Turnaround Tale
How
HP's restructuring chief John Hinshaw is putting the company’s house in order
Carrying the distinction of being Meg Whitman's first hire after she took over at HP, is a clear enough sign that big responsibilities will soon come his way. And sure enough, John Hinshaw was handed over charge of operations and technology with the key task of putting in place infrastructure, systems and tools that would enable the troubled company's turn around. After joining Whitman's A team, Hinshaw, who was earlier with Boeing and Verizon, has taken the axe to costs, streamlined processes, fostered innovation and set the company's own IT agenda. No doubt Winshaw is playing key role in implementing Whitman's 5 year turnaround plan, but he also happens to be pushing HP India's agenda in the top management at Palo Alto as India's 'sponsor'. In India recently, the executive vice president of Technology and Operations at HP discusses the IT major's turnaround plans with CD. Edited excerpts:
How is this restructuring exercise different from the others HP has gone through?
I was a customer of HP for 20 years and have seen HP evolve. We are making solid progress with our five year plan. The first year was about diagnosing the issues, and laying the foundation. Easy Rider
Last year was about fixing and rebuilding. We did a lot of work in terms of new systems, investments and R&D. Now we are positioned to look at areas where we are going to grow again. 2014 will be a much more solid year. We are on track two years out of five so far. We still have a lot more to do. We have a lot of great products that have come out in the last couple of years, now we have to scale them.
Which are the major areas of progress?
First and foremost, in the hearts and minds of our customers and employees as well as our partners who are now feeling good about the future prospects of HP. There was some confusion about what HP was all about. Now we have re-established that we are world's largest infrastructure company and we are staying in the infrastructure business. We have overlaid our software services solutions. Our customers, partners and distributors are very secure about our future. Our employees conducted their annual employees survey this year and in every category the numbers were up. In products like Moonshot (a new server) we have an innovation like we haven't seen in the last 25 years. Some innovations in tablets, ink jet printers-twice as fast as laser, and half the cost, are interesting. Innovations we are adding to our software capabilities like Autonomy and Vertica, are great. In our services capabilities -- IT outsourcing, helpdesk, networking management -- we have been shifting work to now helping customers migrate to cloud, helping them with security, Big Data challenges and mobility. We are shifting from a company that was sort of maintaining IT to helping companies shift to "new style" of IT.
Which areas of the five year plan are fixed and which are evolving?
We are a very large company but we operate very nimbly and in a very non bureaucratic way and that started with Meg (Whitman). Our executive council sits in a cubicle farm in Palo Alto so real time collaboration happens and decisions are speedier. We set up bureaucracy busters program where any employee can send in a note to the bureaucracy busters hotline, mailbox and web page and we would go after it. We have knocked out a thousand different bureaucratic programs this year.
Our customers are thinking about change and our job is to help them. They are thinking a lot about how to go to the cloud, with questions like how do I migrate my traditional app, how do I go to the SaaS (Software as a service), what do I do about the security, how do I manage BYOD (Bring Your Own Device). As we interact with the customer, we are able to move a lot faster. The workforce has been inspired by Meg's leadership and she has brought in a lot of entrepreneurial spirit into HP, acting quickly on issues, following up fast, basically less talk, more action. That culture is permeating through HP.
What is the scope of your restructuring team?
My prime focus is making it easier to buy products from HP, making it easier for our sales force to sell those products, and easier to work if you are an HP employee. The strategy for my organization, which has seven internal divisions, is that if one of my employee is not making it easier to sell, easier to buy, easier to work in HP, then they are doing the wrong thing, whether you are in IT or real estate or operations or procurement or shared services.
What are some of the key internal processes that have changed in HP?
We have implemented salesforce.com and completely redone our sales processes. Earlier every division ran sales differently, had different commission structures, different incentive plans, different ways of looking at customers. We have standardised that across the whole company so that if you are a HP customer, you are in one place in the system and anybody from HP who is interacting with you is interacting the same way and can collaborate better. It's also real time. We have seen tangible results in terms of employee surveys, a couple of years ago only 7% were happy with their sales tools and processes and now its 70%.
For everyday employee matters, we are implementing Workday, another big SaaS product that will help employees right from maintaining their time schedules to their pay cheques. We have also implemented things like Docusign, an electronic signature program for customer contracts, employee job offers etc.. That is all done and stored digitally. We have built these support centers on our key locations where you can go to a mini help desk , you can go get your laptop fixed, or get a software update. We are trying to use technology and process engineering to make teams run more efficiently.
What's the "new style" of IT that HP is trying to focus on?
It really is shifting from traditional IT which was data centers and clients on the desk top and software on the client to cloud. More and more applications are running on the cloud, be it SaaS, be it platform as a service, be it an internal cloud or managed cloud or public cloud to SaaS. That's the first element of "new style" of IT, a cloud enabled world. The second tenet is security. CEOs are very concerned about security and security budgets are going up as intellectual property (IP) is being attacked and hacked. The third area is around big data and analytics. All companies have to figure out what they have to do with the data out on the cloud, and out on the internet through social media, how to pull all that together and make meaningful decisions. Finally, mobility is a component, from a tablet to some mobility software to helping companies build mobile applications. For most people it's mobile first now.
How are you making sure that the culture of innovation still thrives at a time when such large scale changes are happening?
There are four ways we look at innovation. The entire company has a foundation of innovation, it's in the blood of every employee. We reinforce that as a leadership team. We have an innovation week every year and we encourage every employee to submit an idea. It's then reviewed from a group across the business and then they pick the top couple of hundred ideas. Those folks then write a white paper on the idea and do a poster about what they are talking about. Then the executive council comes and looks at those ideas and then we choose several to become products and services.
Secondly, we have our HP labs that have a long history of innovation, and Moonshot came out of that. The difference now is that HP Labs are being run by a business leader, Martin Fink, who was running our business critical server business and he is focusing on not what's cool in technology but what can deliver a product that will make a difference for our customers.
Thirdly, our actual business units have their own R&D elements within each business units. So HP Labs is across the whole company and the server business, the networking business, the storage business, the software business, they've got their R&D teams too that are creating innovative offerings. Finally, there are times when we need to go and acquire a small company to plug in a creative innovation and add that to our portfolio. We haven't done much of that in the past few years because we have been paying down our debt but now we are in a much stronger position from a debt perspective, we can acquire innovations that we haven't necessarily acquired. HP Labs are working on some exciting innovations around memory technology, 3 D Printing technologies, visualization for Big Data…
What is the 'returns based capital allocation' strategy that HP is following?
We have a standard process across the business units on return on invested capital. Before we deploy capital across the capital, it has to go through that process. The returns are analysed and then it gets centrally reviewed by our CFO and our business unit leaders. It is a disciplined process and it has really helped us make the right bets for capital allocation as opposed to saying that each business unit gets X amount of money. It's a nimble process: here's what you want to do, here's 3-5 year returns, here's the deployment time line.
Has the debate about the selling or not selling PC business settled inside HP or not?
There hasn't been any debate for two years. When I came in after Meg, the first thing we looked at is: are we in or not, and we said we are in. It's the foundation of HP, we are an infrastructure company, so there is no debate. The PC business is broader than PCs, we call it the personal system business and that includes tablets, notebooks and hybrids. We certainly see tablets taking a much larger percentage of that, we see notebooks and convertables taking a much larger percentage.
Apart from cloud based products and services, which HP product could be big and disruptive in the near future?
I Think Moonshot is going to be a big disrupter in the market. Anytime you create a new architecture that has radically new economics, it becomes a game changer.
What are the areas in which Meg Whitman has made maximum difference?
She has built an incredible culture, employee morale is high, there's a new attitude internally. The leadership team that she has built, she handpicked each one at executive council level, and in many cases, three levels down. And she has brought back R&D as the core thing that HP does.
vinod.mahantaCDET131101
Carrying the distinction of being Meg Whitman's first hire after she took over at HP, is a clear enough sign that big responsibilities will soon come his way. And sure enough, John Hinshaw was handed over charge of operations and technology with the key task of putting in place infrastructure, systems and tools that would enable the troubled company's turn around. After joining Whitman's A team, Hinshaw, who was earlier with Boeing and Verizon, has taken the axe to costs, streamlined processes, fostered innovation and set the company's own IT agenda. No doubt Winshaw is playing key role in implementing Whitman's 5 year turnaround plan, but he also happens to be pushing HP India's agenda in the top management at Palo Alto as India's 'sponsor'. In India recently, the executive vice president of Technology and Operations at HP discusses the IT major's turnaround plans with CD. Edited excerpts:
How is this restructuring exercise different from the others HP has gone through?
I was a customer of HP for 20 years and have seen HP evolve. We are making solid progress with our five year plan. The first year was about diagnosing the issues, and laying the foundation. Easy Rider
Last year was about fixing and rebuilding. We did a lot of work in terms of new systems, investments and R&D. Now we are positioned to look at areas where we are going to grow again. 2014 will be a much more solid year. We are on track two years out of five so far. We still have a lot more to do. We have a lot of great products that have come out in the last couple of years, now we have to scale them.
Which are the major areas of progress?
First and foremost, in the hearts and minds of our customers and employees as well as our partners who are now feeling good about the future prospects of HP. There was some confusion about what HP was all about. Now we have re-established that we are world's largest infrastructure company and we are staying in the infrastructure business. We have overlaid our software services solutions. Our customers, partners and distributors are very secure about our future. Our employees conducted their annual employees survey this year and in every category the numbers were up. In products like Moonshot (a new server) we have an innovation like we haven't seen in the last 25 years. Some innovations in tablets, ink jet printers-twice as fast as laser, and half the cost, are interesting. Innovations we are adding to our software capabilities like Autonomy and Vertica, are great. In our services capabilities -- IT outsourcing, helpdesk, networking management -- we have been shifting work to now helping customers migrate to cloud, helping them with security, Big Data challenges and mobility. We are shifting from a company that was sort of maintaining IT to helping companies shift to "new style" of IT.
Which areas of the five year plan are fixed and which are evolving?
We are a very large company but we operate very nimbly and in a very non bureaucratic way and that started with Meg (Whitman). Our executive council sits in a cubicle farm in Palo Alto so real time collaboration happens and decisions are speedier. We set up bureaucracy busters program where any employee can send in a note to the bureaucracy busters hotline, mailbox and web page and we would go after it. We have knocked out a thousand different bureaucratic programs this year.
Our customers are thinking about change and our job is to help them. They are thinking a lot about how to go to the cloud, with questions like how do I migrate my traditional app, how do I go to the SaaS (Software as a service), what do I do about the security, how do I manage BYOD (Bring Your Own Device). As we interact with the customer, we are able to move a lot faster. The workforce has been inspired by Meg's leadership and she has brought in a lot of entrepreneurial spirit into HP, acting quickly on issues, following up fast, basically less talk, more action. That culture is permeating through HP.
What is the scope of your restructuring team?
My prime focus is making it easier to buy products from HP, making it easier for our sales force to sell those products, and easier to work if you are an HP employee. The strategy for my organization, which has seven internal divisions, is that if one of my employee is not making it easier to sell, easier to buy, easier to work in HP, then they are doing the wrong thing, whether you are in IT or real estate or operations or procurement or shared services.
What are some of the key internal processes that have changed in HP?
We have implemented salesforce.com and completely redone our sales processes. Earlier every division ran sales differently, had different commission structures, different incentive plans, different ways of looking at customers. We have standardised that across the whole company so that if you are a HP customer, you are in one place in the system and anybody from HP who is interacting with you is interacting the same way and can collaborate better. It's also real time. We have seen tangible results in terms of employee surveys, a couple of years ago only 7% were happy with their sales tools and processes and now its 70%.
For everyday employee matters, we are implementing Workday, another big SaaS product that will help employees right from maintaining their time schedules to their pay cheques. We have also implemented things like Docusign, an electronic signature program for customer contracts, employee job offers etc.. That is all done and stored digitally. We have built these support centers on our key locations where you can go to a mini help desk , you can go get your laptop fixed, or get a software update. We are trying to use technology and process engineering to make teams run more efficiently.
What's the "new style" of IT that HP is trying to focus on?
It really is shifting from traditional IT which was data centers and clients on the desk top and software on the client to cloud. More and more applications are running on the cloud, be it SaaS, be it platform as a service, be it an internal cloud or managed cloud or public cloud to SaaS. That's the first element of "new style" of IT, a cloud enabled world. The second tenet is security. CEOs are very concerned about security and security budgets are going up as intellectual property (IP) is being attacked and hacked. The third area is around big data and analytics. All companies have to figure out what they have to do with the data out on the cloud, and out on the internet through social media, how to pull all that together and make meaningful decisions. Finally, mobility is a component, from a tablet to some mobility software to helping companies build mobile applications. For most people it's mobile first now.
How are you making sure that the culture of innovation still thrives at a time when such large scale changes are happening?
There are four ways we look at innovation. The entire company has a foundation of innovation, it's in the blood of every employee. We reinforce that as a leadership team. We have an innovation week every year and we encourage every employee to submit an idea. It's then reviewed from a group across the business and then they pick the top couple of hundred ideas. Those folks then write a white paper on the idea and do a poster about what they are talking about. Then the executive council comes and looks at those ideas and then we choose several to become products and services.
Secondly, we have our HP labs that have a long history of innovation, and Moonshot came out of that. The difference now is that HP Labs are being run by a business leader, Martin Fink, who was running our business critical server business and he is focusing on not what's cool in technology but what can deliver a product that will make a difference for our customers.
Thirdly, our actual business units have their own R&D elements within each business units. So HP Labs is across the whole company and the server business, the networking business, the storage business, the software business, they've got their R&D teams too that are creating innovative offerings. Finally, there are times when we need to go and acquire a small company to plug in a creative innovation and add that to our portfolio. We haven't done much of that in the past few years because we have been paying down our debt but now we are in a much stronger position from a debt perspective, we can acquire innovations that we haven't necessarily acquired. HP Labs are working on some exciting innovations around memory technology, 3 D Printing technologies, visualization for Big Data…
What is the 'returns based capital allocation' strategy that HP is following?
We have a standard process across the business units on return on invested capital. Before we deploy capital across the capital, it has to go through that process. The returns are analysed and then it gets centrally reviewed by our CFO and our business unit leaders. It is a disciplined process and it has really helped us make the right bets for capital allocation as opposed to saying that each business unit gets X amount of money. It's a nimble process: here's what you want to do, here's 3-5 year returns, here's the deployment time line.
Has the debate about the selling or not selling PC business settled inside HP or not?
There hasn't been any debate for two years. When I came in after Meg, the first thing we looked at is: are we in or not, and we said we are in. It's the foundation of HP, we are an infrastructure company, so there is no debate. The PC business is broader than PCs, we call it the personal system business and that includes tablets, notebooks and hybrids. We certainly see tablets taking a much larger percentage of that, we see notebooks and convertables taking a much larger percentage.
Apart from cloud based products and services, which HP product could be big and disruptive in the near future?
I Think Moonshot is going to be a big disrupter in the market. Anytime you create a new architecture that has radically new economics, it becomes a game changer.
What are the areas in which Meg Whitman has made maximum difference?
She has built an incredible culture, employee morale is high, there's a new attitude internally. The leadership team that she has built, she handpicked each one at executive council level, and in many cases, three levels down. And she has brought back R&D as the core thing that HP does.
vinod.mahantaCDET131101
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