HPE

IBM Hides Watson Under a Red Hat

A charitable assessment might have called it an experiment, really; an experiment to find out if the headwinds on the hardware and infrastructure services side of the house could be mitigated to some meaningful extent by perceived tailwinds on the software side of the house. A less charitable assessment might have called it a gamble... But now, with the (Sunday evening) October 28, 2018 announcement that it will be acquiring open source software leader, Red Hat for an astounding multiple of nearly 12x FY2018 revenue, or $34 billion, IBM signals that the promise of the high-profile experiment / gamble within their software group - relabeled, Cognitive Solutions in 2015, and where "Watson" became the poster child for the recent hyperbolic expectations of artificial intelligence (AI) - was not likely to arrive soon enough to stem the internal bleeding caused by competitive threats within the cloud infrastructure services market. With Red Hat, IBM now turns to defend its 3rd fiddle position in the cloud market (just ahead of Google) - which [...]

By | 2018-11-12T22:33:04+00:00 November 12th, 2018|Alphacution Feed|

@DeutscheBank + @HPE: Case Study on Impacts

"Pay attention to what I say, not what I do..." Let's return to the bonus chart slipped in at the end of the recent post @DeutscheBank: Three-Card Monte and Other Confidence Games (For maximum context and extra credit, you can pick up the thread about Deutsche Bank from the beginning in March 2016 here). Bottom line: We are fascinated with the idea of detecting the impacts of the IT outsourcing deal that DB and HPE entered into in early 2015. The main questions that keep coming to mind are these: Is this deal a template for other large banks? Does it save money? Or, is its value to be found in other metrics, like enhanced performance or boosts in innovation? And, based on the level of transparency provided by DB (which is one of our best bank models), can we even detect the impacts of this arrangement? The answer to this last question is what brings us to this post... Right up front, we can say, yes - generically, speaking [...]

By | 2018-07-15T16:21:31+00:00 July 16th, 2018|Alphacution Feed|

Bulge Bank Headcount Index: Rare Uptick in Q2

It's only happened twice since the peak, recorded nearly 6 years ago (at the end of Q3 2011): Alphacution's bulge bank headcount index has recorded a rare uptick, as of the end of Q2 2017 (see Exhibit, below). Now, of course, it may be too soon to sound the trumpets that a major turn has been made for headcount in the global banking sector. The moves - in either direction - are still small. Although, who knows? Maybe the expectation of regulatory rollbacks has got bank hiring managers feeling more exuberant of late. Or, maybe - as we suggested in our prior post - that process automation, particularly among quant shops, actually requires more people is something that applies more broadly in financial services (given the push to implement more AI). One thing is for sure, most of our bulge banking tracking sample (7 of 9) is bigger in terms of headcount than they were more than 10 years ago. Only UBS and Citi are smaller, but that has been [...]

By | 2018-02-28T16:31:34+00:00 August 30th, 2017|Alphacution Feed|

IT Services: A Force Multiplier?

The following is the opening segment from our most recent study - "IT Services and Strategic Impacts for Global Banks: The Force Multiplier" -  published via our partner, Aite Group. Learn more about how to access the full report here. Today, outsourced IT services are firmly embedded in all industries and most large corporations. Alphacution’s message to financial sector clients and other buyers of IT services is both blessing and curse: The global IT services sector continues to be dominated by lowest-cost, predominantly India-based human capital, and the motivation to engage with these services continues to be, as it seems to have been all along, about labor arbitrage, or the savings harvested from the reduction of high-cost, U.S.- or U.K.-based in-house human capital in favor of lowest-cost, leased human capital. Although the expectation to improve performance—via higher-quality output, more efficient output, or some other cocktail of innovation—is rarely made explicit, we believe that the potential for enhanced process efficiencies adds value to the equation. This is the blessing part. The potential [...]

By | 2018-02-28T16:30:28+00:00 June 13th, 2017|Alphacution Feed|

Deconstructing Hewlett Packard: More Clues to Indigenous Productivity

Remember the game show, Name That Tune? (Look it up...) What if I told you that the basic rubric from that game show - naming a song in fewer notes than your opponent - was useful for predicting all kinds facts about trading and other financial businesses. Tell me your trading strategy and AUM, I can tell you how many employees you have. You are an investment bank with 30,000 employees, I can guess your total technology budget. The list of triangulations like this are actually quite long... Seem strange? Here's some insight: As many of you know, Alphacution is studying the engines of productivity for the full spectrum of financial services firms - and many of their supply chain counterparts - by measuring, modeling and analyzing technology spending patterns and other operational data. Though still relatively early in the game, this research mission has already given birth to a standardized benchmarking framework - "T-Greeks" - that allows us to quantify consensus behaviors within a community of similar entities and determine who is leading or [...]

By | 2018-02-28T16:32:26+00:00 May 16th, 2017|Alphacution Feed|

The Source of #AI Hype

Apple doesn't mention it... Amazon doesn't mention it... Alphabet (aka - Google) does mention it - but doesn't link it specifically to financial performance... IBM? You betcha. More than 155 times... In case you have been living under a rock - which, now that I think of it, has some increasing allure - artificial intelligence (and its slightly less sexy twin, machine learning) has succeeded 2016's marketing darling, blockchain, to become the blinking-neon-sign-outside-your-hotel-room term for 2017. Sorry, folks. The budgets have already been allocated. Go find predictive analytics (2014) and digital transformation (2015) in the dust bin of over-exposed marketing terms if you are not yet hip to how this game is played. Now, let's take a quick step back for a second: This is NOT an anti-AI hit piece. Nor is this an IBM-gotcha piece. I am a fan of both. But, this is simply a commentary based on the convergence of connect-the-dots exercises that have come out of our modeling and research. Yes, AI has an incredibly promising - if not, slightly scary [...]

By | 2018-02-28T16:32:40+00:00 April 27th, 2017|Alphacution Feed|