Commentary
10/1/2010
11:32 AM
Bob Evans
Bob Evans
Commentary

Global CIO: An Open Letter To HP CEO Leo Apotheker

The IT industry and its customers are changing in profound ways. As you take the helm of the world's largest IT company, here are a few suggestions.



Dear Leo: Congratulations on landing the CEO job at Hewlett-Packard. It's a proud company with a wonderful tradition and after some recent corner-office turmoil, HP could use some steady leadership. It's been about 18 months since my last letter to you when you were back at SAP, and I wanted to offer some observations on some of what's happened since then.

At the same time—and this calls to mind the bromide about "may you live in interesting times"—the very notion of "steady" in these turbulent times seems anachronistic. Somehow, you've got to step into a wildly fluid situation in which every HP manager except the head of catering was "reported" to be in close consideration for the CEO job; every know-it-all was swearing on his life that this time the board would demand an insider for the top job; and every stock analyst was wondering how will the new CEO restore the investor confidence so clearly shaken since the unseemly ouster of Mark Hurd.

But I think, Leo, that all that internal stuff—though clearly being relevant—is trivialized by the external challenges you and your enormous company face:

  • the upheaval in traditional IT thinking and practices triggered by the rise of cloud computing;

  • the profound impact on how people work and communicate brought about by social media and collaboration;

  • the ongoing and prodigious leaps in technology from in-memory computing to plummeting component prices and beyond;

  • the ascendancy of highly engineered optimized systems that can allow performance to soar and busywork to almost disappear;

  • the philosophical wars over "the stack" and who controls it, which are spilling rapidly and contentiously into the marketplace;

  • the rapidly growing sense that major IT companies cannot compete unless they have some hand in strategic, customer-facing applications;

  • the explosion in the use of and expectations for predictive analytics and the high-powered IT infrastructures and organizational flexibility that surround them; and,

  • the wildly transformative impact that the mobile-social interplay is having on everything from personal behavior to marketing to product design to supply chains and beyond.

    For the leader of HP—the largest IT company in the world—those eight challenges have to be dealt with swiftly and deftly but also decisively, and all of that will happen under intense scrutiny from customers, employees, competitors, analysts, investors, and the inevitable gadflies that always swarm big companies in transition.

    But you probably have already thought long and hard about all that, right?

    Well, whether you have or not, I'd like to mention now two additional challenges that all CEOs face but that you in particular, as CEO of HP—the largest IT company in the world—will need to handle even more effectively and gracefully than others carrying that title.

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    The first is customers: your relationship with them, your connections with them, your visceral understanding of their wants and needs, and your commitment to putting them—your customers—at the center of HP's thinking from here on out. Not cost-cutting, not the HP Way, not stock price, not employee sensitivities—just customers. Put them at the center and everything else will be fall into place.

    To anyone who might say that's obvious, I'd say I agree—however, some of your experiences as CEO of SAP indicate that in the midst of running a sprawling, complex, and dynamic technology company, you lost touch with SAP's customers and began to view your relationship with them in this way:

    Your responsibility was to keep making the types of big, transaction-oriented, and expensive software that SAP had always made, and the customers' job was to keep buying that big, transaction-oriented, and expensive software that SAP had always made, whether or not all that stuff was delivering value to those customers. (See Global CIO: SAP's Last Chance: It's The Customers, Stupid!.)

    HP faces a bit of that challenge now: it has arguably the broadest product line of any IT company, and HP executives regularly describe how its massive supply chain gives HP incomparable purchasing leverage and how that, therefore, confers on HP strategic advantage. And I guess it does--as long as customers continue to buy the way they used to buy.

    But what if some of those challenges mentioned above shift? What if customers place more knowledge on value and knowledge and speed-to-market and opportunism than on low-cost hardware—will you still have that competitive advantage? When HP customers say to you, "Leo, I need you to help me build a real-time enterprise centered on industry-leading capabilities in predictive analytics"—will your big honkin' supply chain meet that challenge?

    And that brings us to your second primary challenge: competition. As the CEO of HP, your competitors are now not just Oracle and Larry Ellison, but Oracle and Larry Ellison and Mark Hurd (who knows a thing or two about HP), and IBM and Sam Palmisano, and Google and Erich Schmidt, and Amazon.com and Jeff Bezos, and ultimately Apple and Steve Jobs.

    How will you rally your team to confront and overcome those challenges? How will you fight simultaneous massive battles on far-flung fronts against competitors who only have to do one or two things superbly all the time, whereas you and HP, by virtue of your scale and scope, have to do many different types of things superbly without a hitch?

    For the answers, I'd suggest you look to your customers. Understand not just what they want today but what they'll need in three years, and then reorganize HP around customer-driven solutions rather than around product lines that those customers might—or might not—want in a few years.

    Create the HP Center For Customer Value, representing your promise to deliver to your global customers not just hardware and software and services but enduring knowledge, insights, and best practices.

    Compete on your ability to help big enterprises transform their IT organizations in the way your superb CIO, Randy Mott, has done with HP's—it's a feat unmatched by any CIO and any IT organization. Your company's already done, Leo, what most other big companies in the world are desperate to do—teach the world how to do it.

    As for the "where's the HP smartphone?" canard, forget that tactical junk and make the leap past mobile to mobile-social—tie that in with transformation, innovation, and enduring value for your customers based on giving them the tools to engage with and deliver value to their customers in ways no other IT company can. On this subject: have you spent much time with your R&D leader, Prith Banerjee? You might think about turning him and his team and his set of uniquely brilliant skills loose on this spectacular opportunity.

    Well, you've got lots to do and I've taken up enough of your time. Good luck, Leo, and don't forget that the customers are like the head: where the customers go, the body will follow.

    Cheers,

    Bob

    RECOMMENDED READING:

    Global CIO: HP CEO Apotheker Has Deep Expertise But Checkered History

    Global CIO: HP's $130-Billion Gamble

    Global CIO: An Open Letter To SAP CEO Leo Apotheker

    Global CIO: An Open Letter To SAP Chairman Hasso Plattner

    Global CIO: SAP's Last Chance: It's The Customers, Stupid!

    Global CIO: Hewlett-Packard's New CEO: The Top 10 Challenges

    HP Pressure-Cooker: The Top 5 Priorities For Tuesday's Call

    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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