Surviving a merger

Communication is the key to a successful marriage, according to divorce counsellors.

The same is true of mergers and acquisitions, as HP and Compaq are about to find out.

Now that HP's controversial $20bn deal with Compaq has been completed, there is a lot of work to be done. HP's chief executive Carly Fiorina and its new president Michael Capellas will have to work hard to shape the new company without harming HP and Compaq's past, present or future.

Computing spoke to some of those affected by previous IT mergers to find out what really goes on, and how to ease user concerns.

Ian Severn, chairman of the UK Compaq User Organisation, witnessed its 1998 take-over of Digital. 'I honestly think communication could have been better after Compaq took over, as there was a lot of confusion,' he said.

The biggest concern for users in any merger is knowing there is still life in the products they use. Internally suppliers may be in disarray, but provided they keep users informed, a sympathetic and patient audience awaits, says Severn.

'The sales guys need to get out there face to face and understand the customer requirements. The generic answer is important, but how it affects the technology guys is even more important, as they have to reassure management everything's going to be OK,' he said.

Ray Titcombe, chairman of IBM's computer users association, agrees communication is vital to the success of a merger. But it has to be the right kind.

'It's basic common sense communication. You get razzy-tazzy information brochures about how good it's going to be, which doesn't make the IT manager feel safe to keep on buying,' he said.

Little or no information is also dangerous, as users' imagination will start to work overtime.

'When IBM bought Lotus, it didn't go down the route of either fully negating or supporting one idea. There were no details of what products would be left, so people made choices in ignorance,' Titcombe said.

Internal resistance to a merger can be the hardest battle to win.Ensure employees are on your side, and customers will follow, says Charles Grover, PeopleSoft's international (CRM) director.

'People are important too. Without them to understand the products, they are wasted,' said Grover, who experienced the acquisition of customer relationship management vendor Vantive.

Even simple things can help. Grover says organising social events and having an 'open door' policy to promote inclusion benefits staff and, ultimately, customers.

On the downside, the industry is littered with products that were swallowed up and spat out through acquisitions, leaving IT managers to suffer.

'We were told to go to customers and say: "This is the solution for you," when we knew it wasn't,' said one former executive from a large software vendor known for its history of acquisitions.

The biggest challenge, as HP and Compaq will find, is bridging the cultural divide. For two companies who have competed so fiercely it will be hard to decide which way is best.

'Lotus has never really blended in, it's sort of a carbuncle on the side of IBM,' said Titcombe. 'There's a lesson there for future companies that merge in terms of culture and coming together. You have to look at it from the customer perspective,'

And there are no second chances. Disgruntled customers and employees will talk loud and often, and bad news will spread.

A divorce is not so easy to obtain in the corporate world.

SURVIVING A MERGER

Users should:

- Challenge marketing hype to find out what it means to them

- Seek User Group backup

Vendors should:

- Keep employees informed so they can help users make decisions, and put themselves in users' shoes

- Not prolong the inevitable, and tell users sooner rather than later about products that will cease to exist

Both should:

- Talk to those who have been through the process so the worst case scenario won't seem so daunting.