Wednesday, 7 August 2013

Acquisitions and Alliances

Mike Lawrie's reshaping of CSC continues apace with the recent announcements of the acquisition of Infochamp as part of its 'Big Data' and Cloud Computing strategy, and the global alliance with AT&T. These announcements seem to be positive as they take CSC forward into newer services and capabilities. That is at least based on what little information is given about them, (as we all know the devil-is-in-the-detail). So based on what can be gleaned from the announcements, questions we would like answers to and comments are:

  • Is AT&T really a global player? We think it does little for CSC in global terms. AT&T may have networks with global reach but it is not really a global player in that its in-country reach is limited. It has to be said though that that few network companies are truly global - in spite of the industry's marketing hype.
  • The AT&T alliance announcement talks about the integration of cloud services. How does the cloud integration play with the Infochamp acquisition?
  • Further reading on this subject can be found here:
  • A positive point is that the alliance will probably be well received in USA Federal and Defence circles which will enhance business opportunities in the USA. 
  • Outside the USA CSC seems to have done little to build business from a corporate level. Although we note a modest $2.5mln investment in cyber security and cloud services in the BHP based facility at Wollongong south of Sydney Australia. Apart from that the story outside the USA seems to be one of reducing staff and disposal of businesses rather than investment, leading us to conclude that CSC is retrenching back to home.
  • We note the comment about not having to invest capital in networks. In some ways this is a good thing. But it could mean that CSC, and its clients, may pay more for network usage since AT&T will need its full service margin. If CSC were to use its own capital, of which it said to "have a pile", it could create its own without compromise. We are confused about the benefits and suggest these need to be clearly spelt out.
  • Does AT&T takeover CSC's current networks? If so does it pay for what has been invested to date? 
  • In order to reap the benefits of a new network alliance there will be a need for a joint CSC/AT&T global networks consolidation project. This will take time, money, and may cause some disruption. How much time? How much money? How much disruption?
  • What are implications for CSC's own network technology people? Do they join AT&T?
  • One final point. Does the AT&T alliance pave the way for a full scale take over of CSC by AT&T?

In conclusion, there are lots of open questions to be answered about the acquisitions and alliances CSC is seeking. We assume they will be answered in the coming weeks.

Changing the subject; CSC sells cyber crime and security services across the globe and is proud of its expertise in this area. So how come its major data centre in Copenhagen Denmark where it processes work for the Danish government can be hacked by outsiders?


Anonymous said...

In answer to some of your questions...

All network services people go to AT&T it seems.

Rumour has it AT&T will run all networks in CSC, it will also run client networks IF the client agrees. The client will be asked if the balance of the network support contract can be executed by AT&T, nobody knows what happens if they say no, but certainly some will. Account execs have been asked to immediately judge the client's positions and reactions.

Nobody has any idea if AT&T are paying for CSC network kit, it could be a hardware owning outsource or it could be service only - the book value of the kit is probably zero given how old and creaking CSC network is.

CSC has been trying to get out of the network game for over ten years. Another thing on the list of things that CSC knew it had to do but couldn't execute.

Seems CSC isn't the only one with this idea though:

BTW the value of Infochimps probably is in the ballpark of the figure at the bottom of this article:

Anonymous said...

You might like to know that CSC withdrew from the Govenrment grant agreement that would have seen them commit the $2.5mln in the facility at Wollongong.

Anonymous said...

The one thing within CSC that wasn't particularly broken was networks, so I can't see how adding AT&T to the mix that helpful, sure CSC top spend was in networks (Lawrie's approach address the big numbers) but that was because of the amount of network business it had, not because of the CSC internal network. I know for a fact that some of CSC network customers chose CSC because they didn't want AT&T ah well who knows how it ends

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