EMC buys a presence in European consulting

In the seven years since Joe Tucci was appointed CEO, EMC has done its best to transcend its roots as a storage hardware vendor to become an ‘information infrastructure’ provider.

The transformation has taken EMC into such diverse areas as virtualisation, with its acquisition of pioneer VMware in 2003, content management, thanks to its Documentum buy in the same year, and security, through its purchase of RSA in 2006.

But to date, the company has not been able to convincingly proffer that calling card of a truly holistic IT provider – a consultancy division.

While EMC does have something of a consulting footprint in the US, in Europe it employs just 20 consultants. But that is soon to change, as in March 2008 the company announced plans to acquire UK IT services provider Conchango for £42 million. To all intents and purposes, Conchango will now become EMC’s European consultancy wing, although whether the Conchango brand itself will continue to exist has yet to be decided.

The London-based company employs around 330 consultants and provides business advice and development services to corporate clients including Tesco, Tarmac, Virgin Atlantic and Lloyds TSB.

According to co-founder and joint MD Mike Altendorf (pictured), Conchango’s defining feature is its pioneering use of the Agile development methodology, which involves an iterative process of delivery and feedback.

“We adopted Agile after receiving a huge amount of requests from clients who needed to cut down the time to delivery in application development projects,” he explains. “Our proposition is to get from concept to cash [meaning return on investment] in the shortest possible time.”

Altendorf argues that, while the larger European IT services organisations have been forced to adopt global delivery models (in other words, to outsource work to India and other low-cost economies), Conchango’s adherence to Agile has allowed it to keep its workforce in the UK.

“Agile does not work well in the context of Indian outsourcing because it empowers the team,” he argues. Indian organisations, he contends, favour the so-called waterfall methodology, whereby development work is specified long in advance and then delivered as a finished product.

“Using Agile, we can be far more productive than that,” Altendorf says. “The cost benefits of outsourcing to India are not actually as great as many would imagine.”

For Altendorf, the EMC bid was attractive because the Massachusetts-headquartered company has a ‘greenfield’ consultancy practice.

“If we had to integrate with a team of hundreds of other consultants,” he says, “then cultural issues would inevitably get in the way.”

The deal will provide the funding to expand its operations globally, something for which demand already exists, he says. “We have had customers, including Virgin Atlantic, say they need to use our services in other countries.”

But if Conchango’s business model is based on the high quality of its staff, then scaling the business to cover the entire continent will certainly be a challenge – however much investment it now has behind it.

The freedom to innovate afforded by Agile development is what makes Conchango an appealing employer, says Altendorf, along with its use of cutting-edge technology such as Microsoft’s Silverlight web application development platform. EMC’s association with VMware in particular will help Conchango to maintain this technological edge, as virtualisation permeates more of the IT environment.

Nevertheless, EMC is entering a mature and consolidating part of the services industry, and if it is to succeed it must convince not only customers but also the cream of Europe’s consultancy and development talent that it belongs there.

Further reading

See-through Tarmac How construction materials provider, and Conchango customer, Tarmac opened up its ERP systems to its customers

China’s offshore opportunity The Chinese IT outsourcing industry has many challenges to overcome. But it also has the resources to pull it off


Alan Dobie

Alan Dobie is assistant editor at Vitesse Media Plc. He has over 17 years of experience in the publishing industry and has held a number of senior writing, editing and sub-editing roles. Prior to his current...

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