HP Software Testing Tools Reportedly Up for Sale. Could Customers be the First Casualty?
According to a recent Bloomberg report: Hewlett Packard Enterprise Co. is considering the sale of a number of its software assets. Under consideration for the sale are the assets HPE acquired over the past several years, including: Mercury Interactive, Autonomy, and Vertica Systems. The list of Mercury products include tools such as HP Unified Functional Testing (UFT), Quality Center, LoadRunner, Application Life Cycle Management, among others.
The sale is reported to only be in preliminary stages. HPE has declined to comment.
The potential impact on customers
While mergers and acquisitions often sound great for investment banking professionals who represent companies in the deal, the great deal of uncertainty resulting from a merger often creates challenges for employees, particularly the customers of the company getting acquired.
Figuring out how a new world would look after the merger can be challenging. The metrics and incentives for mergers are linked to delivering “synergies,” which in turn are driven by reducing costs or attaining more revenue. This often results in key areas of business, like customer service, being pushed to the backseat. In fact, often customers of the company being acquired are at the most risk of being alienated because of the deal.
Take the following as example.
HP bought Compaq for an $18 billion price tag back in 2002. The merger proved great for HP, as it helped become the world’s largest PC maker, in terms of unit sold, by 2007. But what about Compaq (the target for the acquisition) customers? Customers of Compaq ended up being less satisfied than customers of HP (the acquirer) or Dell (the competitor). In fact, while customers of Compaq got less satisfied with HP after deal, Dell's customer satisfaction scores rose by approximately 4.00%.
If the deal goes through, it will be interesting to see what checks and balances HP puts in place to ensure its customers are not alienated post-acquisition. At this point, from a customer point of view, it would be worth pondering about how HP’s product line could change after the acquisition. If, and how, customer experience will be impacted. And whether or not customers will have a new point of contact after the deal.
At the same, there are other things worth pondering for current HP customers:
We are big, so you have to deal with us
Often when a big corporation buys another big organization, the merger can cause a consolidated business that is too big from a customer point of view. And as result, integration snafus and record-keeping glitches, which often result from the desire to achieve cost savings for hitting the promised synergies, go unnoticed. The quality of services deteriorates and there is little the customer can do as the corporation is too big to care.
The incentive for M&A often tends to be growth. This often means the acquirer can decide to discontinue or divest the product or services that don’t fit the growth model the acquirer is aiming for. Customers thereby can go through a major upheaval as such a decision can have a major impact on their day-to-day business. From a competitive stand point, it will be interesting to see how the acquiring company tries to position itself and if it tries to move away from existing HP software products
Cultural Fit Challenges
Lining up two different cultures can be a significant challenge. It can often result in "us-versus-them" mentality, thereby impacting the customers. If the deal goes through, it will be interesting to see if the cultures can coexist, or if a new culture emerges.
Consolidation of two big companies often results in a big dominant player in the industry. And then, with fewer bigger competitors to worry about, the consolidated business can raise prices more easily without having to worry about losing and alienating customers. That in turn hurts consumers, causing them to reevaluate their relationship with the company.
What does the future look like for HP customers?
We are eagerly watching how this plays out for HP and the go-to-market strategy of the acquirer. From a customer point-of-view, they need to pay attention to the current state of affairs and any perceived upcoming changes so that they can put a plan if prices go up, quality deteriorates, or the new organization isn’t able to meet expectations in the future.
Interested in learning more?
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