Hewlett-Packard Company (HPQ)’s Data Analytics Deal With Cerner Corporation (CERN)

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Hewlett-Packard Company (NYSE:HPQ) recently announced that it had won a major contract from health care IT giant Cerner Corporation (NASDAQ:CERN to upgrade two of its data analytics services. This deal is a positive catalyst for both companies — increasing Hewlett-Packard Company (NYSE:HPQ)’s footprint in the growing health care IT industry while upgrading the performance of Cerner Corporation (NASDAQ:CERN)’s products to remain competitive in an increasingly crowded industry.

Hewlett-Packard Company (NYSE:HPQ)

What the deal means for HP
Like other major IT companies such as International Business Machines Corp. (NYSE:IBMand Accenture Plc (NYSE:ACN), HP has recognized the rising demand for more connected, “smarter” hospitals. The North American health care IT market is expected to grow at a compound annual growth rate of 7.4% by 2017, according to a recent survey. Market research firm Gartner also estimates that the global analytics and business intelligence market will grow 7% year-on-year in 2013.

Hewlett-Packard Company (NYSE:HPQ)’s Vertica Analytics Platform is a core part of the company’s HAVEn initiative, its big data analytics platform. HAVEn is a combination of technologies from HP Autonomy, HP Vertica, HP ArcSight, and other services designed to deliver higher data analytics speeds to clients.

The Cerner Corporation (NASDAQ:CERN) contract will help stabilize Hewlett-Packard Company (NYSE:HPQ)’s Enterprise Services (HP ES) business, which reported a 9% year-on-year decline last quarter despite securing a critical $3.4 billion five-year contract with the U.S. Navy. HP ES was created in 2008 from its $13.9 billion acquisition of EDS. The segment continued growing through acquisitions, including the disastrous $10.3 billion acquisition of Autonomy that caused an $8.8 billion writedown last year.

What the deal means for Cerner
For Cerner Corporation (NASDAQ:CERN), upgrading its data analytics system will ensure that its dependent services — such as EHR (electronic health record) software — remain competitive in an increasingly crowded market. Cerner Corporation (NASDAQ:CERN) is using Hewlett-Packard Company (NYSE:HPQ)’s Vertica Analytics Platform to upgrade the performance of two major services: the Cerner Millennium Architecture and the Cerner Health Facts service.

Millennium is used for delivering patient information to clinicians upon request. Health Facts collects and analyzes patient data to generate information that improves the quality of care at practices. HP Vertica will improve the performance monitoring capabilities of Millennium while boosting the data-handling capacity of Health Facts. Most importantly, HP Vertica will replace Cerner Corporation (NASDAQ:CERN)’s legacy data warehousing solution, which will result in a 100-fold increase in data analytics speed.

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