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HP's order system chaos to continue throughout August

SAP hell lingers

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HP World HP's product ordering system that contributed to a massive shortfall in third quarter revenue is still in disarray and looks set to affect fourth quarter results.

"From a structural perspective, we are well beyond identifying what the issues were and are now moving to complete the necessary fixes," said Joe Nadler, a director in HP's enterprise group, speaking here at the HP World event. "We are just about fully recovered and should be (fully recovered) by the end of August. We have a war room and escalation process so that we can deal . . . with significant customer issues."

Nadler's reassurances, however, did not impress a crowd of HP customers who complained of continued fallout from an SAP ordering system gone wrong. HP blamed a lengthy delay in linking a series of old SAP ordering systems for $400m in lost in revenue during the third quarter. It was forced to spend tons of money to overnight gear and to placate the channel. This missed revenue contributed to an overall loss for HP's hardware business and triggered a 17 percent fall in HP's share price.

One customer from Cingular Wireless complained that a number of orders for HP's high-end Superdome servers and lower-end Intel systems have not arrived on time. "We've had some delivery problems the last few months . . . are those coming to an end," he asked. "If I placed an order for 500 blades, would you be able to give me a good (delivery) date?"

"We'll work on it," Nadler said. "Give me your card."

One must wonder if HP can provide this type of personalized service to its entire customer base or if the company has in fact replaced SAP with a one-card-at-a-time system.

Another customer said he received a complete duplication of his hardware order and asked if he could keep the extra kit.

Mark Gonzalez, an HP vice president in charge of server and storage sales, said he was aware of the problems being faced by HP customers.

"From a Unix perspective, that business is pretty much back on track completely," he said. "Storage is pretty much back on track. With (Industry Standard Servers), we sell a lot of those so the volume is much larger . . . That business is pretty much back on track with the exception of a couple of things. By the end of August, that should be squared away."

After enduring a steady series of complaints about the orders, HP executives promised that the new SAP system would make life better than before. HP customers should soon be able to receive exact product build dates and delivery dates.

"This brings multiple, legacy supply chain systems and integrates them to provide a single view of total inventory," Nadler said. "It will be much easier to make a commitment. Some of you have probably experienced the need to place multiple orders . . . that all goes away."

"The worst is well behind us," Gonzalez added.

The SAP problem proved embarrassing given HP's ongoing effort to promote its Adaptive Enterprise technology for making quick changes to complex sets of hardware and software. HP showed that is has a hard time pulling off these kinds of changes within its own organization, which must spook customers. ®

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