HP set to dump strategic partners
- 23 October, 2006 21:00
Hewlett-Packard continues to simplify operations to cut costs and streamline interactions with customers, and plans to reduce its number of partners, HP's top executive announced last week.
In reasonably feisty form, given the boardroom-level spying scandal dogging his company, Mark Hurd, HP's chairman and chief executive officer, laid out HP's moves to reinvent its operations in a keynote address at Oracle's OpenWorld conference in San Francisco.
"I could scare you and tell you how many people we bought from in the last two years," Hurd says. "I found companies I'd never heard of. We purchased a little something from everyone."
HP is now trying to galvanise its operations around having fewer partners. "We want less partners and more skin in the game with deeper relationships," Hurd says. "We'll focus on a few key partners instead of a plethora of partners." He assured Oracle they were a keeper. "Oracle is a key, key partner for us," Hurd says.
HP uses Oracle's database to manage its supply chain, runs human resources on Oracle's PeopleSoft applications and its customer relationship management software is Oracle's Siebel applications. HP is also "very bullish" on Oracle's Fusion middleware, which it has used to help customers accelerate their service-oriented architecture deployments, Hurd says.
The message HP still gets from customers is: "We love your technology, services and support, it's just hard getting stuff done," Hurd says. He reiterated a message he has espoused since joining HP back in March 2005: this is the need to dramatically simplify HP's operations so it can better serve customers. "We've got a lot of work to do in every dimension of our business."
So far, in restructuring and flattening its business, HP has removed three layers of management between the CEO and staff. "We want to drive accountability for P and L [profit and loss] as low in the company as possible," Hurd says. That move should help free up those lower in the company to make decisions and get back to customers quickly with the information they require.
Like many companies, IT has been a "huge cost centre" for HP, Hurd says.
The company is preparing to consolidate its 762 data marts around the world into a single-enterprise data warehouse. Hurd announced this last December. He didn't mince words about his thinking on data marts. "I hate these things," he says. "They give you different stories about the company." HP is also on track to reduce its 85 data centres in 29 countries to only three. In previous public statements, Hurd had talked about six being the final number of data centres.
HP is also cutting back on the applications it uses to run its business from 5000 to less than 150. Instead of 22,000 internal servers providing utilisation only in the high 20 percent range, HP will have 14,000 servers operating at high levels of utilisation and taking advantage of virtualisation technologies, he says.
The vendor is moving the mix of its IT staff from 50 percent focused on maintaining systems and 50 percent working on innovation to a shift where 20 percent work in maintenance, while the rest concentrate on innovation, Hurd says.