View From The Top: HP CEO Whitman Answers Tough Partner Questions

The Buck Stops Here

Hewlett-Packard CEO Meg Whitman spent 30 minutes taking questions from partners at the BoB conference, hosted this week in Tampa, Fla., by CRN publisher The Channel Company. Here are Whitman's responses to questions from solution providers in the audience, questions that ranged from the importance of HP's culture to its converged infrastructure play to its partnership with Microsoft -- and more.

What is the difference between leverage points for channel versus direct sales?

In my view, this all begins with market segmentation. I think HP has got to improve our ability to segment the market and then offer exactly the right solutions at the right price. And our default is the channel. This company was built with channel partners. Then, my understanding is we pivoted a bit more toward a direct-selling motion. When I came in I pivoted this company right back to channels because I think we are stronger together. Yes, there are customers that we will take direct but our default position is let's do this together with the channel. And let's make sure we collectively segment the end users and then have the right solutions at the right price for the right market segment.

Talk about the importance of creating great culture at HP.

When I came to HP I read the book that [former IBM CEO] Lou Gerstner wrote after completing 10 years at IBM. It was a book called "Who Says Elephants Can't Dance?" Gerstner said when he showed up at IBM he thought that culture was important. And he said by the time he left he thought culture was maybe the only thing that was important. So I think that culture is incredibly important because it is how we show up with you all every single day.

What we tried to do is first lay out a very clear strategy for HP. And lay out a clear set of visions and values on what we are trying to accomplish together that is all driven from the customer in.

Talk about where you are in the turnaround.

We are on a journey. Are we perfect? No. Are we getting a lot better? Yes. But I say this is going to be another year or two before we get this culture exactly the way we want it to be. And it is characterized by accountability, by sense of urgency, by customer focus. One of the things I say is every partner and every customer we have [we will] treat you like you are our only customer and our only partner. While we are getting better, I don't think we are there yet. But it is our aspiration.

You have the best enterprise portfolio in the industry, but you don't have a leadership position. What are you planning to do to change that?

I have not been happy with the performance of the Enterprise Group. And you probably noticed that I have appointed a new leader of HP's Enterprise Group -- Bill Veghte, who I bet is known to many of you. He spent 19 years at Microsoft and knows the channel very well. What I have asked Bill to do is truly knit together HP servers, storage and networking to deliver on the promise of converged infrastructure much more aggressively than we have. The annoying thing about this is we coined the term. We invented the concept, and I think we haven't delivered as well as we should have against it. So that is not only soft bundles [of server, storage, networking], but also making sure that the software that knits this together -- we call it Fusion -- is fantastic. And we have just introduced our most recent release of Fusion. I think you are going to see us come roaring back here.

Today you highlighted Chromebook but not a word about Microsoft. What is the state of the Microsoft partnership?

We just happened to get an incredible review for our Chromebook and decided to highlight it. We have a great long-term partnership with Microsoft. We do a huge amount of business with them. I think we are still their largest customer, maybe their second largest customer. So we collaborate with them. In fact, I would say the collaboration is better today than it has been for many years not only in the consumer space but also servers and tools. So it is a very strong relationship. What I will say is -- and you all see this every day -- there is a new world order out there. If you look at the shift in the share of operating systems over the last couple of years, the share shift has been dramatic, from almost a 100 percent Windows operating system [share] to probably 60 percent share of market for Windows. Android has come on very strong and Chrome is starting to get real traction. So our world has changed.

Is HP looking to make converged infrastructure innovations where there is a 'better together' -- HP on HP on HP -- strategy that delivers better performance?

We have got to pick a small number of solutions that we really want to stand for and own. And I want to do as much as we can HP on HP on HP. ... One of the hallmarks of HP has been a commitment to operating in a heterogenous environment, open standards and OpenStack. You will notice that our public cloud, HP Cloud Services, which is sort of the industrial-strength version of Amazon Web Services, is built on OpenStack. We want to make sure we have best of breed and we are not only HP on HP on HP. But I do think that in the Enterprise Group we ought to be able to demonstrate that HP networking, HP servers and HP storage are better together. All of HP ... our entire internal IT backbone is run only on HP networking, only on HP storage, only on HP servers with only our IT Performance Management Suite tools. And all our security is for the most part our own HP security products: TippingPoint, ArcSight and Fortify.

What is the more difficult job: CEO of HP or governor of California?

I actually think being governor of California would have been more difficult than turning around HP. Maybe that is because I actually know how to do this. The other thing is: You are watching what is happening in Washington, D.C. And California is just a microcosm of the United States. The sort of division and sort of complete dysfunction of so many of our institutions is just distressing. The reason I ran [for governor of California] is I thought business leadership could help. But things happen for a reason. It is a great privilege to be at Hewlett-Packard.

What is HP doing to make it easier for partners to support international customers?

One of the things we have done with PartnerOne is harmonize many of our programs around the globe. Quite frankly, many of our country managers were running their own fiefdoms for a long time. We have tried to harmonize the programs.

When you are servicing a customer that has operations in eight or 10 countries, we need the product that customer wants to be available in all countries. There needs to be consistent pricing. There needs to be consistent terms. There needs to be consistent choices that those customers have. We are working hard to harmonize that as well.

Talk about the move to make HP a single unified company rather than a collection of businesses.

As you know HP, at least in probably the last 10 years, was quite a siloed organization across business units. And even within EG [Enterprise Group], servers, storage, networking,, was more siloed than what I would like. In the end, my view is that this is all about what is the margin for you and for us on this collection of products. We cannot be driven by individual P&L. We can't be driven by country P&L. We have got to start by asking: What does the customer want? This is one of the most challenging cultural shifts because we come from a P&L perspective, when we have got to say: What is easiest for the customer? What I say to our people all the time is: There is no HP EG share. There is no HP software share. There is no HP Printing and Personal Systems share. There is only HP as a company. So we have to work harder to do the right thing for customers and then sort out the internal financials later. We are making some progress. But we have more work to do.

HP was marketing-driven under Carly Fiorina and Mark Hurd pushed HP more toward being sales-oriented. What is HP going to be under Meg Whitman?

I believe that DNA of companies is really hard to change. When I come into new situations like this, I always go back to the heritage of the company. ... What differentiates HP historically is we are a great engineering company. No one does better product engineering than HP. No one does better software engineering as it relates to our hardware than HP. Obviously, software runs the hardware. Many people are surprised to know how much depth we have in software engineering. The second thing HP is all about is customer service and support. We will do anything for customers and partners, sometimes at great expense, I must say. So we have to double down on those core features. Then we have got to build the capability around packaging, pricing, solutioning because of the new style of IT. As a selling company, we are not as good as we should be. But our point of difference has got to be around great products and great customer support and service.