Hewlett-Packard (HP) CEO Meg Whitman has unveiled a five-year turnaround plan for the troubled enterprise IT company, admitting the turnaround would take longer than expected.
Speaking at an analyst briefing, she said: “We have to focus on bringing our incredible assets together to deliver for our customers, employees and shareholders.”
Shares in the company dropped 13% following her statement. The value of shares in HP plummeted to its lowest level in a decade.
Whitman said: “Customers and partners have made enormous investments in HP technology and they need us to continue bring them solutions to solve their problems.”
She admitted the company lacked the sharp, competitive focus it needed to thrive in the coming years because it had too many products and services areas, and operated in too many locations. “In every business, we will benefit from a smaller number of product offerings that we can invest in," she said.
Poor IT systems
Whitman said the company lacked the metrics needed to drive its business strategy. Poor internal IT systems have also hampered the business, she said. She blamed the lack of compelling sales and customer relationship management (CRM) system within the company for some of HP’s problems. She also said the services business lacked a labour management system.
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“This year we’ve made the decision to move to Salesforce.com, which we believe will reveal tangible result in our go to market strategy,” Whitman said. The company will also deploy Compass for workforce management and Workday will be used globally for HR.
However, Whitman said HP had not invested enough in research and development: “We have product gaps we simply should not have.”
She said the company would be investing R&D in software and the cloud.
Enterprise Services revamp
Whitman also focused on EDS, which is now the HP Enterprise Services (ES) business. She blamed the failure of the EDS acquisition on the lack of leadership.
“The acquisition of EDS was integrated into HP over the course of a number of CEOs, resulting in a change in strategy, lack of focus on fundamental execution and reliance on short-term unsustainable fixes that did not help the business,” she said.
Speaking on the turnaround of the ES business, Mike Nefkens, acting global HP Enterprise Services leader, said the company would be taking a portfolio focus. “We have to innovate around our portfolio,” he said.
This will mean that HP’s services business will be investing in the cloud, security and information analytics, he said. The company would be bidding for “low risk and high value deals.”
The ES business would also be re-engineered around standardisation and automation. He suggested the company's growth plans could involve moving customers who have used HP for datacentre, application development and business process outsourcing, towards higher value, lower risk services.