Hewlett-Packard is attempting a radical makeover of its IT infrastructure and processes. The tech vendor's hard-charging chief executive is totally supportive of it. Indeed, he helped conceive the project, along with his handpicked CIO, Randy Mott, and he's counting on it to lower the company's cost structure. But even Hurd admits a project of this magnitude is easier said than done.

John Soat, Contributor

January 15, 2008

3 Min Read

Hewlett-Packard is attempting a radical makeover of its IT infrastructure and processes. The tech vendor's hard-charging chief executive is totally supportive of it. Indeed, he helped conceive the project, along with his handpicked CIO, Randy Mott, and he's counting on it to lower the company's cost structure. But even Hurd admits a project of this magnitude is easier said than done.Last week I attended a get-together of technology managers in Austin, Texas, sponsored by HP. It was one of series of quarterly IT-oriented meetings HP is conducting around the country. The two main attractions for these meetings are CIO Randy Mott, who spoke to the Austin group about HP's ambitious and aggressive three-year IT transformation project, and HP's still relatively new chairman, CEO, and president Mark Hurd, who spoke about the changes he's helped bring about at HP since taking over in 2005.

Those changes -- cost cutting, refocusing, and re-aligning -- have led to some impressive results for HP, financially and in terms of increased market share. Those results led BusinessWeek magazine to name Hurd its businessperson of the year for 2008.

Cognizant of the tech-oriented crowd in Austin, Hurd also spoke about the ambitious IT effort that's going on within his company, which involves dramatically reducing IT projects, applications, and head count along with a costly technology refresh. "For us, it's been about trying to get four simple things done in IT," Hurd said. "I tell Randy, I can say them fast so they must be easy," he added, jokingly.

Here's Hurd's list of objectives for IT: >> First, make available the best information within the business as quickly as possible. Hurd said that a company has only 4.5 minutes to get relevant information to the right place for that information to be effective. Think of a support person dealing with an irate customer, or a salesperson trying to close a deal. >> Second, get IT costs lower -- a lot lower. Mott has said that his objective has been to reduce HP's IT spend as a percent of revenue from 4%, when he started the project in late 2005, to 2% by the end of this year. However, Hurd said that when he came on early in 2005, HP's IT budget was closer to 5% of the company's $80 billion revenue, which makes the 2% goal that much more ambitious. >> Third, "We can't blow up the company and take a quarter off to do it," Hurd said. >> Fourth, "I need to be able to do exactly what I'm doing today, after it's over."

Those objectives may be easy to say, but that doesn't make them easy to do. "Three years later, we're still not done," Hurd said.

For one thing, there's been internal resistance. One of the stated goals of the IT transformation is to reduce the number of applications HP supports from 6,000 to 1,500. HP had 75 different consumer-support applications alone, Hurd said, which meant 75 separate code drops just to modify all those apps. "It took us a while to get to one global [consumer support] app, and every country griped along the way," he said. The application reduction and standardization has led to "incredible fights within the company," Hurd said, starting with business unit leaders, who didn't want to give up power. " 'I don't want to give up my IT,' " is how Hurd characterized their responses.

The results will be tangible -- they already have been, Hurd said. For example, HP has added 3,200 people to its sales force in the last two years. "Think of it as being funded by IT," he said. But it hasn't been easy, or cheap. For one thing, Hurd agreed to a capital investment of 2% of HP's 2005 revenue in the three-year makeover project. "Thinking back about this three years ago, I wouldn't automatically take this on," Hurd said.

"I don't think this story is unique to HP," he said. "Aligning IT with the business is hard."

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