The HPE CEO says the company has been fundamentally transformed in her tenure, not just by selling off non-core areas and increasing focus, but by making more changes in sales and channel organization and corporate culture.
LAS VEGAS – Today at HPE Discover, CEO Meg Whitman outlined the company’s strategy at an hour-long media scrum here. She emphasized the way in which the company has changed to focus on innovation on multiple levels – from basic strategy, to sales culture, partner philosophy, R&D, and even why teleworking is a bad idea for innovation.
Throughout the three days of the event, Whitman has consistently emphasized three pillars in the company’s strategy, and the importance of having them broadly understood. They are making hybrid IT simple, powering the Intelligent Edge, and having the services to make it all happen.
“The whole company is now lined up against these three pillars,” Whitman said. “We are now a faster and more nimble company with a clear and focused strategy. We are now focused on core markets, where we are leading the industry. We shrunk and created four separate companies, and now we are expanding again, and our acquisitions have given customers and partners a lot of confidence.” She called the splitting off of HP Inc, an unqualified success, said that it made sense to spin off certain types of services into DXE, and said that spinoff of the applications software business remains on track for the end of August.
“These four companies are now all better able to compete,” she said.
Whitman also emphasized that HPE does not have to buy its innovation, that innovation comes from three distinct quarters, and that the first, organic innovation, is the most important.
“With internal innovation like our Gen 10 servers, Synergy, and the next generation of 3PAR, this area is as strong as it has been in many, many years,” she said.
She also emphasized that HPE’s R&D has been completely revamped during her tenure.
“We are doing R&D much different than we did five years ago,” she said. “It was very siloed. It had been successful. But it was not modern.”
Whitman said that the development process now has tighter rules than before in order to have a more focused agenda.
“We don’t paint engineers in a very small box but we do give them boundaries,” she said. “If HP Labs can do anything they want to do, you wind up with a lot of science experiments. We had far too many advanced science experiments going on in our advanced R&D. Now we have a far more modern and productive R&D engine, and we have also spent more money as we have gotten our cost structure in line.”
While Whitman has repeatedly emphasized the importance of five recent acquisitions throughout the event – Nimble Storage; SimpliVity, SGI, Niara and Cloud Cruiser – she also implicitly acknowledged that many past acquisitions had not been successful, and stressed that these all these newer ones relate to the company’s core technologies.
“The M&A that has worked for us in the past is complementary technology that leverages our go-to-market,” she said. “We also need to buy companies at the right price.”
The third innovation source is HPE’s Pathfinder program of investing in startups.
“I’d like to curate Silicon Valley for our partners and customers,” Whitman said. “Many of these companies lose five times their revenues, and we generally aren’t looking to buy them, but we will make the investment in them and will include them in our solutions. I’m not looking for venture returns, although I’d like not to lose money.”
Whitman identified high performance computing as a key focus within HPE’s innovation strategy.
“I’m interested in HPC,” she said. “It used to be largely the federal government, and research labs, but it’s now being adopted by almost any enterprise of any scale. With SGI, one plus one definitely equals four.”
Whitman also stressed HPE’s sales organization had been transformed to create a more innovative culture.
“The very first thing we did was align the sales teams behind the strategy,” she said. “The sales organization is clear on roles and responsibility – clearer than it has been in the five and a half years I’ve been here. There used to be a fair amount of competition as opposed to ‘one for all and all for one,” and that’s all gone.”
Peter Ryan was made worldwide head of sales at the beginning of last year – the first time HPE had a worldwide head of sales, to drive a standard approach rather than what they had before, when different regions would have different strategies and go-to-market. He designed the sales force reorganization.
“We decided we needed to transform sales,” Ryan said. “It’s about a mindset change and a culture change when you transform a sales organization. The reaction so far from the organization and customers has been good.”
Whitman indicated that the culture changes included a reversal of the encouragement of teleworking that had been encouraged by one of her predecessors.
“We have really encouraged people to come into the office,” she said. “When you are a part of a turnaround, you need to be part of a team, and to do that, you need to come in and see what’s happening. I don’t think conference calls or text messaging gets things done at the right time, when you need to make decisions in real time in the middle of a turnround. And conference calls don’t do it far me – babies crying, dogs barking.”
Whitman said that face to face was also much better training for employees, particularly for engineers, for whom it is important to be around more experienced engineers.
“Digital tools are great, but having a conversation face-to-face is a better way to create innovation,” said Antonio Neri, Executive Vice President and General Manager of the HP Enterprise Group.
Internal transformation has been paralleled by transformation of the channel.
“As we transformed the company, we had to transform our go-to-market,” Whitman said. “Being a smaller company makes us easier to do business with. 75 per cent of our non-services revenue goes through the channel, and that will probably increase over time.”
Whitman said that the volume business is still important – that people still want to buy 500 servers. At the same time, it’s a declining component of the market.
“In those declining areas. We have to help partners become incredibly operationally efficient,” Ryan said. “We also have to help them make the transformation to where there is more profit. The solution certification we introduced is part of that. The partner feedback is that they like what we are doing. We know the proof will be in the results but so far we are moving in the right direction.”
Whitman also said that efficiency had been increased by their new services strategy.
“We are focusing on the software-defined data centre and the Edge, which are solution sales, and there are services that go along with that,” she said. “Spinning off our enterprise services has made the large SIs much more interested in working with us here. In the past, because we competed with them in services, they were standoffish. Now we see none of that.”