The acquisition of EDS by HP is all over the news, and apparently will result in the second largest tech services firm in the world after IBM. Now, that’s all very well, and we are a very big buyer of technology services, but size does not a compelling value proposition make.
I am challenged, in fact, to find anything about services companies that would make me want to choose one over the other.
Yesterday, for example, Christophe and I met with such a company. They had some interesting things to say, but ideas are rarely enough to get us going. We need execution.
Our key execution question was around their distinctive uniqueness: let’s face it, if you are going to charge those big rates, there better be something different to justify it.
Technology is a commodity, not a uniqueness. And if we want business expertise, we go to a business consulting house, not a technology vendor.
Anyway, as far as I can tell, there wasn’t anything very unique about this particular vendor, and neither will there be that much uniqueness in the new services behemoth that is HP and EDS. In fact, they will likely be distracted for at least two years while they sort out the integration.
The fact is, there are only so many ways to package up a bunch of people and try to sell them for a decent margin. Especially when what you are doing is helping us do business-as-usual.
Or is there?
There is a monumental difference between the outputs of a star performer and an average one. I think the number usually quoted is ten times more effective, and that’s a huge upside when you’re under pressure to deliver. The thing is, star performers are pretty hard to find. Consequently, they aren’t likely to come cheap and are almost certainly not going to get commoditised. It would be amazing to find a services company that had a disproportionate share of star performers, when by an large, everyone is after the same people.
Everyone has access to the same labour market that services companies have, and so we know that arguments around “having the best people” are probably spurious. And if those people have chosen to work in a services company, they usually show up for the pitch, but are nowhere to be seen at execution time. Ten times more effective people are a precious commodity not to be wasted on anything so mundane as servicing customers.
So how about this for a unique proposition: have only star performers, and put up your rate card ten times to cover the fact that you have only one tenth of the headcount. Be so confident that your people can do miracles that you don’t bother with risk-based pricing. Charge us nothing if you fail to meet any commitment at all, even if it isn’t all your fault because your superstars can fix any problem. Make it a no-brainer to hire you because that is the only way that we can guarantee to our management that without fail we can deliver something.
I think we’d be glad to pay for uniqueness like that.
HP and EDS: where are the star performers in your now 200,000 plus average services employees? Do you even know? And how will you use them to give us uniqueness that will make us want to hire you?