG Consulting executives said they have already seen a noticeable increase in revenue as a direct result of the IBM-PwC Consulting deal, which has forced some IBM competitors, including HP, Dell and Sun, to cut alliances with PwC Consulting and look to KPMG Consulting more for work.