Hurd's successor must show HP can do more than cut costs

John Madden/Ovum | August 16, 2010

Former HP CEO Mark Hurd’s departure may turn out to be a classic blessing in disguise.

Admittedly, his skills in cost control and performance metrics were just what HP needed when he took the reins in 2005. Back then the vendor was still struggling under the weight of its messy integration with Compaq.

Once the company’s financial house was in order, Hurd also presided over the company’s rapid expansion into new markets through multiple acquisitions (EDS, 3Com, and more recently Palm).

But this has required more rounds of integration and inevitable restructuring; for example, the company announced in June that 9,000 additional positions will be eliminated.

As a result, in the past several years the “HP Way” – so called for its longstanding, R&D-driven approach to developing and marketing technology and services – has been more synonymous with cost cutting than anything else.

While Wall Street cheers such focus and HP’s financials have been mostly healthy, it’s no way to grow a business in the long term, particularly among enterprise IT customers.

It’s true that HP’s drive for ongoing efficiency and multiple acquisitions has allowed HP’s leadership team to fuel its multi-year strategy to be a premier low-cost and strategic provider in enterprise IT (broadly captured for example in HP’s Converged Infrastructure vision), with an emphasis on modernizing data centers, IT management, and streamlined global service delivery.

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