HP Partners: Apotheker's Executive Shakeup Makes Sense

HP's executive leadership shakeup earlier this week surprised many industry pundits. But HP channel partners, who are now well attuned with the emphasis CEO Leo Apotheker is placing on cloud computing and software, view the reshuffle as merely a series of carefully calculated chess moves.

Three HP executives are now reporting directly to Apotheker: Dave Donatelli, executive vice president and general manager for HP's enterprise servers, storage, and networking business (ESSN); Bill Veghte, executive vice president of software, and Jan Zadak, executive vice president of global sales. Donatelli and Veghte reported to HP Enterprise Business Chief Ann Livermore, who’s been moved upstairs to a seat on HP's board.

Donatelli's ascendance is the least surprising: Since joining HP in 2009, the former EMC executive has presided over booming ESSN division growth. In Q2, HP's ESSN revenue jumped 15 percent year over year, with a 13.8 percent operating margin. ESSN sales also grew 22 percent in Q1.

In light of these results, and Donatelli previously being part of the CEO discussion before Apotheker's hiring, Donatelli taking on a more direct leadership role is a slam dunk.

id
unit-1659132512259
type
Sponsored post

"We knew Dave was going to take over ESSN eventually, so this isn't a big surprise," said Romi Randhawa, president and CEO of Fremont, Calif.-based HPM Networks. "He understands the business and has made great strides during his time at HP, especially in storage [with the 3PAR acquisition]."

Randhawa says it will be interesting to see how Donatelli builds the services and software side of ESSN, which isn't yet well developed but has significant potential. "That's a huge business that HP hasn't been tapping into," he said. "With Dave, I think we'll see action taken to effect a quick turnaround."

Donatelli has also shown an aggressiveness that makes him well suited to take the fight to HP's rivals. At HP's Americas Partner Conference in March, Donatelli urged channel partners to pressure Oracle to change its stance on dropping Itanium development. And at Discover 2011 last week, he insinuated that Cisco has shirked its duties as a networking industry innovator.

With Converged Infrastructure, "We have a very bold ambition and that is to change the networking industry," Donatelli said in a keynote at Discover 2011."That's because nothing has happened there in about 10 years. We thought this was a real opportunity to focus on serving [customers]."

Michael Haley, president of Edge Solutions, an HP partner in Alpharetta, Ga., says Donatelli's feistiness is inspirational to channel partners. "Donatelli has added a lot of credibility to HP. We've made a lot of bets on HP, and having him in a leadership role makes us feel like HP is also investing in us," he said.

Next: What Partners Think About Veghte's Elevation

Veghte's elevation is a bit surprising considering that he's been with HP for just over a year. A former senior vice president in Microsoft's Windows division, Veghte played a major role in building the software giant's Office business, and in the successful launch of Windows 7, which helped scrub the wretched legacy of Windows Vista.

"Bill is the new kid on the block, and he's coming in with high expectations. Software is going to be the glue for the whole Converged Infrastructure strategy," said Convery.

While he won't be facing a Vista-level challenge at HP, Veghte will be the point man for Apotheker's quest to pump up HP's software business, which accounted for just three percent of the company's $126 billion in FY2010 revenue. At APC, Veghte urged channel partners to add HP software to their portfolio, noting that just 12 percent of HP's Americas partners have sold HP software licenses.

Since joining HP Last May, Veghte has presided over HP's acquisition of security vendors Fortify Software and ArcSight, as well as Stratavia (database and application automation software) and Vertica (business intelligence).

HP is focusing on application transformation in the belief that companies will need to re-engineer their legacy applications to run on cloud infrastructure," Veghte said at APC. "We are pursuing a set of capabilities that simplify, automate and secure IT for business," he told attendees.

As part of the executive reshuffle, Todd Bradley, executive vice president of HP's Personal Systems Group, will "lead cross-business initiatives" aimed at building HP’s market share in China, HP said in a statement. Vyomesh Joshi, executive vice president of HP's Imaging and Printing Group, will be tasked with doing the same in India.

In a research note released earlier this week, Keith Bachman, an analyst with BMO Capital, said suggested that investors will react positively to Donatelli and Bradley staying with the company.

"We believe that both Dave and Todd are viewed favorably by investors, so it may be some relief that both appear (at least for now) to be staying with HPQ," Bachman said in the report.