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HP Announces New CEO

By Martin Reynolds | September 30, 2010 | 0 Comments

HP announced its new CEO will start November 1, calling on Léo Apotheker, formerly with SAP. The question is, how will he change HP?

To understand this, I asked a few colleagues how they viewed Mr. Apotheker. The answer is that his bias lies towards sales and marketing. So what does this mean?

First, SAP operates at the business leader level. It sells to the CIO and above. HP, on the other hand, proliferates in the functional parts of IT, with no significant business leader engagement above the CIO.

There’s opportunity here, for sure.

One of the biggest challenges I see for HP is to increase its top line revenues. Mark Hurd’s transformational cost cutting and operational focus brought profitability across the company, but HP’s low-level sales engagements and engineering culture made growing revenues a challenge. By way of example, HP has no executive vice president of sales – the function is distributed across the business units.

So, I expect to see an EVP of sales appointed, centralizing sales and marketing, goaled with stepping up executive relationships and coordinating HP’s value proposition. We’ll also see a focus on selling to vertical industries, complementing HP’s product strategy (check out the SAP web site).

The other piece of the puzzle is, where does HP go next? The company is building a portfolio of cloud technologies, but the clear message is on cutting the cost of computing, rather than enabling its customers to deliver new, innovative services. So I also expect to see a new focus on “cloud for business leaders” – strategies and products that sell to the CIO and above. HP also distributes its software across the organization. HP’s strategic software is a very small piece of the company, but has the greatest potential for growth when leveraged with HP’s global reach. So I’d bet on an EVP of Software, and I’d be  thrilled to see it cast as a cloud role.

Such an approach, executed successfully, will meaningfully increase HP’s revenues and profits. It won’t be easy: HP’s engineering-centric culture will struggle with direction from a central sales and marketing organization. And HP’s strategic software is a tiny part of its overall business – organic growth won’t be sufficient. On the other hand, HP is not constrained by a legacy applications business, and has an opportunity to reinvent itself as a provider of really new ideas.

So Mr. Apotheker comes in with opportunity, promise and challenge. How HP changes will be interesting to watch.

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