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11/26/2008
02:30 PM
Chris Murphy
Chris Murphy
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HP Goes All In With An IT Transformation

Even with the economy in a fierce downturn, HP CIO Randy Mott preaches a high-risk, capital-intensive approach to transforming IT operations. But will other CIOs follow his lead?

Randy Mott's telling an incredibly persuasive story. Hewlett-Packard's CIO is laying out the results of a three-year journey by his team to transform the way it builds, delivers, and manages the technology that runs HP, and the results look impressive: triple the bandwidth at half the cost; 70% of employee time spent on new development with just 30% on IT support; 85 data centers consolidated to six; 700 data marts to fewer than 55; 6,000 applications to about 1,500.

In rough numbers, HP spent about $1.7 billion on the IT transformation, including construction of six new data centers. At the same time, it cut ongoing IT spending from 4% of revenue three years ago to just under 2% today, generating about $1 billion in annual savings. What CIO wouldn't love to have those numbers to tout?

Yet all I can think, as I sit at an HP event at a Miami resort, surrounded by HP customers who've come to learn what Mott and his team are up to, is this: Will even one CIO in the audience follow his advice?

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That's because duplicating HP's business technology transformation comes with medicine many CIOs will find hard to swallow. On the budget front, it's capital-intensive, focusing on reducing IT staff size in part by spending on more automated and efficient software and hardware--not an easy sell in this economic environment. On the organizational front, it takes full support at the executive committee level, giving the IT team the clout to take on business units that want to circumvent centralized tech prioritization and measurement. When it's a stare-down between the CIO and the general manager of some high-flying business unit, will the CEO back the IT team? Mott's vision is a high-risk, high-reward proposition.

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And here's the toughest part: CIOs must do it all at once, all in. They identify the big areas that need transforming and go after them all as one effort. For HP, there were five big areas--portfolio management, IT workforce effectiveness, world-class IT organization, global data center consolidation, and a single enterprise data warehouse. This isn't a pick-and-choose transformation, where companies do the data center consolidation now and push the portfolio management piece somewhere deep into a five-year plan. Mott puts it this way: "Choosing is losing."

The former Wal-Mart and Dell CIO says he's getting more adamant on this point now that the heavy lifting is behind him and he's starting to see the payoff. Do only part of the transformation, Mott warns, and "the parts you don't do will undermine the parts you do."

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An aside: We all get that Mott works for Hewlett-Packard, and that HP sells the stuff needed to make this kind of IT transformation happen, from OpenView and Mercury software to manage and automate data centers to servers and storage to the data warehouse, a market it's trying to break into against entrenched incumbents. One of the four main goals CEO Mark Hurd set down for Mott after recruiting him from Dell was to showcase HP technology.

But Hurd's other three goals are to provide better information, lower risks related to tech failures, and lower costs. This is a CEO who says he doesn't like "binary goals"--as in, be an HP showcase or cut costs. Yes, Mott has some serious advantages over other CIOs, including a CEO who's got his back. Mott is the first to acknowledge that you're crazy to try a transformation without executive support. But this isn't a fairy tale that could happen only at a technology vendor. CIOs might find Mott's transformation pitch a tough sell, but, given his track record as a CIO and the financial results HP has been delivering under Hurd, it's one worth a serious look.

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