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December 13, 2005
Hurd's Plan for HP Nirvana
The late Lew Platt heard the siren song. So did former HP CEO Carly Fiorina. I'm talking about the obvious potential for HP to tie its many businesses together to create an integrated high-tech juggernaut--from handheld consumer gizmos to supercomputer-class servers. But neither of them were able to figure it out to any great degree. Platt's Extended Enterprise plan in the 1990s never really jelled. Neither did Fiorina's plan to "innovate at the intersection" of hardware, software and services. Other than a few big managed services contracts, there was limited evidence that big customers or consumers were really looking to HP as a soup-to-nuts provider. Sure, it sold great printers, good PCs and its OpenView software was rock-solid. But there didn't seem to be much of a virtuous cycle created by linking them all together.
When Mark Hurd took over, most observers figured he would put finding the synergies between HP's businesses on the back burner, to focus more on improving the cost structures and profitability for each of HP's stand-alone businesses.
Well, I just finished listening to HP executives at Hurd's first analyst meeting at the helm. And as with so much about his tenure so far, there seems to be a healthy balance in his approach. A main focus of the session was on the so-called Next Generation Data Center--a strategy that hits at the desire of today's CIO for anything to lower their cost of operating their increasingly complex IT operations. The plan depends on HP's hot-selling blades, its improved storage offerings, and especially of software from nearly a dozen acquisitions over the past year or so. Unlike past HP pitches, this one seems very grounded and aligned with what customers are screaming for now--as opposed as to in the future sometime.
But there were other areas of interesting collaboration. Office printing for example. For years, HP's printer operation has tried to build up its own services to sell along with its printers, to help companies manage their printing costs. This left room for IBM to build its own lucrative print services business, even though Big Blue got out of the printer business years ago. Now, HP printer chief Vyomesh Joshi is working with Services chief Steve Smith to do it right. They're building a team to focus on defining new services, and how to effectively sell them.
For example, HP plans to provide outsourcing, so CIO's wouldn't have to even buy printers but rather pay for their use. ??ou?? think that since we outsource PCs and servers and storage service and support, that we'd offer outsourced print services," Smith explains. "We weren't grabbing hold of it."
HP's slick new Halo technology, announced on Dec. 12, is another example of smart collaboration across HP's business units. Many companies have tried--and failed--to make videoconferencing a ubiquitous, must have technology. But HP brought together computing skills and combined them with imaging smarts from the printer group to create a collaboration technology that really works. Having run a demo of the technology, it is truly brain-dead simple, and the effect truly is as if you're sitting in the room with people in similarly-appointed rooms at some remote location. The price is certainly dear: $525,000 per room, plus $17,000 a month for the always-on network (another capability HP brings to the party). But it is true innovation, that could just become the must-have corporate perk of the year.
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One needs look only as far as Hurd's old company, NCR, to see that he's not about synergy between divisions. Other than in retail, divisions barely talk.
Hurd's "accountability" is each division, region of the division, and salesperson in each region grinding out their numbers for the quarter. And cutting costs.
Posted by: matt at December 16, 2005 08:17 PM