I don’t like Monday, says PwC Consulting

The efforts of auditing giant PriceWaterhouseCoopers to spin off and re-brand its consulting arm as ‘Monday’ seem to have been something of a smokescreen for a more radical move. Just days after the new identity came into effect in late July 2002, the consulting partners at PwC finalised a $3.5 billion deal to join IBM‘s vast Global Services operation. The purchase, which came a mere two years after Hewlett-Packard’s abortive attempts to buy PwC Consulting for a rather more generous $18 billion (€18.4bn), was the first major acquisition for IBM under new chief executive Sam Palmisano (a former head of IBM Global Services).


WebGain finds Studio a new home

WebGain has found a final resting place for its Java application development environment, WebGain Studio. A few months after it ceased trading, the company has sold its core assets to rival tools vendor TogetherSoft.

As well as the Studio tool suite and its centrepiece the Visual Café development environment, TogetherSoft has taken WebGain’s StructureBuilder, Business Designer and Quality Analyzer products. WebGain Studio customers will be offered an upgrade and integration package to get their applications to TogetherSoft’s own integrated Java tools suite.

TogetherSoft’s purchase follows the acquisition by database giant Oracle of WebGain’s TopLink object-to-relational mapping tools in June 2002. This leaves WebGain, a start-up that received $220 million in funding over its 30-month existence, with just one product, its Application Composer software, which is also for sale.


Assessing the key drivers for the deal, Palmisano cited PWC Consulting’s bluechip client base and technological expertise – particularly in the areas of enterprise resource planning (ERP), customer relationship management and supply chain software implementations. PwC Consulting will add 30,000 employees to IBM Global Services arm (IBM GS) – itself the world’s largest IT services operation with a headcount of 150,000 – and swell annual revenues to more than $40 billion.

But the deal presents IBM with some formidable challenges, say industry observers. Charles Rutstein at Forrester Research, for example, suggests it is a bold move given the current slump in spending on IT consultancy. He is also dubious about how well the relatively independent partner structure of PwC will fit with IBM’s committee management culture. “Both IBM and PWC leaders assure us that the cultures of the two organizations will mesh well. We’re not buying it: For PwC’s 1,200 partners, it’ll be a rude shock to transition from being equity-holding business owners to salaried employees,” says Rutstein.

PwC’s sale to IBM was largely influenced by pressure from US regulators, who have been pushing for the big accountants to separate their consulting divisions from their auditing arms in order to avoid conflicts of interest. Unable to float the business as a public company, PwC may have felt divorcing itself from PwC Consulting and changing the name to Monday did not actually put enough distance between the two operations.

Meanwhile, Bob Djurdevic of Annex Research, a long-time IBM watcher, points out that PwC Consulting is being subsumed into one of the most beleaguered constituents of IBM Global Services- its Business Innovation Services (BIS) unit. “The BIS operation, which accounts for about a quarter of the total IBM Global Services revenue, has been by far the worst performer among the Global Services business segments in the last year or so,” he argues. In the last quarter, he observes, sales in the BIS unit declined by-11%.”

The upshot for current and future customers of PwC, says Forrester: “Customers should be on [the] alert for a brain drain.” Especially when partners receive their share of the $3.5 billion.

Key IT industry acquisitions in August
Acquirer   Activity   HG   Target   Activity   HQ   Price  
Agilera Appln outsourcing svcs US United Messaging Unified messaging s/w &svcs US n/a
Bentley Systems Engineering s/w US Rebis Plant design s/w US n/a
Chevin Network mgmt s/w UK Jyra Research Network svcs mgmt s/w US n/a
CIBC World Markets Investment bank Can Accenture’s VC portfolio Start-up venture capital US n/a
Cisco Systems Networking systems US AYR Networks Routing s/w &dist net svcs US $113.0m
Cisco Systems Networking systems US Andiamo SAN storage swicthes US n/a
Concur Technologies Expense mgmt s/w &svcs US Captura Hosted expense mgmt svcs US $12.5m
Finmatica Supply chain mgmt s/w Italy Mercia Software Demand/supply chain planning s/w UK n/a
GEAC Vertical industy applns Canada Extensity Employee relation mgmt s/w US $47.0m
Gores Technology Grp High-tech buyout co US Aprisma div of Enterasys IT infrastructure mgmt s/w US n/a
IBM Systems, s/w &svcs US PwC Consulting IT consulting svcs US $3.5bn
Internet Security Sys Security software US vCIS Behaviour inspection technology US $20.0m
Intuit Finance mgmt s/w US Blue Ocean Software IT resource mgmt s/w US $170.0m
Maximus Gvmt services US Peregrine’s Transport unit Asset mgmt s/w US n/a
OpenService Network security mgmt US Response Networks Service level mgmt s/w US n/a
PeopleSoft Business applications s/w US Teamscape Learning mgmt s/w US n/a
PGP Encryption s/w US Network Assocs’ encrypt s/w Desktop/wireless encryption s/w US n/a
Rational Software Application design s/w US NeuVis Application dev s/w US n/a
Software Research Assocs S/w services Japan Turbolinux Linux implementation US n/a
Sun Microsystems Systems &s/w US Afara Websystems SPARC chip design US n/a
Sungard IT services US Monis Software Derivatives analytics s/w UK n/a
Synopsys Electronic design s/w US inSilicon Integrated circuit design s/w US n/a
TogetherSoft Java appln dev s/w US WebGain’s Studio range Java appln dev s/w US n/a
Tririga Asset mgmt s/w US Peregrine’s FacilityCenter unit Infrastructure mgmt s/w US n/a

Avatar photo

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

Related Topics