The IT industry needs a strong HP. Does it have the strategy and execution to return to strength?


In March HP hosted a number of analysts at the global AR Summit in Boston. The financial, strategic and leadership troubles of HP have been well acknowledged,  As noted, I, and most of the analysts attending had high expectations that HP could articulate a strategy that will enable it to re-capture a position of eminence in the IT industry. In my 13 years as an analyst it was perhaps the most anticipated AR summit I can recall.

In light of what was presented and discussed, it is worth noting three key aspects of HP, its customers and people up front.

Despite all the troubles of HP:

  • HP has not lost the ability to have good people and good leadership. It has lacked investment and execution.
  • HP customers are typically very loyal and sticky to the organization and employees.
  • The industry needs and wants a strong HP

Straight to the content: Meg Whitman was up front and leading the way for HP. I took a number of key aspects away from her plenary session.

  • She is at HP for the long haul. She will see the transformation through.
  • The leadership team she has put in place appear to respect her, and each other.
  • HP knows it has to invest notably in IP and labs to regain the position it had in the IT industry
  • The focus is on selling IT Services and products to CIO and related roles.

Whilst I am not in a position to comment too deeply on the HP PC and Printer business, it is clear that both these businesses are at a fundamental point in the business cycle. Keeping relevance and momentum for HP will be particularly difficult particularly in the next 12-24 months.

Services wise, I came away from the event feeling positive. It knows that the legacy aspects of the services business is under severe pressure and will decline short term prior to a rebound. Additionally HP has increased competitive threats from a range of new providers such as Amazon Web Services (AWS) that did not exist in the past. Despite this, I genuinely believe that HP has well and truly reached the bottom of the cycle.

It clearly has a realisation of its strengths. I consider the new data centre it has built in Sydney, Australia to be a global benchmark, and with the latent applications knowledge it has, alongside cloud computing investments, it  has the chance to truly drive growth moving forward. As someone who has watched BPO for 13 years, I am very excited to see the potential of BPO at slowly being realised, note recent research in this regard. https://capioit.wordpress.com/2013/03/19/hp-bpo-getting-back-to-the-game/

From a functional point of view, I was impressed to hear from HP executives about the challenges and metrics around “RED” accounts. This has been an ongoing issue for HP, and it is clear that they have invested significant time in ensuring the number of red accounts can be minimised. This has also required exiting some accounts or deals. Hard decisions have to be made even to loyal customers if HP is to turnaround services.

Challenges of course will remain. Most clearly, HP needs to invest more in industry and applications. Too much of this was lost in the EDS integration and transition under the “leadership” of Mark Hurd.

Capture Point

Perhaps I went into the HP AR event expecting for a blinding light of strategy that HP could turn on to turn its business around. The truth is that whilst the return of the business will take a few years, HP has started clearly in the right direction. It has finished “navel gazing” and is now focused on changing processes and delivery to ultimately grow above market. Everyone is watching HP, so the spotlight will be in full glare with success or failure. Based on what I have seen in recent weeks from HP, success is looking more likely than it was 6 months ago, so the direction is in hand.

 

If you require further information, please contact Phil Hassey,  Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology in emerging markets. Phil may be contacted by email below,

phil@capioit.com

About capioIT - Phil Hassey

capioIT is an advisory firm focused on helping organisations to understand emerging technology in emerging markets. CEO Phil Hassey established the company in 2010
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