Integration 101

It may look bigger and bolder, but the jury’s still out on whether it’ll be any better.

After acquiring Compaq Computer Co. two weeks ago, Hewlett-Packard Co. now faces the Herculean task of integrating a host of different business and product lines without shedding too many customers in the process.

But what does it mean for your organization? Apart from possibly even cheaper PCs, there’s a lot of uncertainty facing enterprise users. Whatever happens, though, you should have enough time to adjust your IT plans accordingly.

That’s what Meta Group Inc. says in a recently published report on the merger. It could take up to 18 months before corporate customers see significant changes in a new Compaq-powered HP, according to the company.

In its examination of the deal, however, Gartner Group Inc. predicts “chaos will reign” at HP over a similar time frame. Personnel may jump ship and products may get nixed, but corporate users may get better discounts from the new company.

For its part, Forrester Research Inc. says the next nine months should be relatively smooth sailing for customers, also suggesting that now is a good time to cut a deal.

So it appears you’ve got some breathing room, folks. As for what comes next, there’s a lot of homework to do.

This deal, remember, is about survival. Time and again, pundits have hammered home the message that facing serious competition in the desktop, server and services arenas, HP and Compaq needed to find an escape route. Revenue-wise, the new HP will come in second to IBM (although Meta predicts up to 15 per cent of customers will “slip away”) and will be poised to lead the server market, Forrester says. Heck, it may even come out on top of the PC price wars, as well as taking a lead in services.

That’s probably a good corporate strategy, since pretty soon no one’s going to make money off of desktop computers. Piecing together high-end technologies based on Unix and Intel platforms could give HP a leg-up over Sun Microsystems Inc. (according to Meta), but I wouldn’t pin my hopes on the company getting right the first time.

HP and Compaq both have a strong play in NT systems, so the merger should pay off well in that department. And the consumer-corporate mix of products could help extend HP’s market reach in many different directions, including handhelds.

I’m still not convinced, however, that the merger is the best thing for customers. Tech firms trying to manage growth often turn to acquisitions or partnerships to round out technology or business portfolios. Clients may see additional benefits from stronger product and service packages, which in turn makes for higher revenues.

In this case, the pros seem a little vague. HP, in acquiring Compaq, was looking for ways to stay alive in a tightening IT market. Yes, there could be good news for customers, but user demand didn’t drive this merger, and users may have to wait a while to see the advantages, apart from price breaks.

In business, companies tend to eschew risk when it comes to IT purchases. Uncertainty — technological or service-based — does funny things to their shareholders and customers. They tend to take their investment and buying dollars elsewhere.

Charting your organization’s IT future just got a little harder. The good news, however, is you’ve got time to look around before lurching ahead.

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Jim Love, Chief Content Officer, IT World Canada

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