Perhaps I should have called this piece “Blogger Eats Words.” Hewlett-Packard has landed (pun intended) precisely the kind of strategic partnership win I recently suggested it is not positioned for, based on its recent description of its portfolio in a quarterly earnings call. The victory comes exactly where I suggested it needed to: with a services-led approach, leveraging the formidable assets of EDS. In an-industry-shaking coup, HP has landed a contract to replace Sabre as the proverbial “airline reservation system” – traditionally, a synonym for “really hard IT stuff” – for American Airlines (more precisely, AMR, the parent company).
It gets better. As Forrester’s Henry Harteveldt points out, “Sabre Holdings is not only the one of the largest travel technology firms, but one of the largest private-sector transaction processing systems in the world, regardless of industry.” Read Henry’s piece for an excellent look at many of the details and implications.
Sabre was spun out of American itself; nobody knows its value, its limitations, and its architecture better. Except perhaps EDS, who signed a 10 year deal with Sabre in 2001 to outsource its IT. American has taken a bold step, in the midst of difficult economic times for its industry, to mount a reworking of this core process. Strategic? You bet. Partner? It could hardly be more so. It is intriguing, though, to see HP bidding against a firm for which it provides IT services, and that sort of increased coopetition will become more widespread in an era where firms outsource more and more core processing.
Services firms like EDS and its competitors have traditionally described themselves, especially to the investment and industry analyst communities, in terms of such wins. Learning how to leverage these stories in its corporate messaging will serve HP well as it asserts its strategic value. (It’s worth noting that Larry Bissinger, who handles messaging to those communities – and more – for EDS, is one of the folks who have remained with the team after the acquisition. A good move by HP there.)
Linkage to HP’s portfolio, if such linkage can be engineered into similar deals, can be used to validate the cross-portfolio synergies. No doubt there will a great need for, say, PCs, printers, servers, cloud infrastructure, systems management, telecommunications assets, and more in this deal – all of which are strengths HP has in abundance. And the prominent mention of open source componentry may hint at a direction in HP’s messaging that could be a foil to other firms’ portfolios of expensive software.
So kudos, HP, and I must say crow doesn’t taste quite as bad as I feared it would. I hope that next time your timing will be a hair better – an announcement like this with your earnings call would have made a great addition to the atmosphere.