John Hinshaw has headed up HP’s technology and shared services since 2011. As its executive vice-president for technology and operations, Hinshaw is the man behind the operational efficiency on which the company’s transformation is built.
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His goal has been to unwind a heavily centralised IT organisation, to create one that is more aligned to HP's business units yet can still benefit from the economies of scale offered by centralised IT.
HP is two years through a five-year plan to return to profitability, in a strategy described by interim chairman Ralph Whitworth in April 2013 as a "Herculean turnaround".
When CEO Meg Whitman outlined the turnaround plan for HP in 2012, she blamed the lack of compelling sales and the customer relationship management (CRM) system used by the company for some of HP’s problems. She also said the services business lacked a labour management system.
These are among the problem areas Hinshaw and the IT organisation he is responsible for have tried to resolve.
Hinshaw keeps abreast of CIO talent by being involved in CIO forums and meetings. "I used to see Ramon [Baez, former Kimberly-Clark CIO, now HP's CIO] at Microsoft CIO conferences and we both spoke at Dreamforce. When he was at Honeywell and I worked at Boeing, there was a defence industry CIO group," he says.
Along with the CIO-focused conferences, Hinshaw has used CIO recruiters for additional help. "Even if you know somebody, you have to take the right approach to pull them out of their [existing] company," he says.
Addressing HP's underinvestment in IT
A former CIO at Boeing and Verizon, Hinshaw says the first thing he noticed when he joined HP was that it had underinvested in IT. "This was one of the first areas I looked at," he says.
Under its former CIO, Randy Mott, HP had managed to create a lean IT function by consolidating its datacentres, rationalising applications and addressing the IT following merger and acquisition activities. Mott left as part of a restructure in 2011.
Whitman created a new structure for the HP business and Hinshaw was her first hire. He says that when he took over responsibility for IT in 2011, the challenges faced by HP's IT team were due to underinvestment in business capabilities and the organisational structure.
According to Hinshaw, HP's IT was not organised in a way that would deliver business functionality. "It was a heavily centralised IT organisation," he says.
Building a business-centric IT model
Prior to taking on the global CIO role at Verizon, Hinshaw was a business unit CIO. "During my career at Verizon and Boeing I found that you need CIOs who sit both on the IT team and also in the business unit," he says.
The setup at HP led to major inefficiencies, and requests for new functionality could not be supported easily because of the disconnected nature of the IT organisation.
You need CIOs who sit both on the IT team and also in the business unit
John Hinshaw, HP
"The way HP's IT was organised prior to my arrival was that there was one central group responsible for financial applications. Another IT head led supply chain applications, another ran manufacturing applications and another led operations. None of these people were connected to a business unit," says Hinshaw. "You try to prioritise what's important, but you do not have the business context."
One of these disconnects occurred in the enterprise services (ES) unit, formerly EDS. HP merged all the systems that ran its smaller services business with those inherited through the $13bn EDS acquisition in 2008.
"One of the systems that fell by the wayside during that process was the ability to manage labour from a demand and supply perspective. It is one of the things you would think is pretty key for a services business," says Hinshaw.
But the priority was to cut costs, he says: "No one in [IT] woke up every morning and thought about the ES business. They woke up every morning and thought about cutting costs."
Accordingly, the workforce management system for the ES business was woefully inadequate. As an example, Hinshaw says 50 services staff who worked on a security system for one customer would be fired, while a second customer, which needed 50 security specialists, would have no idea those people were available. "There was heavy cost, heavy turnover and inefficiencies," he says.
To tackle this problem, Hinshaw hired a global CIO, Ramon Baze, who was previously at Kimberly-Clark.
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"We then organised IT to be connected to the business, which means there is a CIO responsible for each of our business units reporting to Ramon," says Hinshaw.
There is now a CIO for the printing and personal systems business, a CIO for the enterprise group, a CIO at the software group and one for enterprise services.
The CIO for enterprise services saw the problem with workforce supply and demand. He used a software as a service (SaaS) application and built the system components needed to support workforce management.
The company deployed Compass for workforce management and Workday is being used globally for HR. "We are seeing efficiencies in the ES business because of this system," says Hinshaw.
HP’s $4bn software group was being run by systems designed for HP's hardware business, according to Hinshaw, but this has now been modified. "The CIO who runs IT for the software business has built in extensions important for a software company, such as software entitlement and the way you manage code and people assets, which is a very different IT architecture to what is needed by a hardware company," he says.
Rapid response to change
With CIOs for each business unit, Hinshaw says the new IT organisation at HP enables the company to implement changes more quickly. For instance, when HP implemented Salesforce.com, it was able to roll out the SaaS software to 50,000 people in nine months, which was possible because sales operations and IT were in the same group.
While the CIOs are responsible for their business unit, they also manage pan-HP business applications
John Hinshaw, HP
The head of sales operations, who works under Hinshaw, took control of the business process element in the implementation to have one common view of the customer. "If you pull out a customer, you can see all the business they do [with HP], which did not exist before. And the way we design our sales compensation and how our sales reps see this information is all within the application," he says.
But with CIOs responsible for the core applications of their business, what happens when the company needs a global roll-out? HP still makes use of a common network, common infrastructure and common security.
"While the CIOs are responsible for their business unit, they also manage pan-HP business applications," says Hinshaw. "For instance, our enterprise group CIO manages the Salesforce.com implementation for the whole company, The printing and personal systems CIO manages the supply chain systems across HP. We divided them [the pan-HP systems] up based on who had the greatest need for the systems."