IBM-PwCC transition likely to drag on: Gartner

Market analyst Gartner last week warned that while the IBM and PricewaterhouseCooper Consulting's deal may close by September 30 2002, the transition and integration will probably continue through year-end 2002.

The downside of the deal for customers is that transitions of this magnitude can cause "disruptions, and clients may feel some as project teams take on new staff", Gartner said in a research note.

However, the Australian Institute of Management's CIO Suresh Padmanabhan (whose organisation is a PwCC auditing client) said customers should not be concerned about interruptions to work on existing projects contracted to the firm.

Telstra, whose Services Operations Group (which manages IT infrastructure and business process) currently has a back office project with PwCC to review the "operational structures of non-customer facing activities and create new efficiencies across the business", said it was yet to review the impact the IBM acquisition of PwCC will have on that arrangement.

Meanwhile, Padmanabhan believes one confusing point for customers will be what happens to the IBM engagement staff they currently deal with, given IBM Global Services is on a massive downsizing drive worldwide.

With any merger situation, he said, the main concern was around the people; their roles any and internal processes needing transformation.

"[However] when it comes to transformation and integration, both firms will do a good job because they are technologically adept and highly reputable."

He said, overall, PwCC was a wise strategic acquisition by IBM as the firm was "already very good" in the implementation services field, and could now penetrate more vertical markets through PwCC's customer base.

"PwCC is good at things like business process re-engineering and advising companies on where their IT department should stand. It has that as a core strength as well as being top of the market with business consulting skills."

"The move is a positive for the market," Padmanabhan said.

"If I was working for PwCC, I'd be worried."

Heightening such concerns, local analysts speculated last week that the buy out could result in some redundancies within both companies.

IBM executives did not discuss layoffs last week, but said they consider PwCC's staff the key asset in the deal.

IBM is designing salary and stock compensation packages that it hopes will allow it to retain PwCC's staff and 1300 partners worldwide, executives said.

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