HPE: The UK business one year after split

The headlines say one thing, but Marc Waters, UK and Ireland managing director of Hewlett Packard Enterprise, is confident CEO Meg Whitman’s strategy is paying off

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It has been a big year for Hewlett Packard Enterprise (HPE), following the splitting of HP in November 2015 and continued economic uncertainty after the UK’s Brexit vote. 

The IT landscape has also changed, with Dell EMC now a major force in the datacentre market and the shift from traditional IT to cloud-based computing continuing. 

HPE has gone through several big divestitures, such as offloading its Enterprise Services division to CSC and the recent sale of software infrastructure to Micro Focus, and Marc Waters, UK and Ireland managing director of HPE, admits there are more to come.

Since the big split a year ago, the side of the business that is now HPE has a far smaller footprint than a 50/50 split would suggest. 

It has also made some big investments, among them the $2.7bn acquisition of Arubabuying a stake in intelligent edge computing, and the $275m acquisition of SGI, which gives the company high performance computing (HPC) for big data analytics. 

HPE has also needed to introduce new ways of purchasing IT infrastructure. On one hand, its decision reflects pay-per-use and consumption-based business models. On the other, it has enabled HPE to compete with new entrants such as Nutanix, offering IT departments the ability to pay as they grow their IT infrastructure rather than buying capacity wholly upfront. 

For instance, as opposed to the traditional capital expenditure model of IT purchase, Waters says HPE’s financial services business is able to offer IT departments consumption-based pricing, reflecting the shift to a pay-per-use style of purchasing.

The outsourcing shift

Waters is certain big outsourcing deals are dead. He believes spinning off its Enterprise Services business into CSC puts HPE in a good position to focus on more specialised services.

The approach of ‘big is beautiful and we can do everything’ led to the formation of IT conglomerates,” says Waters. “Digital disruption of the technology market has led HPE to set up focused pure-play organisations that partner exceptionally well.

“There is a mindset shift from saying ‘we do everything’,” he adds. “One of our foundational boundaries is to partner first.”

While the company will continue to work with service providers and channel partners, it also has a US programme called Pathfinder, where HPE makes equity investments in technology businesses. Among the companies HPE has invested in are object storage company Scality, digital enablement specialist Mesosphere, and infrastructure automation company Chef.

“We work with our equity partners to bring innovation to our customers,” says Waters.

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HPE is now also focused on partnering with other organisations to offer specialised services. 

For example, it is partnering with Docker for containerisation, putting Docker on all its servers. In the networking space, HPE is partnering with Arista Networks for software-defined networking. The company is also furthering its long-standing partnership with Microsoft to support the Azure cloud.

“Hybrid will win,” says Waters on a strategy HPE and Microsoft are both focused on. We believe infrastructure will be delivered on-premise, software defined as a service. There is a need for hybrid environments.

Along with these technology partnerships, Waters says the role of the UK HPE business is the execution of the company’s business strategy of delivering innovation to customers. “We need to engage with customers at the right level,” he says. 

The Technology Services business that remains at HPE has a great opportunity to grow. “IT services is core to what we do,” adds Waters. 

Economic and social challenges

Execution of business strategy was the logical response for Waters to make when the UK voted to leave Europe. Country-specific issues can have a knock-on effect for global business plans.

Brexit has sent shockwaves across UK IT, a big employer of foreign workers that has gained from the single market in Europe. 

But Waters appears focused on pushing the UK business forward, whatever happens during the Brexit negotiations.

“We are a big employer in the UK,” says Waters. “You see the country vote, a decision is taken, and then the government gets on with it. As the managing director of UK and Ireland HPE, I do the same.” 

For Waters, macroeconomic uncertainty is something that is always in place to some extent. He believes Brexit is one factor affecting the economic environment.

“We at Hewlett Packard Enterprise do not set our strategy based on individual events impacting macroeconomics, and this is as true of the Brexit decision as it is for anything else,” he says.

As managing director, he says the UK and Ireland offers a lot of opportunity for the company. “It is important to me to ensure the opportunities for our employees and our ability to engage in the market. But I don’t believe we fundamentally change anything as a result of the Brexit decision.” 

As the head of a UK organisation, he clearly wants to see the UK succeed. Having attended the Tory Party Conference business day, Waters says he was lucky enough to hear the chancellor speak.

“We are looking to do everything we can to be a very successful inward investor in the UK and Ireland,” says Waters. 

As part of this, he says the lab facility in Bristol, previously HP Labs but now part of the HPE business following the splitis doing cutting-edge research.

Focus on skills

His message to the government is the need to focus on skills. “I was incredibly pleased to see skills referenced so heavily by the chancellor in his speech.

“I think it is incredibly important to our business, to our customers and to our country,” he says, referring to the need for science, technology, engineering and mathematics (Stem) skills.

One area Waters would like the chancellor to revisit is the apprenticeship levy.

“We are behind the intent of it. I would like real flexibility to deliver what government really wants, because we want the same thing,” he says. “I am passionate about giving opportunities to our own people and the importance of skills to HPE.”

With the right support from government, he believes the apprenticeship could be transformative. “There is an opportunity to create a partnership between government and industry on skills,” Waters concludes. 

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