Tuesday, 21 January 2014

HCL Partnership - a contrary view

Another of our readers has submitted this contrary comment on the HCL partnership. We thought it worth showing in its own post as well as a comment on the original.

Mike Lawrie did the right thing with this move.

It is no surprise that CSC is withdrawing from outsourcing.  Lawrie was left with little choice given CSC’s accumulation of mistakes and errors of strategic direction going back 15 years. These were always going to come back and bite CSC and they did. The surprise is that CSC succeeded in managing down major problems in outsourcing for so long. The good news is that they have now found an exit strategy before outsourcing losses and failure to win new business brings the company to its knees as NHS did a couple of years ago.

The strategic errors included initially keeping so many small data centers that came with outsourcing wins, leading to lack of scale and islands of inefficiency;  the profit models which created high profits in the early years of a contract but little or no profit in later years; the permanent need to sign up more and more (doubtful quality?) new business to mask the profit shortfalls in the later years of  older contracts; the unachievable “cost challenges” factored into the profit models which kept pushing problems into the future; the failure or refusal by CSC top executives to understand the changes in the outsourcing market;  a stubbornly persistent focus on trying to win mega deals when it was clear that the era of the big infrastructure and apps deals was over; and then the recurring cancellation of investments to compensate for the shortfalls in  “this quarter’s profit” .

The tragedy is that CSC could have been one of the pioneers and leaders in Cloud, as it had been in the 1990s in infrastructure and apps outsourcing. Things could have been different if a decade ago it had analyzed objectively the changes in market and client needs, the advances in technology, and the company’s capabilities and market position. This could have led them to what we now know as “Cloud”.  But this would have required strategic vision at a time when CSC was led by a CEO whose focus and priorities were detail, numbers, cost cutting and “this quarter’s profit”.  So it did not happen.

Mike Lawrie deserves criticism for many things, but on this one he deserves credit for defusing a potential time bomb.


Friday, 17 January 2014

B******t Baffles Brains? Not this time

One of our correspondents is so het up about CSC's latest pronouncements that he offers this posting for consideration.

CSC has announced it is working with HCL on providing combined solutions to achieve the much needed growth that evades them. Silicon Angle has many good comments on it in the following LINK
I also have a take on it, and comment on some of CSC's own statements.

A. CSC is bailing out of outsourcing so goodbye all the support staff in that area of the business.  
B. What the hell is 'a cloud agnostic platform' a building by of Richard Dawkins? Bullshit or what? 
C. Multi vendor cloud solutions! Give me a break. It means no one can do it so we are scrambling to cobble together bits and pieces. Bullshit or what? 
D. 'Service mashups'! Bullshit or what? 
E. 'Modernize cloud applications at scale'! Since cloud is relatively new where are the old cloud apps that need modernising at scale. 

 This all takes me back to the early days of IT when IT departments and professionals were accused of not talking sense by using IT Nerd Speak. Many tried to use this goobledigook to pull the wool over the eyes of company management, or didn't really know what they were talking about. Eventually they got found out and Company managements put in their own business experienced managers to run IT depts. Do they never learn? 

 Bottom line is, as has been discussed many times by Cassandra; IT services, apps services, and business services are changing fast (going through a revolution in fact) due to new technology, client experience and increased capability, along with new opportunities from in built intelligence in many devices that were once stand alone and are now integrated and digital. So rather like the way old IBM thought everything needed a main frame and only after IBM nearly collapsed and became service oriented did it become credible. IBM is about to invest $1bln+ in cloud solutions. CSC seeks an alliance, whoopee! I think that CSC sees everything as needing 'integration' and its high price consultants and won't put its money where its mouth is.

Thus CSC is trying to false fit a failed past onto a new shape future. Or to put it another way, to the man with hammer every problem is a nail that needs bashing.
Good luck to them.

For a BS antidote try this link.
author. Mexican Pete

Monday, 13 January 2014

Froggie Tale

They say that if you put a frog into a pot of boiling water, 
it will leap out right away to escape the danger.

But, if you put a frog in a pot that is filled with water that is cool and pleasant, and then you gradually heat it until it starts boiling, the frog will not become aware of the threat until it is too late.
The frog's survival instincts are geared towards detecting sudden changes not slow 

This parable is often used to illustrate how humans also have to be careful to watch slowly changing trends in the environment, not just the sudden changes. It's a warning to keep us paying attention not just to obvious threats but to more slowly developing ones. The alert ones survive to spawn elsewhere.

A correspondent from India sees the water warming in the IT services world:- Read it here 

Further comment: 
In an outsourcing and consulting industry context this is an interesting and apposite tale as it underscores what has been happening for some time now. Changes started with Open Source and Plug & Play kit. Users also became more familiar with IT and can do more for themselves. Then Google, Amazon, Paypal, and others turned up the heat and sold solutions direct to businesses.
Thus the old consulting and Outsourcing models were being replaced by cheaper easier to fit and maintainable solutions. This will explain why IT outsourcers and consultants are having a hard time of it particularly in the commercial sector. The government sector being different because they need more hand holding, generally have less able people working for them, and are slow to adopt new methods. The post is focused on India but this shift includes all other countries. The trouble for CSC and similar companies is that moving to the new world requires capital investment in new skills and infrastructures and new business models and cultures, while keeping the old business running. CSC is buying new companies which are partly in the New World and they will provide some growth. But in  general  CSC seems to be unable to come up with the right models or transition to them fast enough. Thus CSC continues to be in decline as evidenced by revenue reducing and missed targets. In the past CSC had cash-cows like UK's NHS and US Federal contracts to keep it going. These are; as reported in earlier posts, 'drying up'. 
The continuing revenue decline hurts many of those involved especially employees, many of whom could be frogs. Will they be leaping from this pot?

Ribbit, ribbit

Thursday, 9 January 2014

A Night To Remember

One of our commentators has reported that Mike Lawrie CEO of CSC has compared CSC to sailing on the Titanic. This post takes its title from the first feature film about that tragic night of the sinking of The Titanic.

The captain of The Titanic was Edward Smith, a very experienced sailor and sea captain of ocean going liners. He was known as the Millionaires Captain because he seen as a someone to trust your life with, resulting in many millionaires choosing his voyages when crossing the Atlantic.  It was for this reason that he was chosen by the White Star Line to captain the maiden voyage of the largest most modern and best equipped ship of the age, The Titanic. We assume that Mike Lawrie must be the Millionaires CEO since he is obviously seen by the millionaires on company boards as a safe pair of hands for dealing with ailing companies.  Hence he is now leading CSC with a view to sailing it to a 'safe harbour' as it were.

But note: The Titanic sank because Captain Edward Smith ignored all safety warnings about large icebergs being on his chosen route to New York. He was in bed when disaster struck. It was not because the ship was faulty or the crew was useless they did what they were told to do. The captain alone was at fault and as a result 1,571 people lost their lives and a legend was born. CSC is certainly in need of care and attention and has, or had, many successful accounts delivering good profitable revenues. However, under Mr Lawrie’s tenure CSC revenues have shrunk, staff morale is awful, layoffs continue, and clients are leaving, as the company speeds ahead into dangerous waters. Will the captain change the route based on all the information given? We doubt it.

At the end of The Night To Remember, when Captain Smith saw all was lost he gallantly did the right thing and went down with his ship. He knew there was no one to blame but himself. We doubt that Captain Lawrie will be going down with SS CSC; he has his own lifeboat in the shape of multi-million dollar bonuses and performance rewards to sustain him.

What about the passengers and crew of CSC, Is it every man for himself?  Cue song