Does the recent spate of mergers and acquisitions (M&A;) provide benefits for users and purchasers or just more C&C; — confusion and concern? Do you know who your real vendors are today and, if so, how much comfort do you have that they will be there next week, next month or next year?

In today's enterprise management approach, you undoubtedly establish extended partnerships with your material suppliers — the now classic "supply chain" function — and you are calling upon them to provide you with the highest quality and lowest price consistent with the demands of the marketplace. Of course, you have taken steps to cull down the number of component and material suppliers so that those that remain can work more closely with your teams. They will then provide your company with better service and, because they can expect a higher proportion of the total expenditure you make in these areas, better prices held for longer terms.

You also are improving or developing the company's infrastructure to take advantage of modern technologies such as computers. Mainframes are being replaced with distributed, client/server or networked systems with the most contemporary and focused applications for your business requirements. Quick response to your customer's requirements is a high priority and the newer systems offer many routes to improving this vital function. Your company has implemented these programs or is in the throes of doing so, and all is headed in the direction of increased competitiveness.

But do you treat these two supply chain issues differently?


Here today, here tomorrow?

The smart approach is to develop partnerships in both critical areas. When you do, you are committing to a long-range arrangement with your suppliers. However, if you look back, over your shoulder, you might be concerned about the results of the apparent consolidation that has been taking place in most high tech industries. Companies with "household names" are no longer listed in the telephone book much less your purchasing department's Rolodex.

New companies are taking up the slack caused by old-line companies failing to meet the challenge of competition but these start-ups are often under-capitalized or more interested in technologies that won't be ready for prime time for years. You can't wait. Your company can't wait.

Is the fact that a product name or company has disappeared from the supplier register mean you are stuck with an orphan? Not necessarily. When one of the early "IBM Plug Compatible" mainframe computer makers, Gene Amdahl's company in Sunnyvale, Calif. was purchased by Fujitsu — its Japanese partner, major shareholder and sometimes competitor — last year, it wasn't seen as a major change. In fact, the two companies had developed such a close relationship over several years that their products were almost considered the same by the marketplace.

Three other familiar computer companies got caught up in the ritual of merge and acquire in the past 18 months. Compaq Computer of Houston, Texas apparently saw its leadership in the personal computer market to be a decreasing margin or low-growth position. A company that started out in the mid-80s producing a lower-priced clone of IBM's market-making PC — albeit initially with the added benefit of "portability" — Compaq has become the largest PC maker worldwide. Now faced with challenges from mass-marketers Dell Computers and Gateway 2000 for its leadership, Compaq looked to the future and saw client/server and "big iron" as a way to ensure profitability.


Joining in Tandem

First came its acquisition of specialty computer manufacturer Tandem of Cupertino, Calif. Tandem is renown for its transaction processing, fault tolerant designs that allow continuous non-stop operations for critical functions such as airline reservations and banking. At the time, critics felt the merger was going to cause integration woes and decrease development of the Tandem platform. So far, the jury is still out on the long-range implications of this combination.

Many users of engineering and distributed business computer systems were shocked earlier this year when Compaq "dropped the other shoe" and announced an agreement to acquire Digital Equipment Corporation. DEC was one of the oldest companies in the industry to survive previous consolidation/attrition waves.

However, market share erosion had put a crimp in DEC's ability to respond quickly to technology movements. Its well-respected Alpha chip technology seemed for a while to be a solution looking for an implementation. By the time the chip started showing up in systems, the struggle against Intel, AMD and other microprocessor companies was too great. Alpha ended up in high-end servers where it has gained a strong following but that is a segment under heavy pressure from Intel and its implementers. Sun Microsystems (SPARC) and Hewlett-Packard (Precision Architecture) chips were also stronger in the engineering workstation market, a market that DEC had almost created single-handedly.

The Compaq-DEC "alliance that became a merger" is often viewed as one of the most serious threats to stability for user companies. While Compaq doesn't have a reputation for mining technology and throwing away unusable parts of an acquisition, many DEC loyalists are rightfully concerned that Digital's installed base might not be protected for the long term.

Many users have been weaned away from the older Digital operating systems to OpenVMS and Ultrix, the company's UNIX version. In addition, DEC has been an early and strong proponent of Microsoft's Windows NT operating system, fast becoming a dominant player in the OS wars. Although statistics are not available, it is estimated that NT on Alpha is the primary combination in Digital's recent business-oriented sales.

But an engineering-based company might still have a significant investment in older systems running VMS for design workstations, shop floor controls and other applications that fit into the "if ain't broke, don't replace it" mode. There are, we know from observation, many DEC VAX and even PD-11 or earlier systems functioning in smaller shops and departments of larger companies. DEC earned its reputation for durability so these systems don't have to be replaced until the applications are no longer supported on their platforms.

And this is the real concern most executives have with mergers and acquisitions in the technology field: who will support the applications and hardware after a take-over and for how long. You can still buy parts for a 20-year-old car but will you be able to get repairs on a 20-month-old computer if the company is dissolved into another? How can you protect your significant technology investment?