Nowhere was this effect more apparent then the false rumors of Steve Jobs’ recent demise.  On Wednesday, August 24th, Bloomberg News erroneously published Mr. Jobs’ obituary.  Jobs had battled pancreatic cancer four years prior and appeared gaunt and ill at recent events.  Like most news organizations, Bloomberg had pre-authored the obit to get the jump on the competition should his untimely death come to pass.  (More on how this occurred and other press obit practices can be found here.)  As the image above shows, Jobs is alive and more than happy to poke those who predicted his passing right in the eye.

This incident did trigger much conversation regarding the fate of Apple post-Jobs.  Even Bloomberg’s false obit included an “If the Stock Drops…” insert:

“The decline is no surprise to investors and analysts, many of whom considered Jobs irreplaceable. Gene Munster of Piper Jaffray & Co. in Minneapolis had said if Jobs left the company for any reason, Apple’s stock might plummet as much as 25 percent.  Jobs never named a successor, instead telling shareholders in March 2008 that the board would have a variety of executives to choose from were he to step down for any reason.”

Many feel that stockholders deserve to know who will step in should a leader fall.  Larry Ellison is another example, with ZDNet Australia authoring a piece in 2003 following Ellison’s near-death experience on his yacht.  Said the article:

“Oracle stakeholders are at the mercy of a nearing-60 CEO who indulges in high-risk behaviour and whose interest in his company are fitful.” 

Ellison and Jobs represent theoretical examples, but what happens in the real world?  On June 14th, Tim Russert, NBC’s Washington bureau chief and moderator of “Meet the Press”,  died of a sudden heart attack at the DC bureau.  At age 58 and at the height of his career, Russert’s death was completely unexpected and the network initially reeled in his absence.  Quickly taking stock, NBC moved to fill this unfortunate void with the credible and highly respected voice of retired anchor Tom Brokaw.  (Let me disclose that I am a huge fan of both Russert and Brokaw, having met Tom during a brief foray into broadcasting many years ago.)    

Tuesday’s New York Times included a very interesting article on Brokaw and NBC’s succession plan, concluding that:

“Mr. Brokaw has been given an unexpected encore. Since taking over for his close friend Mr. Russert following his death, Mr. Brokaw has lent on-camera stability to “Meet the Press,” which continues to be the most watched of the network Sunday public-affairs programs.”

The article goes on to chronicle how Brokaw has crossed political divides and ensured NBC’s future via MSNBC anchor restructuring and moderation of the October 7th presidential debate.  As a result, Brokaw is helping to shape the ultimate succession plan and ensure that Russert’s legacy continues unabated. 

We all know the importance of succession planning.  However, the reality is that strong personalities such as Jobs and Ellison are unlikely to contemplate their passing and prematurely designate their successor.  Apple and Oracle are their babies and the thought of abandoning their children is not something we should reasonably expect them to address.  Nevertheless, it is reasonable to expect a bridge strategy such as that employed by NBC.

The lesson to be learned is this – in times of instability, it often helps to look to the past as a proxy to the future.  Organizations must have a ready made stable of highly credible executives who can lend their critical voice to a time of flux and ensure that intelligent decisions supersede the impetus to act impulsively.  These executives will serve as a bridge and buy time to perform appropriate due diligence on a properly vetted successor.  Let’s continue to be pragmatic and keep the conversation going.  

Input Variable A) HP

HP has been an uncharacteristic dabbler in and around HRO for many years.  They had been rumored to be entering the market via asset acquisitions ranging from ACS, Convergys, and Hewitt for some time now, but I must say that few (myself included) would have imagined EDS as the target.  Within HR service delivery, HP does have a few arrows in it’s quiver:

1. Announces Nestle as it’s only public HRO Engagement (2006) – Scope includes European payroll with options for benefits administration, including call center administration and some back office operations.  Serves as an extension to the existing finance and accounting outsourcing agreement with Nestle.
2. HP and SAP Alliance – 50% of SAP applications globally run on HP platforms, and HP is one of SAP’s largest clients.  HP also offers SAP consulting and integration services including operations, implementation, upgrades, support and end-to-end outsourcing.
3. HP and Oracle Alliance – More than 100,000 joint customers across every line of business globally, including JDEdwards, PeopleSoft and Oracle HR applications. 
4. HP’s HR Department – Supports 156,000 employees in 170 countries.  In a recent presentation for the Conference Board, HR EVP Marcela Perez de Alonso speaks her efforts to rationalize global HR into functional Centers of Expertise such as total rewards and learning.

Input Variable B) EDS

EDS’ creation of the ExcellerateHRO joint venture in 2005 allowed the firm to move directly into the race for tier one HRO transactions.  However, many have questioned the structure and strategy of the JV and whether it is sustainable in light of formidable competition and increased price pressures.  Here’s how EDS adds up:

1. Current ExcellerateHRO Portfolio – According to published data, 400 clients across nearly all geographies (except APAC) servicing more than 33 million active and retired employees.  Notable clients include CIBC, Total (UK), Bank of America and 7-Eleven Stores.  No new client wins announced since April of 2007.
2. Towers Perrin Joint Venture – Powers the full HR transformation and consulting side of the Excellerate relationship.  Provides global reach in 24 countries and outsourced IT to EDS as part of the initial venture structure.
3. EDS and SAP Alliance – 220 implementations with more than 850,000 users in nine languages and 54 countries.  Over 2,000 certified professionals on staff.  Their internal implementation of SAP is one of the largest in the world. 
4. EDS and Oracle Alliance – Emphasis on applications management, outsourcing, modernization and development services under the brand of the Agility Alliance.  Applications are primarily focused on CRM and HR BPO with 500 professionals on Oracle and 270 on PeopleSoft.

Does A + B = HRO Domination?

In my opinion, it does not.  There is no question that the combined entity will be formidable as a global provider of BPO and ITO solutions, and no one can argue with the depth and breadth of their technological acumen and ability to configure, manage and deploy SAP and Oracle solutions in any location in the world.  However, the one hole that remains is that neither entity brings forth deep and meaningful HR domain and consulting expertise.  Thus, I feel that continued codependency on Towers Perrin will be required to present a credible HR transformation story to the market.  This puts HP/EDS/Towers Perrin next to the likes of Convergys/Deloitte in the HRO landscape.  Competitors such as Accenture, IBM and even ACS (with it’s Buck and Mellon assets) will maintain some advantage with wholly owned and internalized HR consulting capabilities.

This could be resolved with one additional tactical acquisition.  With BearingPoint trading at $1.61/share and lowering its 2008 outlook, I’d see them as one possible candidate for such a takeover.  Suffice it to say that the next 12 months in the market should be quite interesting.

Let’s keep the conversation going.