Last year, shareholders applauded HP's decision to split itself into two companies. On Tuesday, the guillotine fell. CEO Meg Whitman announced at a meeting with financial analysts that HP will cut 10% of its workforce -- about 30,000 jobs -- in preparation for the official launch of its newly separate enterprise services business in November.
"Hewlett-Packard Enterprise will be smaller and more focused than HP is today, and we will have a broad and deep portfolio of businesses that will help enterprises transition to the new style of business," Whitman said at the meeting.
Smaller is the new black. The layoffs are in addition to the 55,000 jobs shed since 2012 and part of a plan to cut $2.7 billion in annual costs as HP's enterprise business strives to compete in markets such as cloud services, security and analytics.
SearchCIO expert and former CIO Harvey Koeppel believes the split and deep restructuring is a first step in the right direction. "I applaud their bold move," he told me.
"What HP is doing is a very classical 'splitting the services apart from the hardware' process. But that's step one of a twelve-step process," he said.
He's not seen much evidence yet of that process. The talk he heard on Tuesday was mostly about cutting costs and appeasing shareholders, liberally sprinkled with high-level language around cloud or digital technologies to refer to what customers want.
"What I have yet to see is a recognition of what that really means, how hard that is to do, how even harder it is to convert a culture from one that is more order-taking and transaction-executing to one that is relationship-based and really customer-focused," he said.
"Customers don't say, 'I want to buy analytics,' or 'I want to buy cloud.' They have a specific business problem that they're trying to solve, from which those technologies are configured and solved and deployed," he said. In order to develop this deep understanding of the customer, HP's next step is to hire more people from the client side.
"[They] need to understand … what it's like to sit in the chair of the CIO, the COO, the CFO or the head of infrastructure. Walk a mile in their shoes and understand what keeps them up at night. And then that insight needs to be turned into actual practice," said Koeppel.
Can HP Enterprise meet the needs of CIOs?
If CIO Christian McMahon's perspective is indicative, IT leaders intend to hold HP to a high bar post-workforce decimation:
@Fran_S_TT I would like to see more innovation including new products & solutions that help the enterprise solve business critical issues— Christian McMahon (@ChristianMcM) September 17, 2015
Whether HP Enterprise can home in on and solve specific customer needs is an open question, said Niel Nickolaisen, CTO of O.C. Tanner and SearchCIO columnist. He believes the split, in theory, helps HP "achieve some level of specialization," he told me over email, but warned that HP's long history of IT generalization is a hard habit to break.
"I think that the challenge for them is to figure out where to invest the innovation. Servers? Storage? Networking? Consulting? How do you lead in technology across such a wide portfolio?" he said. With such a broad portfolio of products and services, he questioned whether HP will be able to innovate at the speed necessary to compete with its rivals.
The road ahead
The journey from generalist to specialist won't be an easy road for HP Enterprise, Nickolaisen said. Indeed, the news made him think about his role in his company's future.
"How can I help my company survive and thrive in an age of specialization and speed? Where should O.C. Tanner specialize? Where should we be the best in the world? Where should we spend our innovation?" he said.
HP has its work cut out for it, Koeppel agreed. Improving the balance sheet by cutting jobs is not unique to HP. It may be necessary to move forward, but it's not a formula that brings long-term success, in his view. Making HP Enterprise a success means changing the company's culture. It's possible, but it doesn't happen just by shedding jobs. It requires new organizational charts, new strategic partnerships and new people who have been there and done that.
"That takes a fair amount of organizational, emotional maturity, professional understanding and guts," he said.
CIO news roundup for week of Sept. 14
Here is more technology news from the week:
- In case you missed it, sister site Computer Weekly covered Dreamforce, Salesforce's annual customer conference, which was held at San Francisco this week. One interesting tidbit from the show: Salesforce talked up its "Internet of Things Cloud" service, which it hopes will give non-technology companies the type of big data analytics that companies like Amazon specialize in.
- GE is forming a digital unit that will combine its software, IT and industrial security operations under one roof, the company announced Monday. The move will "grow our software and analytics enterprise from $6 billion in 2015 to a top 10 software company by 2020," CEO Jeffrey Immelt said in a statement.
- Heading to China? Lyft has got news for you. Uber's No. 1 ride-hailing nemesis is teaming up with Didi Kuaidi, which will allow the U.S. company to operate in China (and vice versa). But will the Didi fleet sport pink mustaches?
- Can a million people be taught to code? One online teaching startup believes they can. Udacity, founded by an AI specialist who once ran Google X, said that through partnerships with tech companies, low education costs and wide accessibility, its model can potentially be scaled up to teach millions of people technical skills like mobile and Web development that can lead to jobs.
CIOs share their initial reactions to HP's split announcement
Details on HP's new hybrid cloud strategy on sister site SearchCloudComputing