Should HP's Next CEO Buy More Software?
Hewlett-Packard has been missing from key markets. But maybe services and third-party partnerships have been the smart plays.
Can "the infrastructure company" also be a powerhouse in software? Some might encourage Mark Hurd's successor at Hewlett-Packard to flesh out what is now a sparse software portfolio. But it might just make sense to stay the course.
The brouhaha surrounding Hurd's resignation is far from over, with Hewlett-Packard's board now catching flack for what some describe as a weak-kneed, politically correct decision. But Hurd is not coming back, and his successor will have an opportunity to redefine HP strategy. Bob Evans painted the big picture in this column. I'll focus on software related to information management, business intelligence and analytics.
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When I think of HP and software, I think of IT systems management, and printer and server management software. A quick scan of the company's Web site also turns up communications and media software I honestly know little about. Those who follow data integration, data warehousing and business intelligence software have long expected HP to acquire vendors in these areas, but the deals have never materialized.
Many thought software would be next after the 2006 acquisition of Knightsbridge, an information management and BI integrator. But as 2007 came and went, HP stood pat as Hyperion, Business Objects and Cognos were acquired by Oracle, SAP and IBM, respectively.
Information integration, data quality and master data management vendors have also been snapped up in recent years. But HP continues to plug software from third-party vendors into its "BI solutions."
Meanwhile, HP's push into high-end data warehousing with the Neoview platform went from white hot in 2007, with major wins at Wal-Mart and Bon-Ton stores, to stone cold in 2008. Neoview was a pet project for Hurd; having joined HP from NCR, the former parent company of Teradata, he knew all about the outsized importance of this category in terms of visibility and strategic decision-making.
Neoview was essentially an attempt to unseat Teradata from the top end of the market. But by the end of 2008, HP reorganized and consolidated Neoview and the former Knightsbridge consultants into the HP Business Intelligence Solutions unit. Hurd put Kristina Robinson, a former NCR protégé and Teradata veteran, in charge, and she quashed all talk of a retreat from BI and Neoview.
To HP's credit, the company's absence from the software side of the business probably hasn't hurt its standing as an information management integrator or hardware partner. In fact, I've come around to believe that HP may be keeping its eye on what matters most, which is potential revenue.
If you examine Gartner's figures on where the big bucks are in information management and BI, only $6 billion comes from BI software each year. The larger opportunities are the $21 billion in data warehousing and the whopping $30 billion in information management and BI implementation services. (HP's EDS acquisition was a grab at the far larger general IT services business, which Datamonitor puts at $600 billion worldwide.)