EMC Extends Consulting With Acquisition of BusinessEdge

Event

On 30 August 2007, EMC announced that it has acquired BusinessEdge Solutions, a privately held IT consulting firm headquartered in New Jersey. BusinessEdge focuses on four industry segments: telecommunications; media and entertainment; financial services; and life sciences (although functionally it combines telecommunications and media and entertainment). Terms of the deal were not announced. BusinessEdge will become a new EMC professional services practice area called Industry Consulting and Information Management Services. The company's two founders report to EMC Global Services President and EMC Executive Vice President Howard Elias, acting as senior vice president of EMC's consulting organization until the position is filled. Elias says that BusinessEdge will remain autonomous through 2007.

Analysis

BusinessEdge provides industry-specific strategy and IT solutions with a team of more than 500 consultants, by Gartner estimates. The firm represents EMC's fourth acquisition of a professional services company; others were related to EMC's Microsoft practice. The BusinessEdge acquisition moves EMC into the arena of industry-focused and technology-related consulting, helping make good on CEO Joe Tucci's pledge to elevate the company's focus from storage technology to a wider range of applications and services. EMC's previous acquisitions of Documentum, Captiva and RSA have marked EMC's migration from its storage-centric roots. By contrast, EMC's purchase of BusinessEdge will give the company a more strategic focus on business and information-centric consulting capabilities, though these will be mostly limited for now to select vertically focused industries in North America.

Previously, EMC partnered with major consulting firms for business-related IT consulting services, such as analyzing business issues and processes and designing IT solutions to solve, automate or take advantage of them. In July 2002, EMC inked a deal with Accenture to jointly develop and deliver a broader range of infrastructure consulting services through a new EMC business unit called Information Solutions Consulting. The contractual relationship has since evolved, but EMC continues to involve Accenture and other consulting partners to broaden its service capabilities. The BusinessEdge acquisition has the potential in some situations to turn these companies from partners into competitors; however, given the nature of the current BusinessEdge account base and the size of the company, these occurrences should be fairly rare. EMC says it will continue to partner with Accenture and other consultancies outside of BusinessEdge's core industries, and in Europe and the Asia/Pacific region.

The BusinessEdge acquisition is on a much smaller scale and narrower scope, but it harkens to the direction of IBM's acquisition of consulting components of giant PriceWaterhouseCoopers. EMC has stated that it seeks to remain a product company, rather than a services company, and that it will leverage BusinessEdge to deepen customer relationships in key accounts and design and implement information infrastructures that will likely include selling more hardware and software.

• BusinessEdge customers: Expect few changes in your consulting relationships.

• EMC customers: EMC now has business and IT consulting credentials in three industries. If you focus on any of BusinessEdge's industry domains, expect to be contacted by EMC as it pursues cross-selling opportunities.

• "Vendor Focus for EMC Documentum: A Content Strategy With Promise, and Challenges" — Major competitors and diminished strategic innovation threaten EMC Documentum's position as one of the leading vendors of enterprise content management systems. By Karen Shegda, Kenneth Chin and Mark Gilbert

• "EMC Engages Accenture to Help Form New Service Organization" — In 2002, EMC announced that it had engaged Accenture to assist in the development of an EMC business unit within its services organization. By Adam Couture and Allie Young

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