HP’s future – Part Two Can the Phoenix rise up from the ruins …

HP’s future – Part Two Can the Phoenix rise up from the ruins …

We left Part One of this series with HP CEO Meg Whitman referring to EDS by name and telling a meeting of HP partners that “EDS is going to be a great turnaround story” – having eliminated the name EDS, the CEO now seems intent on reviving it. With a projected 13% drop in revenues in the next year, the loss of four major accounts and a mere 3% return, any “great turnaround” would truly be a miracle.

To understand whether miracles could still happen, lets concentrate only on HPES (or is it EDS now?) in Europe. The UK in particular has been the bedrock of sales and above all profitability for this global player for decades. In August, Mike Nefkens a long term EDS’er and Anglophile replaced John Visentin. Mutterings about this move being only temporary, are wrong. Nefkens is the man for HPES globally. The equally capable Howard Hughes (again an EDS’er) stepped into Nefken’s old role as European ES leader having run many large client contracts, the last being the huge UK defence project – DII, one of EDS’s barnstormer accounts worth many £Billions.

Both men have had solid experience running large client accounts and thus have the empathy and understanding to drive a real client focus. Both are used to factoring considerably more risk into their deals/contracts than HP ever felt comfortable with. If Whitman truly sees a turnaround she must embrace more “educated risk” from the duo.

Between the two men, the importance of Autonomy will not be lost. Security and Big Data are huge markets and there is little competition of any credible nature in a managed services sense, but large-scale investment here will be crucial. Whitman must provide this investment.

Expect HPES to dictate what they want more explicitly – whole end-to-end responsibility, not fragmented parcels of work even of a very large scale. They want to make a real difference or they don’t want the work. Expect “no bid” replies more often – size, complexity, longevity will become more important to HP. Expect existing accounts to be targeted first for additional mutual commitment, for more devolved powers and nimble decision making in the existing account management team, particularly where competitive frameworks for new business are concerned, for example in Rolls Royce and central government contracts. Expect loss making accounts to be terminated unceremoniously.

Turning briefly to the US, Nefken has Denis Stolkey running the Americas with James Best as his Sales lead, both are again long term EDS’ers. Hughes is supported by Martin Southgate running sales, once again a old fashioned EDS team come together. And finally and very interestingly, Mary McHugh who was running ITO delivery has gone and Tom Egan, another EDS veteran, has taken over.

In Part One, I mentioned a certain Deja Vu. Can you feel it? What seems to have happened is that by accident or design the lost ninth legion of EDS seems to have reassembled and they now have control of all the strategic vantage points. But do they have what it takes to turn the corner? Provided the US HP mafia lets them have their head and agree to a loosening of controls to allow them to do what they do – large profitable deals will follow.

The alternative is very clear – the current team have what it takes to interest any sensible Private Equity company to perform a successful management buy-out.


2 Responses to HP’s future – Part Two Can the Phoenix rise up from the ruins …

  1. Retired of Aldershot says:

    Where were you when the roulette wheel stopped?

    We are all supposed to remember when key events occurred.

    Whilst now retired from the sourcing profession, there have been too many “key events” in the HP saga for me to remember.

    • We are withdrawing from the PC market – oh no we’re not
    • We are not too sure about the printer market – oh yes we are
    • We are really going to attack the sourcing business directly – oh no we’re not
    • We are really going to attack the sourcing market via acquisition – oh no we’re not – well perhaps we will
    • We will fully integrate EDS into the HP family – oh no we won’t
    • We have an absolutely clear strategy for the direction of HP in the service sector – no comment!!
    • We will release the full unfettered EDS engine into the market – watch this space.

    Well before Carla Fiorina left HP, there have been so many changes of direction – indeed the absence of “direction” per se.

    If the article is correct in the resurgence of a fairly autonomous EDS and led by some of the former well managed company then there is some hope for the future of the sourcing business in the UK and mainland Europe.

    However that resurgence will be very sensitive to the re-establishment of sourcing awareness and associated governance expertise within the potential client base and mirrored by service focused excellence in the supply chain.

    Both aspects seem to be have been wandering in the wilderness over the past few years in spite of extensive education opportunities delivered by the National Outsourcing Association, some consultancies and other equally professional organisations.

    Let us hope that Meg Whitman has the board support to guide the “third coming” of EDS (or is it the fourth) since, hitherto, the mention of EDS and HP in the same breath would not have been allowed even by Mr Assange.

  2. Andrew Hall says:

    A Phoenix arising from these ruins would also require the transmogrification of a dinosaur into a phoenix – not sure there’s a precedent for that!

    The former EDS guys you name are all good guys from my experience – I wish them well.

    Keep the column coming – always a good read.

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