Top 7 Challenges Facing New HP CEO Apotheker

Under The Microscope

As Leo Apotheker takes the reins as CEO of HP, the 20-year SAP veteran and former SAP CEO will find a company roiled by broken partnerships, new competition and the lingering shadow of its last CEO, Mark Hurd, who was highly regarded by the industry, Wall Street and the channel.

One thing Apotheker will NOT find is a broken HP, or one that is directionless. Hurd left HP a very powerful company with a tightly-run organization and the kind of market momentum that many companies can only envy.

Apotheker will also come under microscopic examination by HP's solution providers, who have not been shy about discussing what makes a good leader at HP.

Here's a look at the challenges he'll face.

1. Broken Partnerships

HP under Hurd made a number of very aggressive acquisitions which turned friends into rivals, or at least potential rivals.

These include 3Com, which helped drive a stake in its long-term relationship with networking giant Cisco; Palm and Hyperspace, which gave it OS technologies that muddy relationships with companies like Microsoft; and EDS, which put it in competition with top integrators.

Post-Hurd, HP acquired 3PAR, which will impact its long-term storage OEM relationship with Hitachi, and ArcSight, which could impact its relationship with other security vendors.

Oracle's hiring of Hurd also threatens to rupture those two companies' 25-plus-year relationship, although recent statements from the two have toned down the severity of their rift. Apotheker will have to decide which of these relationships should and/or can be salvaged.

2. Damaged Relationship With Oracle

The 25-plus-year HP-Oracle relationship is vital to both companies, given that they have over 140,000 shared customers. Yet Oracle CEO Larry Ellison (pictured) called HP's ouster of Hurd the biggest mistake a Board of Directors made since the "idiots" at Apple pushed Steve Jobs out. HP also slapped Hurd with a lawsuit over protecting confidential HP secrets after Hurd joined Oracle.

However, the lawsuit was settle amicably, the rhetoric was toned down and no insults were traded between Oracle and HP execs during keynotes at the recent OpenWorld conference.

Apotheker will have to find a way to maintain -- and even grow -- the HP-Oracle relationship that is so important to both companies even as Oracle starts to leverage its Sun acquisition to become a combined hardware-software competitor.

3. Combating A Cisco That Could Become Hurd-friendly

Under Hurd, HP changed from being Cisco's biggest networking reseller to being its most bitter rival after a string of increasingly competitive moves, including HP's recent acquisition of 3Com .

Hurd at Oracle has no bones to pick with Cisco. Indeed, with Oracle building its enterprise hardware-software stack, Hurd will likely become a new Cisco ally.

Of course, the alternate could happen. Oracle could acquire a networking vendor to help build its enterprise stack, starting yet another rivalry.

Assuming the former, Apotheker will need to keep an eye on how the Oracle-Cisco relationship develops and how that impacts HP's business. Oracle has big ambitions for the enterprise, and an alliance with Cisco could only be bad for HP.

4. Coming Out Of Hurd's Shadow

A major challenge will be stepping out from Hurd's shadow.

"With Hurd, there is a lot of 'jabber' out there saying that HP made a mistake and was too politically correct," one HP solution provider said. "The newcomer will have to overcome the bias that Mark should have never left’."

The HP solution provider compared Hurd's successor to Steve Young, former quarterback of the NFL's San Francisco 49er, after injuries sidelined the great Joe Montana.

"I once heard him speak as a motivational speaker, and he said one of the toughest things that he faced was being compared to Joe Montana," he said. "Even though Young is an MVP in his own right, he mentioned that after he had thrown an interception, one of his teammates said, 'Montana would not have thrown an interception.' It's hard to replace a perfect person. Hurd’s replacement will have to be capable of defining [his] own identity."

5. Spotlight On The Board

HP's board has come under fire for the way it handled the Hurd departure, and its relationship with Hurd's successor will be watched closely.

Many HP watchers criticized the board for overreacting to Hurd's actions before leaving HP. While Hurd was cleared by the board of issues related to alleged sexual harassment, during the investigation it found that Hurd had improperly filed for travel expenses.

Most criticism was more muted than that of Oracle CEO Larry Ellison, who compared the HP Board to what he called the "idiots on the Apple board" who fired Steve Jobs, and who called the firing "cowardly corporate political correctness."

6. Overcoming Predictions Of Doom And Gloom

Forecasts of a "doom and gloom" scenario for HP after Hurd's departure are total "poppycock," said Mark Gonzalez, president of Nth Generation Computing, a San Diego-based HP partner.

Look at the facts, and not at predictions about how HP is doing since Hurd left the company, Gonzalez said.

"Right now it’s the 'other guys' who seemingly do everything right, and HP is being portrayed as the '[gang] that couldn't shoot straight,'" he said. "But as the 'other Mark,' Mark Twain, once said, 'The reports of my death have been greatly exaggerated.'"

Instead, Gonzalez said, look at HP's market and channel domination. "Most importantly, HP has the largest channel of any of the other players in the IT industry, with over $50 billion in sales," he said. "That gives HP a reach that the other folks could only dream of having."

7. Delivering A Potent Combination Of Leadership Skills

HP's next leader will need to show the essential quality of team work and encourage confidence, loyalty and trust from board, the current senior HP business unit management, and the HP rank and file employees, said John Convery, executive vice president of vendor relations and marketing at Denali Advanced Integration, a Redmond, Wash.-based HP partner.

"The Hurd replacement should embrace all the great things Mark Hurd did for HP, give it his own style, but keep the momentum top of mind [while leapfrogging] the competition with innovation and execution," Convery said.

He will also have to gain the confidence and trust of customers, channel executives, and strategic alliance partners, Convery said. "Listen well and make the channel part of your go-to-market DNA," he said.