HP from HW to SW?

Saturday, 15 January 2011 16:34 Ayman Abouseif
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HP’s new CEO Leo Apotheker is adding the final touches to his new strategic plan for the technology super vendor. Sources said that Mr Apotheker is exhibiting closer cooperation with the company’s board of directors than his predecessor Mark Hurd.

This is consistent with the management-board collaboration often seen in German companies which does not come as a surprise if we remember that Leo was previously the CEO of the German software giant SAP.

According to the new strategy HP will invest more in its software, networking and storage businesses, all of which are more profitable than the company's PC and server businesses. There has been no specific mentions of the printer business or the smart phone business which joined HP’s product line up when the company acquired Palm. Additionally, the plan is to focus on building a business on helping corporations and telecommunications service providers build and operate clouds. HP has recently named Emil Sayegh as vice president of marketing for cloud services to help oversee these efforts.
Apart from saying that the company needs to enhance its software business and that he plans to increase spending on research and development, Mr Apotheker has so far avoided commenting on his strategy. “HP is formulating a bold, solid plan for its future, a plan it will share with its employees, shareholders, customers and partners in due course, and certainly not in response to speculation," an HP spokesperson said last week. Sources said that the new strategy is likely to be finalized and made public in March probably during HP’s annual shareholders meeting.

Mr. Apotheker officially took over as HP’s CEO job last November from Mark Hurd who resigned following an investigation into a sexual-harassment allegation. Mr. Hurd is widely credited with building HP into the world's largest IT company in the world through cost cutting, acquisitions and improving operational efficiency.

To translate his strategy into actions Leo is also making executive changes; Ann Livermore, who runs the company's  enterprise business including consulting and equipment for business will become vice chairman and join the board of directors. Her unit, which produced $57 billion of H-P's $126 billion in sales in the financial year that ended last October, would be split in two. David Donatelli and Tom Hogan will run the equipment and the services businesses, respectively reporting directly to Mr. Apotheker who is making this change because he believes that the pieces of the enterprise business are too big not to report to the CEO. Earlier this month, he also created the post of chief communications officer reporting directly to him, and hired Bill Wohl, a former public-relations executive at SAP where Mr. Apotheker previously served as CEO.

Additionally, there has already been some turnover in senior ranks since Leo took over. Marcela Perez de Alonso, executive vice president of human resources, left in December. Michael Mendenhall, the chief marketing officer, will leave HP at the end of January and chief information officer and EVP Randy Mott is also expected to leave some time soon.

So, Leo is making changes in terms of investment priorities obviously reducing emphasis on hardware as well as many changes in the leadership team which will obviously cascade down and affect several management layers and may also result into additional field reorganizations. Hopefully he can produce results similar to his predecessor, Mark Hurd and keep HP as a major force in IT.

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Last Updated on Saturday, 07 May 2011 12:05
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