New HP CEO Leo Apotheker's Top 11 Priorities For 201110:00 AM EST Tue. Nov. 30, 2010
New HP CEO Leo Apotheker, who took the helm on Nov. 1, is already signaling his top priorities for 2011. Among the areas that the 20-year-software-veteran has singled out are increasing software sales and doing a better job bringing consumer technology breakthroughs to businesses. Here are Apotheker's top 11 priorities for 2011 gleaned from his early conversations with Wall Street analysts and reporters.
Increasing HP's software sales has been a major theme for Apotheker. The former CEO of ERP software giant SAP has pointed out several times that software makes up a meager three percent of HP's $126 billion in annual sales.
"We need more software both as a category and also across the portfolio so that we can differentiate our individual products and services," said Apotheker. So just what kind of software sales gains is he looking for? "Doubling it wouldn't be too bad," said Apotheker. "Tripling it would be even better!
Make no mistake about it. Apotheker is a technologist. And he is determined that HP leverage its huge scale to deliver more technology breakthroughs to the marketplace. Apotheker calls it accelerating HP's innovation cycle. HP's R&D budget was up more than sales growth year-over-year in 2010. Expect that trend to continue. And look for Apotheker to push the R&D team hard to deliver advances that provide near term product advances for HP.
Apotheker wants to plug more of HP's services offerings into more deals. He sees services, like software, as a missed opportunity for the computer giant. This follows two years after HP acquired EDS for $13.9 billion. HP Services revenue was essentially flat at $34.93 billion in fiscal year 2010 compared with $34.69 billion for 2009. Apotheker says that HP needs to break down some technology silohs it has between the product groups and the services team and add "services that cut across all the segments."
Apotheker headed up a large direct sales force at SAP. And he has already signaled his intent to grow HP's direct sales force. "We feel that adding all these people we can provide our customers way better service so we'll continue doing that," he said. Look for HP to add more direct sales talent to its services team. Apotheker also aims to step up the training and solutions focus of the direct sales force. "Trust me, we'll be focusing on that even more in the future," he said.
Apotheker has moved quickly to get HP employee support for the next big cultural shift at the company. Cost cutting and salary cuts were the order of the day under former HP CEO Mark Hurd. Only three weeks on the job, Apotheker reinstituted salary increases in Fiscal Year 2011 as part of the HP's normal annual review process.
"HP employees are a highly competitive group who want to win," he said. "They also want to be rewarded for their performance." You can almost hear HP employees cheering Apotheker.
HP may have the broadest and deepest product line in the information technology marktetplace. But don't look for the company to attempt to lock customers into a single end-to-end vertical technology stack. Apotheker says customers are looking for "choice" not proprietary technology lock-ins." HP has made sure its open industry standard servers run the full range of software solutions from the likes of Oracle, SAP, and Microsoft. Expect that to continue under Apotheker.
It's no mistake that Apotheker has singled out the impressive sales growth gains in HP's ProCurve networking business. He sees the networking business as a huge opportunity for HP to play a greater role providing converged infrastructure with HP servers, storage and networking. HP said networking sales increased a whopping 227 percent overall in the fourth fiscal quarter 2010. HP has enrolled 400 of its top global accounts in the HP Networking proof-of-concept program. Look for Apotheker to lead the charge to increase the company's networking sales by an even greater margin in 2011.
Apotheker has met with countless HP customers who want to do more business with the computer giant but in some cases are put off by the difficulty of doing business with the $126 billion behemoth. "We need to make it easier for customers to do business with HP," he says. Look for Apotheker to take a number of steps to reduce the bureaucracy and the finger-pointing that has frustrated more than a few customers looking for help from HP.
A self-described "Global citizen," Apotheker has already traveled thousands of miles and met with customers and employees around the world. Look for him to spend a lot of time in emerging markets like India and China making sure that HP is firing on all cylinders leveraging its size to gain competitive advantage. Apotheker sees HP as a global citizen too that needs to do a better job outpacing the competition in those emerging markets.
Apotheker says customers are looking for information on demand anytime and anyplace -- what he refers to as a "mobile instant on platform." Customers don't want to have to struggle to get information from the corporate network when they are on the road. And they don't want to be locked into a single public cloud. They want the cloud their way. And Apotheker aims to make sure they get it in whatever form they want it. "We will continue to deliver solutions in a hybrid environment whether it's on-premise through the cloud or hosted," he said.
Apotheker likes to point out that HP has a strong footprint in the both the consumer technology market and the enterprise computing business. In fact, he calls that consumer to enterprise connection HP's "secret sauce." Look for Apotheker to push more consumer technology advances into the enterprise to give HP a competitive advantage. And look for him to do a much better job integrating consumer technology like the Tablet into full fledged vertical market enterprise solutions.