IDC gives blessing to HP-Unisys Fonterra bid

It's logical for Unisys to drop its standalone bid for Fonterra's outsourcing contract and join with HP to go against EDS, suggests IDC analyst Mark Cribbens.

It’s logical for Unisys to drop its standalone bid for Fonterra’s outsourcing contract and join with HP to go against EDS, says IDC analyst Mark Cribbens.

“Actually, I was surprised the final three were all single-vendor bids.”

The Fonterra contract involves all the company’s IT processes, including desktops, laptops, servers, networks, helpdesk services and utility software, for the 34 countries Fonterra operates in. The contract could be worth as much as $100 million in the first year, IDC says.

Cribbens says given the magnitude of the contract, he’s not really surprised HP and Unisys have joined forces. They’ve had relationships in the past, though not at this level, he says.

“Back when Unisys was doing break-fix services for hardware, someone buying an HP computer may have had the servicing outsourced to Unisys and Unisys used to purchase HP desktop PCs and rebadge them as Unisys — though that doesn’t happen now, as Unisys's relationship is with Dell.”

HP and Unisys have different strengths, “with Unisys traditionally in the high-end hardware space, but it has moved into services and high-end outsourcing, with a contract with the Police, for example”. HP, while moving into the services arena, is still centred around its core offerings, Cribbens says, “but Unisys has been there”.

Most vendors, even those that are fierce competitors, have worked together at some point, he notes. And it’s not uncommon for an organisation to win a contract and then farm out some parts to other providers. He points to EDS’s IT outsourcing contract with Telecom as an example of a single bidder winning a contract but sub-outsourcing parts of it. “EDS doesn’t do every single clause of that contract. For example, IBM became the desktop PC provider to Telecom. EDS doesn’t make desktops.”

As for what the joint bid means for EDS, “it does make their work a bit more difficult and can only strengthen HP’s bid”.

EDS’s history of winning large outsourcing contracts in New Zealand still stands it in good stead, however, he says.

Tough times in the IT sector aren’t likely to have been a factor in HP and Unisys teaming up. “Even if the market was buoyant, they may still have joined together.”

EDS and the HP-Unisys consortium have until tomorrow, to submit their bids. The winner will be announced later in the year.

Last month Fonterra CIO Marcel van den Assum told Computerworld it wasn’t a fait accompli that Fonterra would choose to outsource, but that the final decision would be made after the number of bidders was whittled down to two.

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