How to Capitalize on HP/Compaq Merger

By Kim S._Nash Print this article Print

HP has to prove the worth of its purchase of Compaq. That means there's no better time for customers to drive a hard bargain.

'Bring in the Props'">

'Bring in the Props'

But now is the time to sharpen your negotiating stance, McGuckin advises. "Put the IBM coffee cup on the desk. Wear the IBM windbreaker. Bring in the props,'' he says, "because a lot of this is theater.''

Make clear, he says, that gaining your company's future business is unlikely if the new HP team on your account isn't responsive—not just with support and service, but better prices as well.

Beyond props, you should invite at least one alternative vendor in to talk about future server and software needs. Compare its products with those of HP by testing them in your data center. Leave the competitor's test server there.

"Nothing strikes fear in the heart of a vendor like seeing a test machine from an alternative" on the same floor as its own machines, he says.

At renewal time, you can likely hold out for 30% discounts on multiyear contracts, McGuckin says. For smaller individual projects, like a one-year rollout of new systems for a new enterprise software deployment, you can push for 50% or 60% cuts. That's the kind of discounting Sun Microsystems and IBM have recently offered, he says.

Companies who use HP consulting also should be able to work the merger period to their advantage, says Richard Matlus, research director of Gartner's strategic-sourcing practice.

"They're going to be looking for success stories," says Matlus. If your company has projects that can lead to million-dollar fees, HP will be determined to sign you up, particularly in the current "downturn market" for consulting.

But be thoughtful. Whether managers should squeeze HP for better prices now depends on how you see your future with the vendor, says Dave Krauthamer, information systems director at Advanced Fibre Communications.

"If you're viewing your relationship as simply tactical, maybe" try to be ruthless, Krauthamer says. "But if you're viewing it as strategic, as we do, you've already come to a most reasonable peace" in contract negotiations.

This article was originally published on 2002-05-14
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