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IBM Getting PwC Consulting for $3.5 Billion
MoThugz writes: "This Yahoo! News article reports that IBM will be buying PriceWaterhouseCoopers Consulting for a cool $3.5 billion in cash and stock. From the page: 'The purchase is aimed at boosting slowing revenues in the computer giant's large services business, which now accounts for more revenue than its well-known computers and mainframes. ... The merger gives IBM, the world's largest supplier of computers and computer services, the consulting arm of PriceWaterhouseCoopers, the world's largest accounting firm. The combined IBM-PriceWaterhouseCoopers will rank a close second to top consultant Accenture Ltd. , formerly Andersen Consulting.'"
You know, I just read a story charging IBM's CEO of running the company into the ground with mergers and acquisitions and deals done to drive the stock up. It was very convincing and a deal like this makes me wonder. Do you guys see this as a good move or one driven by a love of the stock market, and what about IBM's future? Somebody once said, "The service and consulting business is the last refuge of the damned." I can't help but wonder if that will prove to be true.
"A witty saying proves nothing." - Voltaire
Jesus, Andersen changed their name already? What, do they have a small army of business card printers and sign-repainters standing by in case of corporate scandal?
...quality promotion liaison."
"Hey, aren't you from Ande-"
"Hmm? Nope! Nope, never heard of them! I'm from *checks card* uhh, Accenture, and I am a *checks card*
The opinions stated herein do not necessarily represent those of anybody at all. Deal with it.
http://www.monday.com used to be a site saying "PWC Consulting is now Monday" and explained the name. Now it points back to pwcconsulting.com and the IBM announcement.
This sort of thing really creeps me out. I mean, from a business standpoint I'm sure it makes sense, but it also seems to be the next step in the sorts of things Karl Marx was describing. We already have a media cartel and a software monopoly. Now we have IT corporations buying up consultancies?
Does this freak anybody else out at all?
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Bleah! Heh heh heh... BLEAH BLEAH!!! Ha ha ha ha...
These figures are off the top of my head, please correct me if wrong.
Consulting made up ~25% of IBM's 18 Billion in revenue last year. It's been a significant part of IBM for a long time and many credit the consulting arm of IBM for pulling IBM through the '90s. IBM is *much* more than a harddrive manufacturer or computer hardware company.
If you have a hard time understanding this, put it this way... IBM was the Microsoft of the 60s, 70s, and 80s. Back then, Computers were mostly for *accounting* and various services that you would hire consultants for. IBM took advantage of this and became big. I question Microsoft, because after ~10 years as a substantial Monopoly, they haven't successfully branched into another area and their largest competition is given away for free.
Anyways, I figured a consulting explanation was in order for anybody who wants to post a *WHY WOULD IBM BUY A CONSULTING FIRM?* comment.
BTW, does anybody know what happened to the name "Monday"? I thought PWC consulting was changing it's name to "Monday". Am I wrong?
Bringing irony to the Slash-masses
and this post gets modded down as redundant:
Accenture was originally part of the Arthur Andersen LLC conglomerate, as Andersen Consulting. Notice the consulting, not accounting. In January 2001 they renamed themselves to Accenture and began public trade.
That all doesn't mean that it's off the hook, however.
Today, XYZ corporation went under for bad accounting. Eyes are trained on the actions of the newly formed IBM-PwC.
Microsoft spokesman Mr. Longhorn said "that open-source *had* to have contributed to the shortcomings of their accounting scheme. With Microsoft software, since we do not show the source, corporations can better hide their iillegal deads."
RMS responds, "Accouting through obscurity does not work."
In other news...
next merges
Apple buy IKEA
Oracle buy Chanel
Microsoft buy playschool
Boeing buy John Deer
I have dealt with PWC's "consulting" before and IBM just paid a lot of money for a really crappy business and a gaggle of STUPID people.
Out of the six or so PWC-run projects I've been involved with at various places of work, every single one has been:
a) a massive failure
b) over budget
c) not at all what the customer wanted in the first place
d) way over on scheduled time
Natural != (nontoxic || beneficial)
This acquisition makes perfect sense. Just as corporate security requires much more than just securing the computers, offering business solutions requires more than just offering hardware and software. When IBM's clients are faced with a business problem, IBM can now offer not only hardware and software, but solutions for the tax angle, the public relations angle, etc. My guess is that they've been looking to do something like this for a while, and now there's a 60% off sale going on at the NYSE.
Is this to make it clear that they are doing something about conflicts of interest involving account consulting?
Perhaps they've got some misdeeds that may come to light, and are trying to prevent anything that might be discovered from precipitating an Anderson-esque collapse?
Well, in any event, to an ignoramus like me, it sounds win-win.
Good! Tech mergers mean I get fewer rejection notices!
Table-ized A.I.
A blast from the past - "HP is considering the acquisition of PricewaterhouseCoopers' global management and information technology practice for between $17 billion and $18 billion in cash and stock, the company confirmed in a statement early this morning."
So PWC had to sell off their consulting unit to somebody, or spin it off as a standalone entity. IBM makes sense as a buyer, since they already do IT consulting and related services. IBM probably got a good price, since this was a forced sale.
No big thing; it actually makes sense as a deal.
Q: What do you get if you cross IBM and PWC?
A: IBM
(Yes, it's not funny; it wasn't funny when they bought the company I worked for, either...)
-- Terry
Last year HP tried to buy PWC, the deal ended because the price was too high, something like $18 Billion. Now that HP has merged with Compaq and has all of the Compaq nightmares IBM buys PWC for $1.5 Billion.
Carly must be dieing right now.
"The poet presents his thoughts festively, on the carriage of rhythm; usually because they could not walk" Nietzsche
Garfield made them re-think that change.
- Tal Cohen
As merger season is apparently upon us, here's some other possible additions to the merger club:
Hale Business Systems, Mary Kay Cosmetics, Fuller Brush, and W.R. Grace Company merge to become Hale Mary Fuller Grace.
Polygram Records, Warner Brothers, and Keebler Crackers merge to become Polly-Warner-Cracker.
3M and Goodyear merge to become MMMGood.
John Deere and Abitibi-Price merge to become Deere Abi.
Zippo Manufacturing, Audi Motors, Dofasco, and Dakota Mining merge to become Zip Audi Do Da.
Honeywell, Imasco, and Home Oil merge to become Honey I'm Home.
Denison Mines, and Alliance and Metal Mining merge to become Mine All Mine.
Xerox and Wurlitzer will merge and begin manufacturing reproductive organs.
Fairchild Electronics and Honeywell Computers will merge and become Fairwell Honeychild.
3M, J.C. Penney and the Canadian Opera Company will merge and become 3 Penney Opera.
Knott's Berry Farm & National Organization of Women will merge and become Knott NOW!
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Anderson Consulting was spun out of Arthur Anderson the accounting firm, it was set up to take advantage of the "additional" services that they could offer to clients whose books they audited.
So it is actually founded on exactly the mentality that led to Enron et al.
An Eye for an Eye will make the whole world blind - Gandhi
I hope the Bob's don't start laying people off!
"Things are more moderner than before- bigger, and yet smaller- it's computers-- San Dimas High School football RULES!"
these big IT consulting firms are only as good as the clowns they put on your project. In my career so far, i've been involved in 3 major projects involving "Big 5" consultants. Often, you get graduates with little experience under their belt.
Their answer to this is that their employees are able to draw on a vast and global pool of knowledge.
I think that's bollocks.
I once talked to a very high level consultant working for one of the big consultancy firms, at a bar. He told me this,
"Look at there business and come up with the most complicated solution, and describe it in the most vague and unintelligible way you can. Make sure to use lots of big technical words,especially trendy ones, feel free to make up entirely new terminology to desribe everyday things. For instance a gateway is now a "Inter/Intra network liason device", and a router is now a "packet traffic management switching and delegation processing unit." Do not spell out clearly how to implement your plan. If the business does well, take all the credit. If not, claim they did not implement your plan correctly, and that it is their own fault for leaving out the most "critical" piece of your solution."
That was from a guy I knew in Philly who made 7 figures a year, and that he employed the strategy on all consultant gigs from management, to manufacturing and IT.
Could Jesus microwave a burrito so hot, that he himself could not eat it? HS
Even in its heyday, IBM made its profits from selling goods, so it couldn't generate the obscene amounts of cash which MS is sitting on. The scandal is that MS has made monopoly profits from software, where the direct cost of sale is almost zero, and rather than doing anything with the money or paying it to shareholders in dividends (and hence paying taxes like the rest of us) they have amassed a cash mountain. So while IBM has bought PwC Consulting, MSFT has *chosen* not to.
So on Microsoft's part, this displays either a different plan or (more likely) a lack of vision. Having made easy money from the Windows/Office monopoly, they don't understand how to run a "normal" business where you have to sell goods or services (where the cost of sale is not insignificant compared to the price tag).
As for IBM, while Global Services is a managed service offering which also performs implementations, PwC Consulting will be mostly implementation based. Their plan will be to use the PwC arm to feed ongoing business into GS (which means that when they report the accounts of the two arms separately IBMGS will show impressive growth).
Dunstan
The last scintilla of doubt just rode out of town
"...you have to keep them under a tight reign."
rein. under tight rein. like reindeer. they're reined together, see? or like horses. that's where the saying comes from. if you give a horse free rein, it will just do as it pleases. to control it, you have to keep it under tight rein.
pedant n: a person who pays more attention to formal rules and book learning than they merit (WordNet ® 1.6, © 1997 Princeton University)
It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail. - Abraham Maslow
If some employees leave or get sacked from PwC, I hope they send emails around as good as this one from a sacked PwC employee.
I'll do it for cheesy poofs.
Check this out then -- it's sad and hilarious at the same time, perfect drama in other words. It's mostly about business consultancy, not IT, but it's the same patterns. Highlights include Anderson getting bonuses that get higher as they manage to get more people fired at the client site.
I have worked with major consultancy firms. Their work is substandard and they attempt to bully their way past any independents or local technical management with incompetent ideas that are poorly implemented.
What they give to senior management is schmooze, payoffs (come visit our corporate HQ in the Bahamas) and the ability for the board to escape the blame when defending their poor results to shareholders.
I have seen the large consultancy companies take 200 people to do the work of 20 competent staff. This is why I dislike the biggies so much.
Those looking may like to note that Accenture's full name is Accenture Ltd and it is registered in an offshore tax-haven (Bermuda). It appears that they haven't lost their bad habits from the Andersen days. This fact is not revealed on their web site or their annual report, however its is revealed in their SEC 10K Filing. They in turn own shares in Accenture SCA, a Luxemburg based partnership which is the main operating body. That is minimal fiscal transparency.
Um no. The pressure came from the SEC over independence issues, starting some 3 years ago.
Of course, in the last 6 months, it's only got stronger, and now there's significant client pressure as well.
The only thing you can accurately describe as "Scotch" is a sticky tape made by 3M. And it's
You obviously didn't notice that Microsoft now sells a CRM suite and a reasonably well thought of Content Management System.
Now the CRM suite is no match for Siebel, as it's targeted at SMEs, but the CMS is in the tier just below Vignette and Documentum, and has inflicted major price movements in the CMS market.
Oh, btw, spot on with the rest of your comment.
The only thing you can accurately describe as "Scotch" is a sticky tape made by 3M. And it's
OK so they slashed BIS in the thousands of jobs. They crush variable pay so that if you literally walk on water you get a dollar or two. Annual increases are cut by 75%. Dump the disk business. Cut all business travel. Training dollars - if there ever were any are now approved by God Himself and No One Else. 2 to an office is standard. Conflicting gibberish about whether we're supposed to work mandatory 15% OT or if were supposed to bill 40 hrs to internal and not one minute more. Constant chatter of who will get cut next & when. Stock is down by almost half. And now we have to make room for 30,000 PwC pussies? Let's see how many Partners are converted into a new gibbering gabble of do-nothing VPs and high dollar pimps. Half of these beotches are the same customer hired flunkies who are on an engagement to tell the customer what a bunch of fucked up losers the IGS team is - now we're all gonna be one big wet sploogy purring love pile.
God was smoking rat poison on this one.
Back in the day (before it was known as PwC) I worked for PW. Because they were a part of a accounting company, they were constrained by the accounting rules. This meant that even though we computer types were not accountants, we still needed to comply with the investment rules and the continuing education rules. We watched Andersen form AC, then morph that to Accenture, and wondered what was stopping PW from doing the same thing.
:)
I've seen some postings about idiots, wasted money, and pet technologies being implemented by these firms. I worked with some of the smartest people I've ever met while I was at PW. I also watched some big dopes try to make things work.
Some folks did squander client's money. Other clients demanded that we build something that pleased the CIO of their company, even if they were told that it would never solve the problem that they wanted it to solve.
I did participate in some great projects - projects that helped companies and government agencies solve some really big problems.
PW's strength (from my perspective) was that they could bring smart people to the table who could figure out how to solve problems while not being held back by company politics or excessive meetings.
Now, as a member of a large corporation, I see that there are many projects that we are simply unable to tackle because we don't have enough team players, or enough aggressive and smart players to move the ball. That's when we call the big folks like IBM and Accenture.....
I guess my pension $$ are now a part of IBM's program.
But Herr Heisenberg, how does the electron know when I'm looking?
Right. I worked for one of these orgs too, and since the accountants had more votes in the partnership and held the managing partner positions, they called all the shots. The consultants just got to complain about it and threaten to go elsewhere. Remember Accenture's multi-year fight to get out from under the thumb of AA? It was only resolved through *big* payments from Accenture to AA, and then only after bitter arbitration.
From Accenture's IPO prospectus:
"Until August 7, 2000, we had contractual relationships with Andersen Worldwide and Arthur Andersen under certain agreements whereby we and our "member firms," which are now our subsidiaries, on the one hand, and Arthur Andersen and its member firms, on the other hand, were two stand-alone business units linked through various member firm agreements to Andersen Worldwide, a single coordinating entity. On December 17, 1997, the Accenture member firms requested binding arbitration of claims that Andersen Worldwide and the member firms of Arthur Andersen, among other things, had breached or failed to perform material obligations owed to the Accenture member firms under the member firm agreements.
"On August 7, 2000, the parties to the arbitration were notified that the tribunal appointed by the International Chamber of Commerce in its final award, dated July 28, 2000, had ruled that Andersen Worldwide had breached its material obligations under the member firm agreements and that the Accenture member firms were excused from any further obligations to Andersen Worldwide and Arthur Andersen as of August 7, 2000. Under the terms of the final award, Accenture, and each of the member firms comprising it, was required to cease using the Andersen name or any derivative thereof, no later than December 31, 2000. On January 1, 2001, we began to conduct business under the name Accenture.
"On December 19, 2000, Andersen Worldwide and Arthur Andersen LLP, on behalf of themselves and all other Arthur Andersen member firms, partners, shareholders and others, and Accenture Partners, S.C. and Accenture LLP, on behalf of themselves and all other Accenture member firms, partners, shareholders and others, executed a binding memorandum of understanding agreement to settle and resolve all existing and potential disputes among the parties concerning the implementation of the final award and the separation of the Accenture member firms from Andersen Worldwide and Arthur Andersen, including the discharge and release of all obligations of parties under the terminated member firm agreements between the Accenture member firms and Andersen Worldwide. The memorandum of understanding agreement provided for the parties to enter into a number of definitive agreements with respect to services, subleases, releases and indemnities and to finalize other arrangements among the parties. It also contained provisions for specified uses by Accenture of its former name. On March 1, 2001, Accenture, Andersen Worldwide and Arthur Andersen completed implementation of the memorandum of understanding agreement by executing releases and indemnities, finalizing other arrangements among the parties and entering into services agreements..."
Milo
There has, for a while, been a debate about exactly what constitutes consulting. IBM does a lot of outsourcing deals (which Accenture is also entering) and some people don't consider that consulting. However, the Accenture's and PWC's of the world do a lot more of the traditional strategy consulting that IBM doesn't do much.
I never said that IBM did only Outsourcing. Yes, IBM does do some other types of activities considered as consulting. However, PwC certainly has a much stronger foothold in the strategy consulting market which is one marketst that originally drove consulting. However, PwC, Accenture, Cap Gemeni E&Y, and the other former "Big 5" are certainly not the equals of strategy's old guard like McKinsey, Bain, BCG, or Booz Allen. I think the differentiation of these consulting markets really goes back to the image of various types of consulting. Often, IT consultants have looked down on outsourcing practices and strategy consultants have looked down on the IT constulants.
And, by the way, a list of practices on a website does not always tell the real story of what is beign done.
PWC was the second-biggest "business consulting" firm. The biggest IT Consulting firm was, and will continue to be, IBM Global Services. It will simply now have a much bigger business consulting wing. (It already had one, it just wasn't as large.)
HP tried to by that same division for $38 billions 3 years ago. I say they are getting a deal.
Looking for a great online backup: Green Backup
Remeber when HP was going to buy Price Waterhouse Cooper a year or two ago?
HP wanted to buy it for 17-18 Billion.
IBM will now be buying it for 1/5 of that.
Here is the link if no one remembers.
What a mistake that would have been!
Moon Macrosystems. Sun's biggest competitor.