Global Sourcing: Deutsche Post cancels HP's 7 year deal after 6 months of annoucement!

This is indeed shocking for HP (NYSE:HP). HP has a big challenge of integrating EDS and the time it needs to do it will also tell how many new contracts they can keep. In this deal HP was supposed to dave $1 Billion for its (now lost) client. I guess people in DT got smarter and did the math themselves.

These days a lot of firms are asking for independent advise. In the past months I have done a lot of calls myself to discuss deal that were as big as $500 Million to some multi-billion mergers/acquisitions. So why would someone ask a lone ranger, a nutcase blogger about it for advise. The answer was simple: They preferred to invest horizontally and vertically across several domains rather than just asking Gartner or any other advisor firm. A lot of firms lately are taking advise from independent consultants and advisors. Obviously I do feel proud at times when I see an international announcement of a merger, acquisition or other investment is where I participated as well.

Anyways back to this news:

German logistics company Deutsche Post has cancelled what was to be a seven-year IT outsourcing contract with Hewlett-Packard, six months after the deal was announced.

In January 2008, Deutsche Post revealed that 2,500 employees working in the company’s data centre facilities would transfer to Hewlett-Packard in a move designed to save €1 billion over seven years.

However, the company has since reassessed the efficiency of its own IT department and found that outsourcing would not provide enough of a cost advantage to justify the risks involved.

“(Deutsche Post) IT Services continued to improve its cost position, increased the number of services delivered while also maintaining service levels in the six months following the deal’s announcement,” said Stephen McGuckin, IT services managing director at Deutsche Post in an email to employees.

Source