Government // Enterprise Architecture
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8/16/2012
11:59 AM
Josh Greenbaum
Josh Greenbaum
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Can HP Remake Itself Before It's Too Late?

When a company's most recent success is a good Olympic slogan, it's a sad day, but such is the current state of HP. The once mighty force has become a fragmented mess.

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It's a sad day when the bar is set so low that a company's most successful endeavor in recent memory involves a new slogan and ad campaign tied to the Olympics, and the best news to date is that it won a lawsuit it should never have had to engage in. Such is the state of Hewlett-Packard today, a once mighty force in technology that's now relegated to a status that can best be described as dire.

News from the last quarter only compounds how dire things have become: HP took a $1.5 billion charge against earnings due to a greater number of employees taking an early retirement package than had been anticipated. As if the company could afford to lose talent. To paraphrase the old aphorism: Those whom the gods wish to destroy, they first deplete of their valuable employees.

The brain drain on top of the increasing irrelevance of HP in many key markets and its inability thus far to credibly enter any new markets makes the question that remains not whether CEO Meg Whitman can keep the company alive, but how she will dismantle HP into something that's both manageable and relevant in today's market.

If even that option remains.

It's been almost a year since that fateful day in August 2011 when then-CEO Leo Apotheker, following the misdirection of a board that was asleep at the switch in so many well-documented ways, announced the possible spinoff of HP's PC unit, the death of Palm, and the acquisition of Autonomy. The ensuing firestorm undeservedly cost Apotheker, his chief of staff, HP's long-time CTO, and numerous others their jobs and their reputations. It was as shocking a misfire as I have ever seen in almost 30 years of covering the IT industry.

Into the breach rode Meg Whitman, promising stability and leadership, and armed, one would assume, with an ironclad agreement that she would get more than the paltry 11 months Apotheker was given to clean up a mess that was decades in the making.

With the close of Whitman's first year rapidly approaching, I think it's safe to say that not much has changed for HP. The company's revenue and market share continue to decline as core markets like PCs and services fall apart. The Autonomy acquisition, which couldn't have been undone even if Whitman had wanted to, has proven to be as troubled as most of the company's other large acquisitions--witness the untimely departure of Autonomy CEO Mike Lynch in May, six months following the acquisition, and the complete absence of a public strategy to integrate Autonomy and create a pan-HP value proposition around its enterprise search capabilities.

Meanwhile, Palm is dead (though it appears that HP is trying to keep a zombified version of Palm OS alive), HP lost Vyomesh "VJ" Joshi, the driving force behind its highly successful printer division, and partnerships with the likes of SAP have been troubled by the inability of HP to move fast enough on the hardware side to keep pace with its partners' software innovations. Meanwhile, EDS is being gutted amid a planned $8 billion write-down, having proven in one quarter too many that it has been unable to adapt its go-to-market to pick up the large volume of smaller, strategic deals that it needs to turn in consistent quarterly success.

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dbtinc
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dbtinc,
User Rank: Apprentice
8/17/2012 | 12:42:39 PM
re: Can HP Remake Itself Before It's Too Late?
it's been a long time since the great days of HP as a technology company - now? Overpriced and underperformed. Farewell, my sweet.
EVVJSK
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EVVJSK,
User Rank: Apprentice
8/17/2012 | 5:31:28 PM
re: Can HP Remake Itself Before It's Too Late?
Recently, I went to look for a laptop for my niece for college.
I was looking in the $550 range. HP didn't have anything to offer on that range at local electronics outlets so I went online to Dell. Have to be competitive.
IT Outsourcing Professional
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IT Outsourcing Professional,
User Rank: Apprentice
8/17/2012 | 9:05:03 PM
re: Can HP Remake Itself Before It's Too Late?
CEO's from Ms. Fiorina up to including the Apotheker operated the company in a manner that promoted little or no synergy between business units.

During a recent Outsourcing account review the customer remarked that they could order laptops and servers faster than HP Enterprise Services staff using online options.

The same customer (along time customer from EDS days) also remarked that the HP software solutions had fewer capabilities than the former EDS solutions. They also claimed that HP software came with an immediate remediation plan, unlike competitor's software that came with an implementation plan.
dchasselshp5
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dchasselshp5,
User Rank: Apprentice
8/18/2012 | 12:58:24 PM
re: Can HP Remake Itself Before It's Too Late?
HP have been like many large "IT" vendors been victim of the "deal junkie" syndrome and now face the consequences of poor strategy to integrate branding. This was an eat or be eaten world driven by short term demands from stock markets. Buying mature companies might look good with revenues but in reality they were buying old technologies. Maybe HP will be "lucky" and tackle this as others disguise the problem. Interesting to see Progress Software face reality and unload their "distractions" to their core business and downsizing just as HP will have to do?

There is another angle that may be the saving of HP. enterprise software is long overdue for change and it will be a step change that may leave incumbents in same position as HP in having to face write offs? What is this change? It will see business software become commoditised where custom solutions can be built where core code does not change no code generation or compiling. This has now arrived with a few having spent many years on R&D. Independent analyst Naomi Bloom sums it up here http://infullbloom.us/?p=3222.
G«£Writing less code to achieve great business applications was my focus in that 1984 article, and it remains so today. Being able to do this is critical if weG«÷re going to realize the full potential of information technologyG«•
G«£G«™.how those models can become applications without any code being written or even generatedG«•.
G«£If IG«÷m right, youG«÷ll want to be on the agile, models-driven, definitional development side of the moat thus createdG«™..G«•
In a subsequent tweet author said G«£It really matters how your vendors build their software, not just what they buildG«• and Michael Krigsman a leading analyst tweeted referring to the article G«£Pointing to the technical foundation of futureG«•.

HP may just have an advantage over others for this as they recognise solutions will drive all sales as you say hardware is commoditised. Maybe the stock markets should take stock on how technology companies grow in the new era of smart buyers who will be encouraged to be so by independent analysts by understanding what exactly it is they are buying into for their business software?
jsmith891
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jsmith891,
User Rank: Apprentice
8/18/2012 | 5:07:49 PM
re: Can HP Remake Itself Before It's Too Late?
A company that sells printers which need $40plus ink cartridges after printing five pictures is a company not interested in my business. The kiss is not worth the screwing.
skandakatla
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skandakatla,
User Rank: Apprentice
8/18/2012 | 6:15:08 PM
re: Can HP Remake Itself Before It's Too Late?
Let us wait for the good days for HP.
ANON1237925156805
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ANON1237925156805,
User Rank: Apprentice
8/20/2012 | 7:03:49 PM
re: Can HP Remake Itself Before It's Too Late?
The mismanagement of HP goes back over a decade and starts with the board of directors. They have swung from asleep at the wheel-letting charismatic CEO's go their own way-to hypervigilant-setting arbitrary and unrealistic deadlines for CEO's to achieve the impossible.

It's the job of a company's board to counterbalance the short-term thinking that results from focusing too hard on immediate shareholder value. Board members are are in effect the custodians of the long term health of a company. That means that they must require CEO's to articulate an overall vision that extends out into the future and to drive all business decisions, whether it be acquisitions or changes in direction, based on whether they fit into the big picture.

HPs board has quite simply failed at this. They rubber stamped the purchases of Compaq and EDS though both were questioned by experts in the industry and neither fit into a coherent and specific narrative about where HP was headed. They did nothing to ensure that these companies were properly integrated into HP.

Once jolted upright and forced to restructure, they brought In Leo Apotheker and asked him to fix the mess in 9 months or else. The message was "We're watching closely now." Apotheker's flip flopping wasn't helpful but frankly the problems were too deep-seated by then for him to have succeeded in so short a time with such a limited mandate.

Now we read that Ms. Whitman is also on a ticking clock. We don't read that she's been asked to start by saying hey, HP, what are your natural abilities, what do you want to be when you grow up and what do you need to major in to make that happen? We read that she's been asked to fix it. Fix what, how, why?

There's brilliance yet in the organization and some residual motivation in areas of historical excellence. But since none of it is directed at a goal, the energy dissipates faster than it can be generated. Add to this the fact that Mr. Hurd completely destroyed the employees' confidence that they would be treated justly and with respect. Hence the brain drain just when experts are most needed.

It's not easy to find any cause for optimism here and that's heartbreaking. Barring a miracle, we can only hope that the components of HP that are best of breed don't go under with the sinking ship.
pintaricn
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pintaricn,
User Rank: Apprentice
8/21/2012 | 2:24:49 PM
re: Can HP Remake Itself Before It's Too Late?
Great post.
AustinIT
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AustinIT,
User Rank: Apprentice
8/21/2012 | 5:37:18 PM
re: Can HP Remake Itself Before It's Too Late?
You know things have got to be bad when even the likes of Carl Icahn haven't shown any interest in picking their bones.
Andrew Hornback
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Andrew Hornback,
User Rank: Apprentice
8/23/2012 | 1:24:09 AM
re: Can HP Remake Itself Before It's Too Late?
To be quite honest... when HP announced that they were going to kill off the Palm, I could already smell the decomposition happening. As a former Hockey Puck, er, Palm Pre owner, I have no love for the organization, for how Palm turned their back on their customers and then HP followed suit. The attempted relaunch and total backfire of webOS was icing on that cake.

When HP announced that they were going to try to take themselves down the path that IBM did a number of years ago - focus on services, sell off the laptop/desktop divisions - I thought that maybe they were on the right track. That misfire has really led me to stay away from HP - both in my professional and personal lives.

HP needs to regain an identity as opposed to this nebulous cloud of technology. Interestingly enough, I see Dell following the same path with all of their recent purchases. These giants need to determine where they're going, or they're going to implode from their own gravity.

Andrew Hornback
InformationWeek Contributor
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