On March 28, EDS, HP, and IBM turned in their bids in a series of three-ring binders that took up 6 feet of shelf space in Passerini's office -- and weighed in at 145 pounds. The selection team divided the responses into sections and sent them to 125 Procter experts around the world, who spent a weekend of all-nighters evaluating the documents. After several days of discussions, the six senior members of the selection team gathered to make the final call.
The meeting lasted most of a day. As each team member spoke, a consensus began to emerge. After a show of hands, the decision was unanimous. P&G would skip the intermediate step; HP was the winner. The reasons were many, but the one that closed the deal was this: HP wanted it the most. "HP was new to the market, they were very focused, and they were very, very hungry," says Andrew Hewat, TPI's lead consultant to P&G. On April 11, P&G broke the news: The company was awarding a $3 billion, 10-year IT services contract to HP. "IBM was absolutely stunned when they heard that we had won," Fiorina says.
Livermore trumpeted the P&G win with the somewhat disingenuous comment that HP is now a "legitimate alternative" to IBM. True, HP services became a $12 billion organization as a result of the Compaq merger, which allowed it to claim the industry's number three spot for total IT services. But that ranking is misleading, since it includes low-margin "break-fix" deals -- maintaining systems and running help desks. The real money is in the far more lucrative computer-services consulting and outsourcing arena, where HP ranks a distant seventh. Still, HP is now very much on EDS's and IBM's radar screens. "We reset the clock when we did the Compaq merger," says Livermore. "And all the momentum is on our side."
There's just one last item to settle in regard to the bidding for P&G: Did HP lowball the price to win the contract? HP won't disclose any numbers, but its executives insist that the P&G deal will be profitable in its first year. "The people who are saying we lowballed are the people who lost," says Fiorina. "They're using lowballing as an excuse to justify their own failure to show."
Perhaps. But here's what's certain: HP's next big challenge is to manage P&G's expectations over the long haul. HP won the P&G deal, but now comes the tougher part: proving that it truly deserved to win. Every hour of the day, every day of the year, from now until August 2013, HP must deliver on its promises. All of the IT industry will be watching.
Neither IBM nor EDS thought HP could beat them head-to-head. Wrong. Here are five rules for competing the HP way.
HP played up its strengths, but it didn't play down its obvious weaknesses. The company tackled them head on, which kept the competition from doing it instead.
Each interaction with the customer moves you closer to a win or closer to a loss. Rigorous self-criticism at HP put nearly every presentation to P&G in the win column.
But conserve your ammo. At decisive moments, HP chief Carly Fiorina stepped into the fray. Her meetings with P&G were infrequent, but she made each one count.
When Fiorina told P&G, "We will be your Wal-Mart," she gave a mental model of what a relationship with HP would be like -- P&G's rich, successful relationship with its biggest partner.
"HP was new to the market . . . and they were very, very hungry," says a consultant to P&G. HP won because it wanted the most to win.
Bill Breen (bbreen@fastcompany.com) is a Fast Company senior writer.
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