Context: Since August 2015, HP has been engaged in a division of the company that will be formalized on November 1st through launch of Hewlett Packard Enterprise (HPE). With current CEO Meg Whitman at the helm, HPE will manage data centre hardware, software and services sales to the enterprise, while HP Inc. will retain responsibility for marketing and delivery of HP’s traditional stronghold – PCs, printers and other peripherals. The division of HP into two separate entities is a huge undertaking requiring decisions about the placement of 270,000 employees, tax and administrative disentanglement of 750 legal entities, and the separation of IT infrastructure that has evolved over the company’s 75 year history. This past week, HP took to the road, touching down in Toronto to provide a sneak preview of the newly formed, $55 billion company (214 estimate) that will become HPE.
Three keYs:
Solutions not servers: At a press orientation for the Toronto HP Roadshow, not one of the five presenters uttered the word ‘server’, but focused instead on HPE shift from a product to a solutions company. According to Charlie Atkinson, VP of the enterprise group and managing director, HPE Canada, a major trend animating the business world is the “idea economy,” a new way of looking at data-driven organizational enablement that has its corollary in the technology world: HP’s “new style of IT.” In his view, HP’s unique qualification to deliver this “style of IT” – solutions in the areas of Big Data, cloud, mobility and security – is based on two items: the company’s broad product and service portfolio reach, and the experience HP has built splitting up its own company which may be used in turn to inform customer re-engineering.
Hybrid hype: Digging deeper into the HP solutions approach, members of a panel sketched out four “transformational areas” that the new HPE will look to address. The first – “transform to hybrid infrastructure” – was outlined by Bobby Patrick, CMO of HP Cloud, who noted the strategic importance of cloud for HPE and the enterprise in hybrid strategy. Citing a 451 Research report, Patrick claimed that private cloud currently constitutes 90 percent of global, enterprise infrastructure, and based on HP estimates, forecast that the average company will have approximately 10 private clouds (including SaaS applications; timeframe unspecified). HP is feeling this momentum: Helion, the HP OpenStack cloud platform that replaced Cloud OS is now a $3 billion business that Patrick expects will grow at a rate of 20 percent in the coming years. In Canada, the company is targeting this high end, open source offering for enterprise customers at the service provider community, which director of strategic partners for HPE Canada Chris Christianopoulos believes will help the company build the ecosystem needed to differentiate HP cloud services.
Securing the apps: Protect digital enterprise assets is HPE’s second focus area, which Daniel Dorr, HPE director of marketing, likened to “applying the brakes on a car” where HP’s goal is to make security go faster, even as it manages risk from a much broader attack surface. According to Dorr, the threat landscape has changed, and is now financially driven (a $105 billion economy on a global basis), with a sprinkling of political and activist hackavists: HP’s threat intelligence team estimates that today, hacks occur at a rate of 16 per second. Even more importantly, infrastructure has changed – “in cloud there are no more walls” – requiring new approaches to security that extend beyond the traditional protection of the perimeter. The answer, according to Dorr, is security analytics as provided by HPE’s ArcSight product, which collects, correlates, and analyzes and provides alarms/reports on threats at the application layer.
Driving data deluge for business value: Analytics are also key to the third focus area – power the data-driven business – outlined by Stefano Lindt, strategic marketing and evangelism, HPE. In addition to solutions to optimize security and IT operations, HPE has acquired or developed analytics technologies aimed at helping businesses manage the data deluge, and even more, to adapt Big Data so that it provides the insight needed to locate new sources of revenue and business value. According to Lindt, empowering the data-driven organization requires the correlation of traditional business data, machine data and human data (created inside the organization and externally), and he pointed to Vertica, Autonomy and the most recent HP offering, Haven open source BI and predictive analytics software, as offerings that allow businesses to leverage data to make decisions – and now do this in real time.
Mobile experience as a productivity play: For his part, Kevin Jones, SVP and GM for HP Enterprise Services for the Americas, discussed the fourth transformational area – HPE efforts to enable workplace productivity. In this “last mile,” Jones argued that information delivery cannot be late, faulty, or represent a bad experience for the user”: “random acts of mobility do not move the productivity needle forward,” he added. Despite demands of the digital workplace of today, however, many enterprises are now in reactive as opposed to proactive mode when it comes to mobility. This spells opportunity for HPE – in terms of technology sales for products such as Aruba networking – and for its services arm, which proved productivity gain through the HP internal implementation of UC and Skype for business (HP earned back 5 million minutes with one click entry for this, Jones claimed), or through solutions like the NASCAR media engagement centre, which enabled the racing organization to understand fan sentiment in real time.
The bottom line: While they may not be unique, it would be hard to argue against the importance of the transformational areas identified by HPE – enabling cloud, security, Big Data analytics and the end user mobility experience are ubiquitous goals in the IT industry today. The question is how to execute. The ostensible reason for the division of HP was to allow the company to shed the moribund, more commoditized PC side of the business, allowing investors to direct resources to what HP looked to shape as a more agile, innovation-driven business – HPE. This strategy has been tried before – to good effect, for example, by IBM which was able to sell its PC, and then some portions of its server business to Lenovo, enabling a shift towards higher end software delivery. With HPE, the new strategy is less clearly delineated: while the solutions focus is strident, it’s not necessarily new. And while transformational areas are certainly relevant to the marketplace, they are not aligned with evolving organizational structures. At the roadshow, any business unit re-org was treated as a hushed affair, leaving one to conclude that HPE will is composed of the five segments described in the company’s original SEC filing: the Enterprise Group, Enterprise Services, Software, Financial Services, and Corporate Investments. Presumably, under these will sit some number of some set of solutions, which will no doubt span the sale of offerings from the new and traditional HP business to accommodate the end-to-end solution capability that HP has relied on and continues to claim as a market differentiator. As Jones noted, HPE has already formed partnership with HP Inc. for the delivery of mobility solutions: have we come full circle before parting of the ways?
