May 2004

An Extra Helping of MPE

Steve Suraci hungers for a place at the table where the 3000’s future is being dished out. The president of Pivital Solutions, Suraci led his company into a new spot during 2003 as an authorized HP 3000 reseller. The effort came less than a year before HP ended its sales of the computer. Pivital was taking advantage of an opening in the 3000’s sales channel, but the company was also eyeing opportunity in the support market while it sold some of the last of HP’s new 3000s.

Pivital sold those 3000s from a heritage of providing ERP and manufacturing solutions to the community, starting as GrowthPower application consultants and then becoming a support resource for the ERP customer. The company took on its 3000 resale mission as a means to become a nationally-focused firm. Suraci and Pivital showed an appetite for the 3000’s future over the past year, a moxie that seemed to suggest the system’s useful life is not as fettered as some believe.

It may have been such promise that prompted Suraci to run for an OpenMPE board seat this spring. When the votes were counted he’d joined the group of directors which hopes to steward MPE/iX in the years after HP leaves the 3000 market. Suraci founded Pivital in 1991 and made the company his full-time venture in 1995, but his HP 3000 career goes back far enough to begin with managing applications on a Series 42 Classic HP 3000. We wanted to know what this newest OpenMPE board member thinks the organization can aspire to, what the end game of new 3000 sales looked like, and what the prospects for third parties might become. We spoke in the weeks just before the OpenMPE election.

Why did you run for the board of OpenMPE?

OpenMPE is the best chance we’re going to get at a real homesteading solution, one that will last. As much as we’d like to say that OpenMPE wasn’t being honest with the users, and HP isn’t working quick enough, you have to admit that HP holds all the cards. We’re the ones trying to get something out of them that they don’t want to give up.

Do you think the non-disclosure agreement OpenMPE has signed with HP is in the best interests of the negotiations over MPE source code release?

The reality is that the NDA is critical. HP is making some very high-level decisions, and they’ve got a lot of legal issues to address. If they do give in on this, it’s still a major win for OpenMPE. OpenMPE has got nothing if it doesn’t have the rights to MPE. If the NDA is part of the terms HP is dictating at this point, OpenMPE has to live within those terms.

Can the clock run out for OpenMPE’s aspirations?

OpenMPE’s time will come for those who wait. There is no doubt in my mind that HP will let the product go on completely unmanaged. The fact remains that the threat of litigation will eventually outweigh the profitability of the product. Then OpenMPE will be in the driver’s seat. HP will need to hand off the product to just such an organization to avoid the inevitable litigation.

HP is telling customers that risks will build by staying on the 3000. Do you think the risks will escalate for customers who rely on an HP that’s cutting back on 3000 staffing?

It’s hard to say from an HP standpoint what their direction is going to be regarding staffing. It appears as if more of the feet on the street for HP have limited MPE knowledge. Some of them don’t even know what an MPE system is. That would be a major concern to a customer.

Over time, if the trend that’s going on right now continues with HP support, HP customers are going to move off the platform. For the customer that stays over time, I think there’s going to be dwindling commitment on HP’s part. They’ll be staffing fewer and fewer people.

How has the support business changed for Pivital in the last year?

Our organization has grown into one that really is the primary gist of our business. We only do 3000 stuff now. We’re still supporting the GrowthPower application on the 3000 side, and some stuff with MANMAN. But that portion of our business hasn’t grown much in the last few years. It’s about 30 percent of our business, and the 70 percent is from 3000-generic services and support.

We intend to be there for customers. As long as there’s 3000 customers, we’ll be there supporting them. The support business has been going along very well for us in the last several months, once we got through the last exceptions that had been made for the last 3000 sales.

Did being an HP authorized reseller in 2003 help you ramp up a 3000 support business?

It really made us focus as a national company. When we got the reseller agreement we took heart that we could be a national company. There was no reason why we couldn’t take the service people we were using regionally and add to that team to become a national organization. Last year we were well-represented at events like the Solutions Symposiums, CAMUS, and Ecometry’s user conference. We tried to get the word out and advertise that we were a national player. Two or three years ago if you’d asked someone who Pivital Solutions was, they’d have no idea, unless they were in the GrowthPower or MANMAN space.

What was the end of HP authorized 3000 sales like for Pivital?

We sold five or six servers in the end run, during the last month or so. From a dollar revenue standpoint it proved valuable to have continued as a reseller. But at the end there was a lot more competition, and competition from HP itself.

Have you encountered situations where you’re now competing with HP for support business?

95 percent of the time when we have opportunities to sell support, our primary competitor is HP. That’s not a knock on anybody else out there trying to sell support. The reality is we rarely run into each other.

Frankly, the customers we’re dealing with at this point aren’t calling us for no reason. They’ve got some preconceived notion about why they’d go third party. We are still a much higher risk than sticking with HP, but the customers have made a decision before picking up the phone: cost-wise, or service level-wise, they are dissatisfied with HP.

Why do you think you’re a higher risk than HP right now?

Well, it’s not just us, or anybody else in the third party support field. We all have great engineers that can probably solve any problem. But we still don’t have access to MPE source code. As a result, we absolutely are a much bigger risk. Can we find workarounds? Almost always. We haven’t run into a situation yet where we haven’t been able to get a customer back up and running.

From a customer’s view, if I’m doing a couple billion dollars a year through my HP 3000, and I walk into my CEO’s office and tell him, “Pivital is on the job,” they’ll say, “Who?” When he hears “HP is on the job,” he doesn’t have that same perception. When he thinks of HP, it’s in a much different light than the guy in the IT department — who’s probably dissatisfied with the level of HP service

It’s not a liability in that we can’t provide the same level of service; we do, and in a lot of cases we probably do a better job at it. Because all that we do is the HP 3000.

How much business in support has become available?

We saw a lot of hesitation from customers before end of sales. They weren’t sold on the fact that they weren’t going to have the HP safety net available to them. Look at how much 9x7 support HP is doing even now. Getting the customers to make the first commitment was the hard part. Now, a lot of the hesitation is starting to go away.

Why is that?

HP’s finished with most of its system shipments, although I’m sure they haven’t finished filling the State Farm order they got at the end of sales. Rumor had it that State Farm’s order was about 140 servers. But to 3000 customers, HP seems more determined to leave the 3000 market.

Did HP’s extension of its support for 6.5 make a difference to your business or the marketplace?

They did us a huge favor with that announcement. They said they’re not fixing problems with 6.5, but they’ll keep charging customers for support. If there’s a problem, they’ll have the customers go out and get MPE/iX 7.0. From our standpoint, we give that letter to our customers. It’s a selling point for us. They just leveled the playing field for the vast majority of customers.