HP Scandal Reflects on Enterprise Software Issue
August 11, 2010

The recent turmoil at Hewlett-Packard that went public with news of the resignation of CEO Mark Hurd is only superficially about the facts of the scandal or the question of who will be the new CEO, sexy as those issues may be. What it really shines a light on is the performance of the company itself. I wrote earlier this year (See: “HP Takes Technology Portfolio to the Clouds with New Growth Strategy”) about the challenges HP faces in building its brand credibility and gaining traction to advance its enterprise software business. Then in May, HP hired Bill Veghte from Microsoft to run its $3 billion software business unit. Bill and his boss Ann Livermore stated at the time, not surprisingly, that software is a strategic part of delivering innovation to customers. In my view that’s more a description of their goal than the then-current reality. In fact, HP has had a low profile in the software segment. Though the division gets its place on its Web site, many of us close-in watchers question claims that HP is a leader in any enterprise software category beyond data center and network management. Convincing us otherwise will require more than fancy words and sales collateral; Mark Hurd or no Mark Hurd, it’ll require walking the talk: having the people and products companies want – products that will make a difference.

To be fair, HP has been investing in many areas important to business productivity and profitability, including information management. I provided some analysis earlier this year about HP Neoview (See: “HP Perseveres in Data Warehousing with Neoview”), and HP has hired a heavy-hitter sales team to challenge IBM, Netezza, Oracle, Teradata, EMC (which recently acquired Greenplum) and other providers including newcomers Aster Data and CloudEra, which I recently reviewed.

That’s good, but not enough. HP has to make deeper inroads into markets for content and IT management systems as well as some others. It’s hard to tell whether HP has made much progress in these efforts yet; the company never has excelled at marketing, and certainly could benefit from getting some help in communicating clearly why it is a safe bet in enterprise software and from committing to advance its efforts as fast as its competitors.

In the meantime, watch the wires for news of purchases. It’s likely HP will make more acquisitions, not just to gain customers and products but to speed the process of building out its middleware and connectivity to compliment its data center and cloud computing efforts. In the crowded field for enterprise software, keep an eye on Progress Software and Tibco, two companies that might fit the bill and do the job; both are public companies, so it would be easy to determine their fit financially as well as in people and products.

But even that by itself isn’t enough. Neither Carly Fiorina nor Hurd has looked much like a Larry Ellison, and despite the job Hurd did picking up the pieces, HP still – or perhaps even more – badly needs to do something to liven up its profile in enterprise software and demonstrate it has the determination and imagination to be a true leader in the market. Maybe HP, with an impressive new CEO in place, should do the unexpected (and make a somewhat ironic self-referential statement) and acquire a vendor of expense management software that is easy for even a CEO to use. Having strong governance, risk and compliance (GRC) processes in place to stop any squirrely activity is useful – it can keep a company from losing its CEO and billions of dollars in value within one week.

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Regards,

Mark Smith – CEO & EVP Research


 

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