IT Week Leader: A promising merger

How will an HP EDS merger affect the market, and enterprise customers?

There is always uncertainty when a company is involved in a multibillion-pound takeover. But customers of EDS and HP may have less to fear than most. For, although the deal will inevitably result in some streamlining, HP must know that a huge factor in making this transaction a success will be keeping both sets of customers satisfied.

Strategically, EDS looks like it will fit well with HP’s current services arm: HP has largely focused on hosting, managed services and maintenance; EDS complements this portfolio with its own managed services and hosting operations, while adding an established outsourcing division. And with HP having recently invested heavily in datacentre services, acquiring EYP Mission Critical Facilities and Opsware, EDS’s 100 or so enterprise-class datacentres will add further clout.

But while there are sound strategic reasons for the acquisition, it is the process of integrating diverse entities that derails most big mergers. EDS and HP could hardly be more dissimilar in their approach: just as EDS has never shaken off the steely rigour instilled by its former US Navy officer founder, HP is still infused with the West Coast idealism of its creators.

The potential for a culture clash is clear, but it does not mean that the deal will be as luckless as HP’s previous giant acquisition of Compaq. HP’s current chief executive, Mark Hurd, has earned a reputation as a master of detail, and that augurs well for the tie-up.