HP’s ULTIMATE TEAM PLAYER

  • facebook-tonernews-12-08-2016
  • 161213_banner_futorag_902x177px
  • 05 02 2016 429716a-cig-clearchoice-banner-902x177
  • futor_902x177v7-tonernew
  • mse-big-banner-new-03-17-2016-416716a-tonernews-web-banner-mse-212
  • Print
  • cartridgewebsite-com-big-banner-02-09-07-2016
  • 2toner1-2
  • big-banner-ad_2-sean
  • 4toner4
  • 536716a_green_sweep_web_banner_902x17712
  • toner-news-big-banner-nov-8
Share

HP’s ULTIMATE TEAM PLAYER

 user 2006-01-23 at 9:43:00 am Views: 43
  • #13401

    HP’s Ultimate Team Player
    Ann Livermore has helped revive Hewlett-Packard. Her next task will be much tougher
    One
    July evening in Silicon Valley, Hewlett-Packard Co.executive Ann
    Livermore got the phone call she had waited months to receive. She
    rushed to the hospital, having learned that a kidney had been donated,
    and underwent an organ transplant, necessary due to complications from
    a childhood disease. For most executives, it would have been an
    opportune time to call it quits after a 24-year career. But three days
    after the surgery, she was phoning HP Chief Executive Mark V. Hurd and
    peppering lieutenants with questions. “I finally asked if someone would
    please go in there and take her laptop away,” laughs Hurd.
    Why
    didn’t Livermore step down? Opportunity. While the $33 billion
    corporate-computing business she runs has long been one of the most
    glaring underachievers in tech, she’s convinced the business is finally
    ready to show what it can do. Livermore and HP have spent 18 months
    overhauling the unit, and the benefits are only now becoming visible.
    “From the moment I left, I never thought of not coming back,” says
    Livermore, who was out for 51/2 weeks. “We have a very special
    opportunity right now.”
    It’s a dramatic reversal. A year ago her
    Technology Solutions Group, which sells servers, storage, and
    consulting services to corporations, was valued at next to nothing by
    Wall Street analysts. Mercilessly squeezed by IBM () and Dell Inc. (),
    the unit struggled to show profits or promise. Indeed, while HP’s
    printer business brought in nearly all of the company’s earnings,
    Livermore’s unit became a millstone around the neck of former CEO
    Carleton S. Fiorina, contributing to her ouster a year ago.
    Yet
    Livermore’s unit is now a key reason HP’s stock is on a tear and the
    newly arrived Hurd is being hailed as a turnaround maestro. Thanks
    mostly to cost-cutting and operational improvements, the businesses
    turned in a 50% increase in operating earnings in fiscal 2005, to $1.9
    billion, on revenues of $33.2 billion. Overall, HP earned $4.2 billion
    for the year, on revenues of $86.7 billion.
    Now, rather than
    bemoaning how bad the corporate business is, analysts are trying to
    figure out how good it can be. What was once rated an F has become a C
    business. Can Livermore bring the grade up to a B or even an A? It’s an
    open question, though there’s little doubt the next phase will be
    harder than the last. “They’re certainly doing better,” says Richard E.
    Belluzzo, a longtime HP exec who now heads the storage company Quantum
    Corp. “They’ve done some good work, particularly on the cost side. But
    the strategic challenges are pretty much the same.”
    Harsh perhaps,
    but true. While HP wants its corporate unit to be a leaner, meaner
    alternative to IBM, it remains far behind Big Blue in several key
    areas, including high-end computing, software, and services such as
    consulting and outsourcing. In software, for example, HP’s revenues are
    about $1 billion, compared with IBM’s $16 billion. And other rivals
    expect HP to grow complacent, given its recent improvements. “I’m happy
    they’re feeling happy about their success, because it means they’ll get
    apathetic — and we’ll clean their clocks,” says Daniel J. Warmenhoven,
    another former HP executive who now runs storage highflier Network
    Appliance Inc.
    Yet HP is better positioned than in the past. For
    starters, Hurd has brought the company’s costs in line by laying off
    about 15,000 employees, or 10% of its workforce. It also has a stronger
    product lineup, particularly in storage and software, where HP has made
    nine acquisitions in 18 months. Just as important, Hurd and Livermore
    are beginning to articulate a strategy for corporate customers that’s
    truly distinct from IBM’s, not just a similar approach with a different
    name.
    The difference? While IBM leads with its consulting services
    and its ability to help the top brass devise corporate strategy, HP is
    focused on helping companies get a handle on the soaring costs of
    maintaining and powering their tech gear. The goal is to use software
    and other automation technologies to reduce the number of tech staffers
    by 90%, at the same time they slash the amount of energy tech equipment
    uses. Livermore’s ideal is a “lights-out” data center, with almost no
    human involvement. While IBM goes after chief executives, HP is
    tailoring its message for chief information officers, the people who
    oversee corporate technology. “We’re focused on addressing CIOs biggest
    pain point,” says Livermore. “Customers are complaining that all their
    money goes into labor and operating costs. We can be the company to
    help them automate and manage this, to drive costs out.”
    In many
    ways, Livermore is a perfect metaphor for HP. The 46-year-old is
    competent, respected, but not really feared by rivals. A standout
    tennis player and valedictorian of her high school in Greensboro, N.C.,
    she earned a coveted Morehouse Scholarship to the University of North
    Carolina at Chapel Hill. She went straight to business school at
    Stanford University. There, she won the annual competition for best
    business plan for running the doughnut concession. Her secret? She
    solicited companies that were coming to interview students to buy her
    sweets by the dozen.
    When she joined HP, straight out of Stanford,
    she never expected to make a career of it. She had watched her father
    stay at the same insurance company for years and vowed not to get
    bogged down. But she fell in love with HP’s unique culture. Especially
    appealing was HP’s willingness to accommodate working mothers, through
    flexible working hours and other arrangements. Livermore could dote on
    her daughter, even as she roared through the ranks. By 1996 she was
    running the services arm. In 1999, she made a very public run at the
    CEO job — even hiring an internal press relations person to raise her
    profile. She lost out to Fiorina and then became a staunch ally.
    INAUSPICIOUS START
    For
    all her success, Livermore still has something to prove. Wall Streeters
    are wary of her ability to deliver consistent financial results. Even
    some HP insiders ascribe her rise to a selfless willingness to follow
    orders. They’re quick to point out that she’s a solid general manager
    and universally well-liked but question whether she can rally the
    troops to challenge a fierce foe like IBM. “She’s extremely competent,”
    says one insider, “but I don’t see her as a key leader for the
    long-term.” Completing the turnaround in the corporate business could
    help Livermore win over the naysayers. She may even get another shot at
    the chief executive job, although Hurd, at 49, likely will hold the
    post for a good number of years.
    Livermore had an inauspicious start
    in her current job. She took over the corporate computing business in
    early 2004. Just three months later, in August, it reported a
    disastrous quarter, causing HP to miss its earnings estimates by 33%
    and pushing the company’s stock down 15%.
    Out of that crisis,
    Livermore has helped forge a comeback. Within days, she instructed HP
    veteran Scott Stallard to set up a war room to begin addressing the
    unit’s many operational problems. Over the months that followed, she
    worked closely with a seven-person team to identify and improve 15 key
    weaknesses — everything from how HP worked with distributors to how it
    pulled together bids for customers. One accomplishment: HP established
    an Integrated Bid Desk that reduced the time it took to generate prices
    for complex corporate deals from two weeks to one day.
    The improvements couldn’t save Fiorina, though. She was pushed out in early February of last year.
    As
    the company searched for a new chief, Livermore headed out to talk with
    customers. In March she visited four large Wall Street firms and was
    struck by the problems these big tech buyers were suffering from.
    “Every one of the CIOs was complaining that while their spending on
    tech equipment was declining, their spending on operations — mostly
    labor — was increasing an average of 10% per year. They were pleading
    for ways to automate more,” says Livermore. “They all believed HP was a
    company that could help them.”
    From New York, Livermore traveled to
    Phoenix, where 80 of HP’s top researchers had gathered for an annual
    technology confab. At the gathering, which is structured like a trade
    show with demonstration booths, Livermore saw a series of technologies
    that could help the CIOs she had just met on Wall Street. She pow-wowed
    with Shane Robison, HP’s chief technologist, and his staff. Together,
    they hatched a plan centered on creating the “next-generation data
    center.”
    Hurd came on board later that month, on Mar. 29. In their
    first meetings, Livermore urged him to slash HP’s cost structure, to
    boost profits and clean out bureaucracy. She also encouraged Hurd to
    improve HP’s sales effort by investing in software tools to help
    salesmen analyze deals more quickly, and by promoting sales vets to run
    more of HP’s businesses.
    In all of these cases, she got her wish. In
    July, Hurd laid off thousands and gave Livermore and her fellow
    division chiefs more control over their respective sales and marketing
    efforts. Soon after, she accelerated plans to hire more storage and
    server salespeople and implemented a new compensation plan to boost
    sales of software, including the next-generation data center
    technologies. The once-insular HP is also hiring and promoting
    outsiders to fill key posts. Among others, Steve Smith, a hard-driving
    former Electronic Data Systems Corp. () salesman, now runs the $15
    billion services business.
    BLOWING HP’S HORN
    The payoff came in
    November, when HP showed investors surprisingly strong results. The
    corporate computing business was the real shocker, with the storage and
    server unit posting operating earnings of $405 million, about four
    times the total a year earlier.
    By December, the normally hype-free
    Hurd was ready to crow a bit. At a packed meeting of financial analysts
    in Manhattan, he said Livermore’s division would lead the way toward a
    “lights-out” data center. “If you look at our raw technology, I don’t
    think there’s another company in the world that has a lead on HP,” he
    said.
    A growing number of analysts think Livermore’s business is
    back on solid footing. Merrill Lynch & Co. analyst Richard Farmer
    predicts the unit will see operating profits rise another 50% this
    year, to $3 billion, while revenues increase to $35.1 billion.
    But
    can HP become a leader on par with IBM, setting the trends in
    technology? That’s a separate question. “They’re in the process of
    turning it around, but I wouldn’t hand them the keys to the kingdom
    just yet,” says Goldman Sachs & Co. analyst Laura Conigliaro.
    Livermore
    recognizes that both she and HP have their doubters. But she believes
    time is on their side. “The fact is, there’s no one better in the world
    at helping customers design, build, and manage data centers,” she says.
    “We have not proudly or loudly enough put that stake in the ground. But
    we will.” The company’s future — and her own — may depend on it.