Consulting
References Practices Case (First Item)
August 15, 1994
Last week, Digital Equipment Corp. dissolved its Digital Consulting unit, one of nine business units named when it reorganized the company just four weeks ago.
Had the plans been in place , the decision would have been part of the July 14 announcement, according a Digital spokesman. But the company could not "keep waiting around until every piece was perfect, " he said.
Digital's reversal came after widely circulated reports that the unit was for sale. Additionally, some observers said the former vice president of the unit, Gresham Brebaeh, had proposed to purchase pieces of the business. Brebach is no longer at Digital.
The transition will be complete Jan. 1. No specific layoffs are included in the plan.
According to Digital, the move is partly intended to simplify systems integration services for its 1,000 largest customers. "Rather than having major customers called on by the account team, multivendor services and Digital Consulting, we focused it more," the spokesman said.
But the rules are not black and white. Medium-size and smaller customers "can still get direct service from Digital," the spokesman said. "But more commonly, partners will do that business."
Even in large accounts "it still may be better to broker a relationship with one of these other [partners]," he said.
Most analysts agreed the move is better than a sale. "Unless DEC wants to become just a commodity hardware pusher, it needs a solutions capability," said Steven Milunavieh, an analyst at Morgan Stanley Group. Inc. in New York.
"It falls right in line with their attempt to. get focused, and the focus is on client\server hardware and the Alpha architecture," said Frane Romano, an analyst at Aberdeen Group in Boston.
He predicted there is a good chance Digital will simply phase these services out in the future.
However, in a recent interview, Palmer emphasized systems integration as a core competency.
The new systems integration business will be vendor-independent, "but our strength is in Digital platforms," the spokesman said
Analysts also said the change occurred because the $2.5 billion business was not profitable. Digital's spokesman said that was "definitely not" the ease. But clearly, consulting did not work as a separate unit .
"We've certainly learned some lessons in the past year with this business," the spokesman said. "I think we have the right balance now."