HP and BT in managed services US$1.5bn alliance

5 May 2004

MUNICH – IT giant Hewlett-Packard has entered into a global strategic alliance with BT that will see the two companies develop a strategic go-to-market alliance to address mutual growth opportunities in the global information and communications technology marketplace. According to a local Irish spokesperson, shared experiences between the two companies on contract wins like the €500m Bank of Ireland outsourcing deal and the UK’s NHS contract helped make the alliance happen.

As a first step, the companies have signed managed services agreements with a combined value of US$1.5bn over the next seven years. Under these agreements, HP will manage BT’s midrange and desktop information technology infrastructure in the UK, and BT will manage HP’s voice and data network and product support call centres within the EMEA region. According to the CEO of BT’s global services division, Andy Green, the alliance will see HP manage more than 91,000 desktop computers across Ireland and the UK for BT.

The immediate focus of the companies is to implement successfully the managed service agreements over the coming months, while concurrently developing the joint go-to-market approach. Green emphasised that the nature of the alliance was that each company would recommend the other as a “preferred” partner and that the alliance was not binding insofar as each working with other partners. “The deal is for a preferred agreement to involve each company, but ultimately at the end of the day the customer gets to choose its providers,” Green said, indicating that the partnership between HP and BT enabled them to win the lucrative National Health Service (National Health Service) contract in the UK, which will involve HP managing more than 2,000 servers for the NHS.

“Under the new alliance, some 290 people will move from BT to HP, while 40 people from HP will become employees of BT,” Green added.

Starting this summer, the companies plan initially to address targeted European enterprises, plus the Ireland and UK mid-market, consumer and small-and medium-size business (SMB) markets through a combination of service offerings. Subsequently, other markets will be added as conditions and opportunities develop, in order to ultimately provide global solutions capability via the alliance.

The companies are evaluating the development of opportunities in segments such as ICT infrastructure, application management, mobility, workplace solutions and contact centre services. The approach will include the creation of a common service delivery model that is designed to improve the technical alignment across both companies in order to deliver, both together and separately, seamless ICT services.

A spokesperson for BT in Ireland told siliconrepublic.com in Munich yesterday: “This is a big deal for us. This deal comes on the back of the success we had with HP in securing the Bank of Ireland contact.

“We effectively extrapolated that into something more formal. There’s a market opportunity there for the taking for both companies,” she told siliconrepublic.com.

“Connections matter more than ever today, and in a world where business and technology are inextricably linked, bringing together IT and communications into one seamless environment creates a solid foundation for growth,” said Carly Fiorina, HP chairman and chief executive officer. “When we capitalise on our combined strengths, we not only take our own capabilities to a new level, but we then bring the very same standard of simplicity and excellence to our own customers, quickly, securely and reliably.”

Last year, news of HP’s €500m outsourcing contract with the Bank of Ireland prompted industrial action by members of the Irish Bank Officials Association (IBOA) amongst members of the bank’s IT division in Cabinteely, Dublin. However, HP and the IBOA reached agreement on the nature of the transfer of workers from Bank of Ireland to HP’s payroll.

In March this year, Esat BT, BT’s local arm in Ireland, announced the successful signing of its element of the contract with Bank of Ireland to manage the bank’s data, voice, internet and data recovery requirements. The total value of Esat BT’s share of the contract was €151m.

In Munich, HP revealed that it had signed major contract wins with the Ford Motor Company to manage more than 15,000 printing devices and the IT needs of 150,000 employees, as well as a “pay as you go” IT services alliance with global travel distribution firm Amadeus. The company also revealed a breakthrough in its Intel Itanium 2-based server products, with a 50pc reduction in the cost of servers operating upon twice the workload. According to Nora Denzel, senior vice president of the adaptive enterprise and software group, the new servers are capable of costing one-third less than that of a comparable IBM machine and 20pc faster, as well as being 45pc faster than that of a comparable machine from Dell.

By John Kennedy