By Michael Haines and Michele Cantara
Gartner Inc.
HP’s purchase of .NET application specialist Extreme Logic will boost HP Consulting’s strength in Microsoft technologies. But the acquisition likely won’t substantially enhance HP Consulting’s ability in vertical industries.
Event
On August 13, 2003, Hewlett-Packard (HP) announced a definitive agreement to acquire Extreme Logic, a consulting firm that architects and implements business solutions based on Microsoft .Net. HP did not release financial details of the transaction. Extreme Logic, with about 200 employees, will become a subsidiary within HP Consulting. HP Consulting will retain Extreme Logic’s management team.
First Take
HP, on its own and through its acquisition of Compaq Computer, has focused a great deal of its strategy in recent years on becoming a leader in the Microsoft market. Historically, HP Consulting has been strong in providing Microsoft-related infrastructure services for products such as Microsoft Exchange and SQL Server. In September 2002, HP Services and Microsoft announced that HP would act as a global Prime Integrator for .Net. The Extreme Logic acquisition enhances HP Consulting’s Microsoft practice by increasing its ability to deliver value as a Microsoft .Net system integrator. In particular, the deal will bolster HP Consulting’s .Net capabilities in the eastern United States. Extreme Logic also brings considerable expertise in architectural methods (more than 100 of the company’s 200 employees provide architecture services).
Enterprises demand comprehensive solutions (not point products) and expect these solutions to exploit the Internet. This acquisition will eventually enable HP to offer a broader range of solutions as a part of its Adaptive Enterprise initiative. HP should be able to integrate Extreme Logic’s intellectual assets into Adaptive Enterprise by mid-2004.
HP has also made a strong commitment to its channel partners and has attempted to grow the share of its business that partners contribute. The solutions that emerge from the Extreme Logic acquisition will likely (and should) be made available for partners to sell and help deliver.
During the past several years, HP Services has striven through organic growth, partnerships and acquisitions to gain the size and scope to differentiate itself and to compete more effectively on a global scale. The Extreme Logic deal belongs to HP’s serial acquisition strategy. In 2001, Compaq bought Rainier, a company similar to Extreme Logic. HP Services wants to become the premier infrastructure service provider for enterprises as well as for other IT service providers. Buying Extreme Logic will boost HP Services’ capabilities in this area, and enterprises should shortlist HP for .Net infrastructure solution work. However, apart from areas within the communications, network service provider, financial services, manufacturing and government sectors, HP remains limited in its ability to offer solutions for vertical industries.
Acquisitions tend to create confusion for all of the parties involved. Until this acquisition is complete, potential Extreme Logic customers should carefully scrutinize proposals and contractually ensure that appropriate resources will be applied to their implementations.
Analytical Sources: Michael Haines and Michele Cantara, Gartner Research
Recommended Reading and Related Research
“Company Profile: HP Services’ Strategy Moves Forward” – We review HP Services’ market position, strategy and offerings and discuss the company’s progress to date. By Eric Rocco and Michael Haines
“HP Services Named First Global Prime Integrator for .Net” – Those seeking .Net expertise should put HP Services on their shortlist and evaluate HP Services for large global deployments requiring significant Microsoft and Unix content. By Michele Cantara, Bob Igou and Alex Soejarto
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