L - Back when I was following CPQ closely, I heard that a lot. But the numbers did not support the claim. Tandem had been losing money for almost 3 years when CPQ bought them. The Tandem research group was folded into CPQ research, so their costs disappeared... the cost of sales was allocated across the whole of CPQ sales, so those costs were reduced... under those circumstances, Tandem appeared to be profitable. But the real numbers were no different than when Tandem was a stand-alone company. My opinion is that the Tandem acquisition was a huge distraction for CPQ, and was one of the key factors in the decline of CPQ in the late 90s. The product line had no connection to anything else CPQ was doing, the sales force did not know how to sell it, and the Tandem executives had no idea about any business except their own, but none the less had big sway in CPQ policy decisions.
Tandem had twice as many VPs as CPQ when they were acquired, despite CPQ being 6 times as large. And after the acquisition, those execs were sprinkled throughout the CPQ organization, which caused a lot of culture shock and infighting since they outnumbered the "classic" CPQ people 2 to 1.
HP people have always had a soft spot for Tandem. Tandem was started by HP people, they were actually on the HP campus between the customer center and the research buildings, and there has always been a lot of intermingling of employees. But the hard analysis says that CPQ should never have acquired Tandem. |
