The decision to replace the beleaguered Leo Apotheker as CEO of Hewlett-Packard with Meg Whitman, has already met with a tidal wave of skepticism. That was to be expected.
Analysts and pundits are quick to question what the founder of the consumer-facing eBay can possibly do to bring leadership and focus to the largest high tech company selling a complex array of products and services to IT professionals.
Frankly, I don’t know if she can pull this off. I don’t know if Meg Whitman knows if she can pull this off. But there is little value in speculating whether she can or can’t dig this $130 billion American icon out of the hole it has dug for itself. We’ll find out pretty quick whether her strongest skills – “management and communication skills, and a commitment to executional excellence,”her self-assessment -- can save the day.
Microsoft has chosen platforms and tools, IBM has middleware and databases. HP needs one area in software that can pull together all the other pieces.
Dana Gardner, principal analyst with InterArbor Solutions, Inc.
While we wait to see if Ms. Whitman can deliver, here are five things (there are more than five, I know) she must do to bolster the sagging confidence among some IT professionals.
1. Articulate a clearly understood enterprise software strategy
For years analysts, media and customers have had trouble articulating, in 50 words or less, what exactly is HP’s software strategy. The company does have some respectable offerings in systems, project and lifecycle management, but can hardly be called a market leader in that space. Its HP-UX operating system, once a major player in the Unix market, has been contracting for several years. It’s unclear whether its way-too-expensive acquisition of Autonomy can serve as a meaningful anchor that could help drive sales across the company’s multiple hardware and software lines. Lastly, it unexplainably dumped its WebOS operating system for mobile devices after only a few months on the market.
HP doesn’t have a major enterprise app to build an enterprise software strategy around like IBM’s DB2 or Oracle’s database lineup. But Whitman will have to find some peg to hang the company's software hat on.
“The question is where do they create a leadership position in software. Microsoft has chosen platforms and tools, IBM has middleware and databases. HP needs one area in software that can pull together all the other pieces,” said Dana Gardner, principal analyst with InterArbor Solutions, Inc.
2. Develop a more compelling mobile strategy
If Whitman wants HP to be a more complete player in large IT shops, she must develop a more compelling mobile computing strategy. Unfortunately, her predecessor just unceremoniously dumped HP's WebOS-based tablet device before it really had a chance to take hold. Apple’s iPad and the coming wave of Android-based tablets figure to dominate the tablet market, but Whitman needs to show some guts and take them both on. There is too much at stake over the next several years to just fork it all over without a fight.
3. Really think through the decision to sell off its PC business
Again, unfortunately, Whitman’s predecessor just made the decision to put HP’s still-very-profitable PC business up for sale. HP’s largest competitors, most notably Oracle and IBM, are looking to be the one-stop shop for large corporate IT shops. If HP goes calling on these shops without PCs and laptops to offer, early opinions from analysts and users say it will hurt the company’s ability to sell soup-to-nuts corporate solutions.
According to estimates from the analyst firm Sterne Agee, HP generated some $2 billion in operating income last year (the second most profitable behind Apple). Time for Whitman to woman-up (as opposed to man-up) and continue to take on those one-stop competitors.
4. Strengthen relationships with Microsoft
With HP's high-end Unix-based server market crumbling, Whitman should spend some quality time in Redmond, Wash. taking a look at Microsoft’s Windows Server 8. The upcoming product has been significantly beefed up with several new enterprise-level technologies and has received good early reviews from testers. While she’s up there, Whitman should talk to Mr. Ballmer about her lack of a mobile strategy. With their mobile relationship dissolved over HP’s decision to acquire Palm, Whitman could get back in Microsoft’s good graces (now that it has dumped WebOS) by looking at the phone/tablet/desktop development strategy Microsoft is piecing together around the client version of Windows 8.
5. Overhaul HP’s lackluster services division
As IBM streamlined its business in the early 2000s, selling off its PC business (which made more sense for IBM than it does for HP) and doubling down on its middleware and data base products, it also focused hard on its professional services division. The latter bet paid off handsomely with revenues for IBM Global Services accounting for over half of its $100 billion revenues in 2010. While revenue from HP’s service unit has grown consistently, it continues to fall behind IBM’s torrid pace. Ms. Whitman, like Messrs. Gerstner and Palmisano at IBM, needs to pursue higher-margin value-added opportunities that exist in abundance among Fortune 1000 companies.
There is no question the overall IT industry can be a healthier environment with a more competitive HP in it – if only to keep IBM, Oracle and Microsoft honest in terms of pricing.
Most observers don’t envy the job that lies ahead of Ms. Whitman, but the rewards of pulling a staggering HP back from the precipice are great.
Let us know what you think about this story; email Ed Scannell at firstname.lastname@example.org.