Livermore Outlines Her Vision For HP's Adaptive Enterprise

In May, Hewlett-Packard named Ann Livermore as executive VP in charge of its Technology Solutions Group, which includes its server and storage products. Last week, in announcing results for its third quarter, those businesses had poor results, leading to the firing of three executives. At HP World 2004 in Chicago this week, Livermore talked to InformationWeek about the performance of the company and her vision for HP's Adaptive Enterprise in the days ahead.

InformationWeek: The Technology Solutions Group got a black eye last week when the quarterly results came out. Are you feeling some heat?

Livermore: Clearly, I was as disappointed as anyone to see the results. I believe that the things we need to do to fix the business are within our control. We had some execution issues in the United States and Europe--in the United States around our new order-processing and manufacturing operations systems, and in Europe with some of the programs associated with our channel partners that weren't managed as well as they should be. The good news is these aren't issues that speak to a competitive problem. They are execution issues.

InformationWeek: Will all these issues be cleared up in the current quarter?

Livermore: [CEO] Carly [Fiorina] indicated that in the United States, the system and business-process issues will be back in control this quarter and there won't be any meaningful impact to our performance this quarter from those issues. We'll make progress on a number of the issues with our channel management in Europe, but not all of those can be fixed this quarter. But we have put in places the steps to make the improvements.

InformationWeek: Have there been, or will there be, any additional firings beyond the three announced last week?

Livermore: I don't think so. I think we wanted to be fairly rapid in our actions. Now we have all the teams focused on being aggressive in the marketplace and executing the plan.

InformationWeek: One of the biggest drops was in storage revenue. Is there an overall industry problem with storage?

Livermore: We do think there's continued carefulness from customers in spending, but we're not seeing major shifts in the market. We think that over time, you see spending cycles, but we're not seeing major changes. People are very careful with their storage purchase decisions. A lot of customers are still rationalizing their storage utilization, just as a lot have done with their servers to make sure they have the right amount. We're adding sales specialists focused on storage into our sales teams because we think one of our issues has been that we haven't had the coverage we need to pursue as many opportunities as we think are available in the marketplace. We're also providing incentives for our server sales reps to hit a higher connect rate between storage and servers.

InformationWeek: These issues can provide an opening for customers to say that HP isn't executing well. Will this make it more difficult for HP to secure its position with top competitors like IBM and Sun?

Livermore: Interestingly, the fastest-growing consulting service we have inside HP right now is our Solaris-to-Linux migration service. So we're sharpening our weapons even more. I would expect our competitors to try and introduce some programs, but ours have been in place and we've been implementing against them for both. We also have some mainframe attack programs, and we can show some pretty compelling total cost of ownership arguments as to why it's much better to move to a Unix, Windows, Linux or even HP Non-Stop environment, as opposed to staying on the mainframe.

InformationWeek: For large companies attempting to get a handle on sprawling enterprises, the Adaptive Enterprise seems a good alternative, but what does it mean for small and midsize businesses?

Livermore: Our view is that small- and medium-sized businesses have a lot of the same needs as a large enterprise. They just may not have all the resources to be able to do all the work themselves, like corporations that have big IT organizations. If you look at the concepts behind the Adaptive Enterprise, they work for small and medium-sized businesses. The first is around simplification; simplify the IT architecture and infrastructure you have. And associated with that, simplify business processes. Second is standardization; standardize your technologies and processes. And third is modularity; the ideal that you can pick something up and reuse it in other parts of your company. And then integration, where you have the right level of integration between applications. The basic concepts fit really well whether you're a big corporation or a smaller business.

InformationWeek: How does HP make Adaptive Enterprise a little more comprehensible and user friendly for a wide audience?

Livermore: For our broad customer base, part of what we're trying to do is provide them options. If they're just interested in products, they can purchase those and do it themselves. They can be helped by consulting from HP or one of our partners. And some small- and medium-sized companies want to outsource operations and not deal with it at all themselves. For them we have things like E-mail hosting services, storage services, and remote managing, and many channel partners offer many of the same services.

InformationWeek: You've said Adaptive Enterprise isn't something you buy, but a journey. Some analysts say that while customers like to talk about utility computing and related issues, they still buy point products and may not be that receptive to embarking on large-scale journeys. How do sell this journey?

Livermore: They buy point products to see what they can do themselves to take them on this journey. A lot of it depends on whether customers believe it's going to be a competitive advantage for them, and not every corporation is there. But we believe leading corporations are at a point where being able to change business processes and their IT to keep up with competitive dynamics is an advantage. Certainly there will be customers who haven't gotten to a point yet where they understand that how responsive they are to change is a weapon they can use against their competition.