Global CIO: Inside HP's Numbers: Mark Hurd's Top 10 Strategic Insights - InformationWeek

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5/21/2010
08:33 AM
Bob Evans
Bob Evans
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Global CIO: Inside HP's Numbers: Mark Hurd's Top 10 Strategic Insights

As HP posts strong growth, CEO Hurd nears the end of his sweeping transformation of the world's biggest IT supplier.

5) Software: Clarity Of Purpose. Asked if a recent spate of acquisitions in the software sector would trigger reactions by HP, Hurd emphasized that HP Software is focusing intently on "the management space" for servers, PCs, storage, networks, and security. Saying the acquisition referred to by the analyst (SAP buying Sybase) is "frankly not that intriguing to us" because it's outside HP's core interest, Hurd said HP will stay focused on "this whole automation management place where we think it directly affects our converged infrastructure business on one side, and also helps automate our services on the other." He then listed three strategic objectives for HP Software: key elements in data-center transformation; key components for HP's converged infrastructure strategy; and vital pieces inside HP's own drive for maximum IT efficiency.

6) Printing: Retail And Services. What was intriguing in HP's discussion of its stalwart imaging and printing business was the dramatic shift in emphasis from the sale of consumer and business printers—although they're still clearly very significant—to the focus on managed printing services and HP's booming photo-kiosk deal with Wal-Mart. In the quarter ended April 30, HP installed 2,400 of those kiosks in Wal-Mart stores and expects to hit 7,000 by the end of the year. On the printing-services side, CFO Cathy Lesjak said HP had "multi-million dollar wins in every geography across diverse industries including financial services, telecommunications and transportation," according to the transcript. Hurd noted that "the importance of those two businesses for us are, those are long-term businesses. Management services, five-year contracts, retail photo kiosks nine to ten years, 100% connect of supplies for those products and they are becoming, beginning to be a meaningful part of our portfolio." Whoever thought of HP printers as a long-term annuity business?

7) PCs: Driving HP's Supply Chain. This one's a little wonky but it reveals a key reason why HP has stuck with its PC business even though the products themselves are no longer regarded as deeply strategic enterprise tools—and, in fact, are under serious pressure from smartphones and tablets. Hurd said that inside HP itself, its PC business is the companywide engine for procurement and supply-chain efficiency: "Remember for us, we think about the PC business more broadly than we do the PC business just in isolation. The PC business really is the procurement arm for almost the entire company from a product perspective. We leverage the common parts across almost all of our infrastructure, so for us we think about it not just in the context of operating performance, but the leverage and the position it gives to the entire company."

8) Microsoft: Mobile Eggshells. Hurd spoke enthusiastically about the potential for HP to own its own operating system and IP to be leveraged across a huge range of interconnected HP devices, and while that's all great for HP, what does it mean for HP's broad and deep partnership with Microsoft, which has more than a passing interest in mobile operating systems? In addressing the role the Palm OS will play in trying together HP smartphones and printers and more, Hurd struggled a bit to address the potential impact on Microsoft: "And again, I don't want to tell you that we’re not going to have—Microsoft is probably one of the best relationships we've got in our company, and they're still extremely important." No doubt they are—but it's telling that Hurd felt he had to address that situation.

9) Servers: High-End Potential. This one's vital because while IBM has spent much of the past year reinvigorating its high-end servers with dramatic new capabilities, HP's been active in the midrange but rather silent on high-performance systems. With its new Superdome units coming later this year, Hurd said that "we’re introducing a new business critical system" that will reflect the company's belief in "a combination of we think very strong growth in the industry-standard server blade market combined with Virtual Connect . . . . We feel very good about the new product release." An HP press release describes it as the "industry's first mission-critical converged infrastructure in one platform" ranging "from x86 to Superdome 2." And did Hurd say he "feel(s) very good" about that new product? Yes he did—and that leads us to our final point:

10) Mark Hurd Feels Good.: On 14 separate occasions during his initial presentation and then the Q&A with analysts, Hurd said that he and/or HP "feel good" or "feel very good" about the company's Q2 achievements and future prospects. While not exactly the sort of metric you can pump into a spreadsheet, it's nevertheless something of a barometer into the mindset of Hurd, who's not one to toss around happy-talk without a very strong basis for feeling that way.

RECOMMENDED READING:

Global CIO: Hewlett-Packard Attacks Innovation Gridlock That's Killing CIOs

Global CIO: Hewlett-Packard CEO Hurd Shifts Strategy Toward Services

Global CIO: Hewlett-Packard CEO Hurd's Strategy: The Infrastructure Company

Global CIO: IBM Claims Hardware Supremacy And Calls Out HP's Hurd

Global CIO: Hewlett-Packard's Hurd Creates Growth Engine In R&D

Global CIO: Hewlett-Packard's Hurd Says Bad IT Means A Bad CEO

Global CIO: Why Hewlett-Packard Must Articulate Its Enterprise Strategy

Global CIO: An Open Letter To Hewlett-Packard CEO Mark Hurd

Global CIO: Hewlett-Packard Recruits Microsoft To Raid Sun's Customers

Global CIO: Oracle Dumps HP After Co-Creating 'Most Successful Introduction Ever'

GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at [email protected].

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