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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.'"
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.
This is basically true of all the large consulting firms (PWC, KPMG, E&Y, etc). The methodology, from my dealings with them, seems to be:
1. get the CIO well-fed and well-laid, and if possible the CFO and the CEO or COO (whomever has responsibility for the CIO and CFO)
2. now that the contract is yours, hire a bunch of people off the street - they should have good college degrees and no practical experience. These monkeys must be able to speak and write effectively, and must have no ability to think critically at all. They are just there for documentation
3. get the monkeys to ask the client's IT guys what problems they are facing, and how they would solve them if they didn't have to do what upper management told them to do
4. without doing any fact checking, error checking or even prima facie review (these are critical to the program - not doing them, that is), edit the interviews into a single document. It doesn't matter if the document is not internally consistent (and it won't be, coming from many sources), as long as it's what the CIO has already heard from his people (and it will be, because it came from his people to the consultants). This validates the CIO's excellent hiring and promotion strategies, six-sigma ho-shin plans and whatever.
5. after making sure that step 4 takes as long as the client will tolerate, charge $200 per consultant per hour
6. brag in ads and so forth about how you helped a $6bn/yr company fix all its IT problems, but you can't say who they are because it would violate the non-disclosure you insisted on in step 1
Basically, the big 6 (or 4 or whatever they are today) are worthless piles of crap. On the other hand, independent consultants and IT services companies tend to be pretty good. IBM was odd in that they charged $400 per hour for good people, but they could actually get good people (who they paid $70 per hour at most). Maybe they ran out of good people to get, and decided to hire the monkeys.
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
Good! Tech mergers mean I get fewer rejection notices!
Table-ized A.I.
My current summer job is at Accenture and I've had to listen to these damn presentations about Accenture's history, so I might repeat it to clear the confusion. :)
In the beginning... there was Arthur Andersen, they founded a computer and strategy consulting company called Andersen Consulting. It didn't take many years for Andersen Consulting to grow larger than Arthur Andersen itself. Now Andersen Consulting had to pay each year large amounts of money to their parent company, because they couldn't make enough money on their own.
Now the people at Andersen Consulting wanted to break from Arthur Andersen, because they thought the yearly payments they made to Arthur Andersen was slowing down their growth. Arthur Andersen however didn't want to let Andersen Consulting go, so a legal battle began. As a part of the settlement in this legal battle (sometimes during year 2000), Andersen Consulting agreed to change their name to Accenture.
So basically the people here hate Arthur Andersen and they've been laughing their asses of because of Arthur Andersen & Enron.
Indeed. I've seen the same pattern myself (and I even worked for a time at a company that pulled that kind of scam).
The only thing I'd add is that most of these companies have pet technologies that must solve every problem. At one company I worked for this resulted in half a dozen aging Novell servers that worked perfectly well being replaced with about two dozen massive NT4 servers that were horribly unstable. Our wonderful NDS tree that was a pleasure to administer was replaced by unmanagable 'domains' with complex trust relationships that nobody understood.
At the consulting company I was working for, Tivoli was the 'one true solution' for everything (you can guess the company). Clients were conned into buying Tivoli agents for everything. It's amazing how expensive these agents can get. Then of course you need more of their expensive consultants to configure the resulting mess.
What I've learned is that consultants have their place, but you have to keep them under a tight reign. Give them specific, well scoped projects with well-defined deliverables. Do use them for specific skills that you don't have in-house, or extra manpower when you don't have enough staff for a specific project. Never let them define the goals, scope, or technology to be used.
It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail. - Abraham Maslow
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
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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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