Pushing Internal Efficiencies

After a year of working to improve its relationships with VARs, Compaq Computer has come out on top with solution providers. That success was duplicated businesswise as well, according to chairman and CEO Michael Capellas. In the second quarter, he notes, Compaq gained share in industry-standard servers in all regions over the first quarter, and it gained share in desktops in all regions except North America, where its share held steady. In an interview with VARBusiness, Capellas offered his thoughts on how his company was able to improve from third place in notebooks to first place and where its future--with or without Hewlett-Packard--lies.

VARBusiness: Compaq won the notebook category of the ARC, receiving top scores in such areas as marketing support, ease of doing business, e-business programs and product availability. What steps did you take to enhance the company's performance in these areas?
Capellas: We've really focused on ease of doing business. You will often hear me say we must drive toward "radical simplification." We've improved our internal efficiencies, such as optimizing our capacity utilization and streamlining order-management systems that make Compaq easier to do business with. That has enabled us to increase our responsiveness in product availability.

VB: Has Compaq launched any initiative in the past year that makes its notebooks a better value proposition for solution providers?
Capellas: Over the past six to nine months, we have been very aggressive in terms of value-added services, and product and solutions innovations, as well as in incorporating efficiencies into internal practices that, in turn, allow us to increase value to customers in price and availability. We also made significant improvements in our order cycle times. That has allowed us to get products into the hands of solution providers much faster.

VB: Conversely, Compaq scored relatively low in product quality/functionality. What are you doing to alleviate these apparent problems?
Capellas: We acknowledge that there have been some issues with earlier notebook models, and we have made an enormous commitment to product quality. In fact, all senior executives are measured on quality and customer satisfaction as a component of their performance measurement. We address any quality issues head on.

I can tell you that the new Evo line of notebooks delivers outstanding quality and performance. We have undertaken exhaustive external research and testing coming out of the factories to ensure that the products are designed and tested for dependability in demanding networked environments.

VB: In general, do you feel that Compaq has as loyal a channel as it did a few years ago?
Capellas: We are always working on ways to build loyalty and partnership. We can do this by continuing to deliver on key services that are critical to solution providers, such as product availability and marketing support. And, of course, we will continue to come to market with innovative products.

The other key action we can take is to make sure we build products and programs that fit the go-to-market needs of solution providers and provide them with the tools they need to deliver Compaq products and solutions to their end customers. We have no doubt the Evo launch will improve [our] loyalty rating.

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