Compaq Reveals Services Ambitions

The PC maker can no longer hide its integration scheme

Compaq Computer Corp. is aiming to assemble a global services and integration arm to help support the company's ascent into enterprise computing.

Having already opened professional services offices inside ten U.S. cities, Compaq's emerging consulting and integration services ambitions are hardly a close kept secret. But as the $14.8 billion PC giant steps up its commitment to run global enterprise networks, the magnitude of Compaq's vision has become increasingly clear.

According to analysts, the new enterprise services organization is now attempting to fill a sizable hole in the Houston manufacturer's services infrastructure and move the company closer to Compaq Chairman Eckhard Pfieffer's vision of becoming a full-line information technology company.

When Compaq last fall announced plans to make significant investments in its worldwide services infrastructure, the company's management dismissed assertions that it was harboring plans to build a consulting and integration arm - a scheme many industry analysts and Compaq business partners say is now being aggressively pursued.

"There's no question they're building it. The speed with which they are able to build, however, will need to take into consideration several factors, not all of which are under Compaq's control," said Graham Kemp, an analyst at G2 Research Inc. of Mountain View, Calif.

"The type of people they're looking to hire are part of an extremely competitive market," said Kemp.

By year's end, Compaq expects the number of professional services personnel based at its support offices to grow to 100, a number some Compaq executives say will more than double in the coming year. Still, the manufacturer will remain at a considerable disadvantage when matched up against the giant services organizations already assembled by a number of its manufacturing rivals including Digital Equipment Corp., Hewlett Packard Co. and IBM Corp.

In the short term, Compaq's services ambitions will concentrate on building infrastructure in the enterprise server arena where the vendor is now rolling out its most powerful hardware platforms to date. Compaq's high-powered servers have already opened doors at such large customers as Smith Barney and General Motors Corp. The two customers' services requirements, however, are now being met differently. At Smith Barney, Compaq's fledgling services unit is supporting the financial management company directly, while at General Motors Corp., Compaq has partnered with Electronic Data Systems Corp. of Plano, Texas.

"We're seeing the lines blur between the midrange and client server applications, and we're seeing the emergence of the thin-client fatter-server model," said Stan Ratcliffe, vice president of marketing and strategic planning for EDS Client/Server Sales and Marketing. Ratcliffe said the General Motors contract is among EDS' largest Compaq integration projects. For its part, Compaq expects to supply in excess of 8,500 servers to GM over the next 18 months.

"This is a new common-office, common-server environment based on Compaq hardware and Microsoft NT back-office products and EDS has the role of managing and implementing the network," said Ratcliffe, who indicated the three companies had become an effective partnership on a number of contracts.

"There are definitely more resources going forward to sharpen our integration skills, but does this imply that we are planning to take business away from our integrator partners? Clearly the answer is no," said Greg Young, Compaq's senior business manager, North America, desktop marketing.

"We are frequently faulted as being only a PC company, and so it's important that we understand PCs are part of the enterprise scheme. We are now carefully articulating this to make our customers and partners better understand," said Young, who indicated that Compaq's new services personnel would almost exclusively deploy technology inside the enterprise server segment. For instance, the new personnel are not expected to be involved in computer maintenance, an area that Compaq enlisted Digital Equipment Corp. to address under a global service and support contract announced in December 1995. Moreover, the vendor emphasized part of Compaq's enterprise services scheme would involve modifying integrator programs to better answer the needs of their partners.

"Whether it's Price Waterhouse or Andersen Consulting, we believe that there are some modifications to our existing programs that will allow large integrators to better work with Compaq, rather than for us to force the integrators into the existing programs," said Michael Norris, Compaq's vice president of sales North America. Norris indicated the manufacturer was currently re-evaluating the guidelines it uses to work with large integrators.

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