Deutsche Post axes massive HP services deal

Sends IT giant a Dear Hans letter

Posted in IT Channel, 5th August 2008 13:31 GMT

Deutsche Post has jilted Hewlett Packard at the altar barely six months after the pair announced a seven-year outsourcing deal.

At the time it was announced, the organisations said the tie-up would save Deutsche Post €1bn over the course of the deal. Around 2,500 workers were due to transfer to HP as part of the contract. HP had already been working with DP for some 15 years.

However, it has emerged in recent days that Deutsche Post has concluded that following a reorganisation, its IT department was more efficient than it had expected. As a result, the benefits of outsourcing IT - to anyone - did not outweigh the risks, and DP had decided not to ink the final contract.

HP confirmed this afternoon that the deal was off, saying:

The [Deutsche Post World Net] DPWN team working on the project identified a number of areas where optimisation can be achieved without outsourcing at this time. DPWN IT Services will continue to retain responsibility for all day-to-day services while working with HP’s support to deliver the savings through a series of transformation projects.

The firm did raise the possibility of the two revisiting the situation in the future.

That an organisation’s in-house staff should emerge as the best choice for providing its IT isn’t unusual - plenty of dumped IT workers could tell you that. What is unusual is that managers at DP made the call, and pulled the plug on the deal, rather than simply pressing on regardless.

The IT services landscape is littered with the carcasses of massive projects that seemed like a really good idea at a certain point in time, and which once initiated took on a life of their own irrespective of changing market, political or economic conditions.

HP is about to become much more familiar with this sort of deal, in the UK at least, now that its takeover of EDS is a done deal. ®

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