HP's strategy: is it plotting, or losing the plot?

April 19, 2011 | Phil Fersht

Leo's game-plan: Inspired, or just surrounding himself with old chums?

Today, we were greeted with news of the latest in a series of executive hires moving from SAP to HP (see last year's post on Leo's appointment), with the announcement that Marty Homlish has joined as Chief Marketing Officer - and yes, his previous employer was... you got it... SAP!  This follows several other high-profile executive appointments from... you got it... SAP, such as Marge Breya, Bill Wohl and others.

No disrespect to Marty, who has a stellar reputation from his recent decade-long marketing tenure at SAP, but what is HP doing?   Once a thriving hardware and services business locking heads with IBM, its services business has been slipping since even before its EDS acquisition, its BPO business seems to be dropping off a cliff, and now it's filling its management ranks with ERP veterans. Unless something is brewing that we don't know about, HP isn't an ERP vendor.

If HP isn't plotting a radical move to buy SAP, or some other ERP business, it seems to be letting itself down badly - the firm needs new thinkers who can drive innovation and a new direction into the business, because right now, most industry observers are left scratching their heads trying to figure out what the game-plan is.  If HP is looking to acquire SAP, and is readying itself with an already-in-place management team of old-school SAPers, then Leo may be pulling off a masterstroke in forward-thinking leadership that will go down in technology history.

Whatever the case, HP needs to put a stake in the ground - and soon - to let the world know its true strategy, as I, like many of my industry colleagues, am baffled.

Posted in: Business Process Outsourcing (BPO)Confusing Outsourcing InformationIT Outsourcing / IT Services

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  1. James Baker
    Posted Apr 19, 2011 10:54 PM | Permalink Reply


    You've said what so many people are thinking - why only hire old-world SAP folks? What are they going to bring to the table to get HP back on track? I do hope Leo doesn't follow Fiorina and Hurd in this series of CEO-failures for the firm,

    James Baker

  2. Anon
    Posted Apr 19, 2011 11:19 PM | Permalink Reply

    Fantastic piece, couldn't agree more. If they were even hiring innovative, high-tech talent leadership that would make sense (hello, Cisco? Samsung? Apple?). But the fossilized ERP set? I don't get it.

  3. Gaurav
    Posted Apr 19, 2011 11:25 PM | Permalink Reply

    Waiting for the new billboard ads:

    "xxx runs HP" -:)


  4. Eric
    Posted Apr 20, 2011 01:05 AM | Permalink Reply

    Hiring Leo Apotheker in the first place was a curious move, and this (seemingly) ongoing poaching of SAP's executives is even curiouser. Like you, Phil, I have my doubts that an SAP takeover is imminent, which does beg the question "why is HP hiring so many software executives?"


  5. Anon
    Posted Apr 20, 2011 11:56 PM | Permalink Reply

    Is this just a case of filling the ranks with your own to cover your back? Might not be any more strategic than that.

  6. Bala
    Posted Apr 21, 2011 12:57 AM | Permalink Reply

    Or may be there is no one available in the market?? and someone must be thinking any news is good news as long as its heard...

  7. xyz
    Posted Apr 21, 2011 04:54 AM | Permalink Reply

    Isn't it far more obvious an explanation that Mr. Apotheker simply wants some people around that he knows and trust, and are only there because he invited them in? Growing a bit of a power base there of people that are likely to agree with him and share his vision.

    I agree it is curious to hire all these SAP folks, but sometimes the most obvious explanation is the most plausible one...

  8. Phil Hassey
    Posted Apr 21, 2011 06:53 AM | Permalink Reply

    What they need is enterprise marketing capabilities. Their previous head of marketing was too consumer focused. So if they can get more enterprise marketing leadership from SAP or anywhere, then that is well overdue.

  9. Phil Fersht
    Posted Apr 21, 2011 08:34 AM | Permalink Reply

    @xyz: you may well be correct that Mr A is hiring his cronies. If that is the case, he is doing HP's shareholders a disservice by not hiring innovators and fresh-thinkers... HP needs people to drag the firm out of its malaise and get it back to where it was a decade ago,


  10. Phil Fersht
    Posted Apr 21, 2011 08:40 PM | Permalink Reply

    @Phil H: Maybe they'll improve some of their "language" to communicate more effectively with enterprises, but following the SAP marketing rule-book over the last decade isn't going to move them in the direction they really need to be - and c'mon - Leo's hardly bringing in superstars here. The HP tale will unravel over the next few months and we'll see if Leo can restore HP's former glories with his ex-SAP folks... somehow I doubt it

  11. Jonathan Yarmis
    Posted Apr 23, 2011 03:47 AM | Permalink Reply

    The good news: HP realizes there's value in software and realizes it has to increase its software value component from both a technical and marketing perspective. The bad news: they're focused on last-generation value propositions in a market that is rapidly moving towards newer, disruptive value props.

  12. Phil Fersht
    Posted Apr 24, 2011 09:24 PM | Permalink Reply

    @Jonathan: end of the day, Leo's an enterprise software guy - that's what he knows. Whatever the reasons behind the SAP-poaching, HP has some very tough strategic decisions to make:

    Where will the firm double-down? Hardware, software, services, printers? My view is it needs to focus heavily on catching up with IBM's middleware and IT/BPO services business. Has he hired the right people to help him do this? Let's revisit this conversation in six months for some answers...


  13. Jonathan Yarmis
    Posted Apr 24, 2011 09:31 PM | Permalink Reply

    Phil, I actually don't think the choices are tough at all. They need to be a more competitive services player -- I leave it to you to determine whether and how they do that -- and they need to increase their software value component across the board, across all of their segments. Perhaps their biggest challenge will be making Palm of value in their existing hardware portfolio (notably printers) as well as more relevant (OK, relevant at all) in emerging categories like phones and tablets. And can they make Palm relevant at all on the desktop? And perhaps their biggest challenge with regards to IBM is the fact that IBM has a significant lead not only in mature middleware categories but has also been timely and aggressive in emerging categories like analytics.

    Ultimately for HP to become relevant, I think they have to find an emerging category where not only can they be ahead of the curve but also ahead of their major competition. I have some thoughts on what that might be, as you knew I would...but I've got to get my own blog post out first. :)

  14. resrpt
    Posted Apr 24, 2011 08:54 PM | Permalink Reply

    Even if HP is planning to buy SAP, whats the next move with it? SAP is growing strong, and HP is not known for helping SAP make inroads in enterprises! Also, HP is not very strong at implementing SAP solutions (unlike IBM, Accenture etc.). Yet, this could be a move to augment revenue and strengthen the software business which drives more in management tools, but where is the fit? They don't have credible middleware/services to fight IBM, consulting skills to fight Accenture, global delivery to fight Indian folks. So what is the deal here?

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    Posted Apr 25, 2011 06:20 AM | Permalink Reply

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  16. You Don’t Know HP….Yet
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