Hewlett-Packard Co. and PricewaterhouseCoopers L.L.P., whose proposed marriage was called off last year, have rekindled their courtship to develop and market collaborative supply chain software to manufacturing companies.
HP, which dropped its planned $18 billion acquisition of PWC in November 2000, will leverage its technology development strength, while PWC will contribute its industry-specific consulting expertise.
Palo Alto, Calif.-based HP and New York-based PWC will target a range of industries, including high-tech, aerospace, automotive and consumer packaged goods. Two-hundred HP employees will spend most of their time on the initiative, while 2,000 consultants in PWC’s supply chain operations solutions practice will dedicate a good deal of their time to it.
Seminars, training programs
The companies will conduct tightly aligned marketing and sales initiatives. Bruce Toal, HP’s marketing manager, said his company and PWC will jointly run executive seminars, marketing tours, sales training programs and direct marketing campaigns. Advertising is also being considered.
The companies’ extensive co-operation underscores the close working relationship forged during their courtship, which was dashed because of what some HP investors saw as too high a price tag for PWC. "We gained some powerful insight through that experience, realizing where both companies were strong," Toal said.
The companies face considerable competition. In recent months, supply chain management has come to be seen as one of the few profit centers in an otherwise bleak software terrain.
Matt Porta, PWC’s manager of collaborative value-chain strategies, said his firm’s understanding of customer relationship management and industry-by-industry knowledge will help set the venture apart. "Numerous third parties have ranked PWC Consulting as a leader in CRM, supply chain, e-markets, database integration and enterprise resource management. So it makes sense from a business perspective, since we have the knowledge, skills, expertise and abilities in all of these areas."
Global marketing clout
PWC and HP also view the deal as a way to extend their collective international marketing presence.
Both companies are keen international marketers. PWC has clients in 60 countries; HP runs much of its global marketing operations, including some U.S. initiatives, out of Switzerland. And both companies plan to use their extensive marketing contacts among manufacturers.
"One of our most fruitful areas is manufacturing, especially in the supply chain, which is a hot spot for both of us," Toal said.
Porta added that the recession gives both companies a prime opportunity to market supply chain software, which some clients view as a relatively quick and easy way to cut costs.
Speed of implementation will be underscored as a marketing message, Toal said. "Within 90 days you can be automating your purchase order process," he said.
HP, which is struggling with a dramatic revenue shortfall, recently implemented the joint venture’s supply chain software and has seen dramatic results—something sales people will tout, Toal said.
"We’ve seen a 300% jump on reducing costs on excess inventory," he said. "We’ve seen a return on investment on this to pay for itself in a year’s time frame."