HP and IBM both launched major new cloud initiatives this month, and the differences between the two efforts highlight the divergent approaches that each firm's leadership is pursuing.
Both companies see the cloud as their primary battlefield - IBM spun out PCs a decade ago and HP recently restructured the company so that personal technology and printer declines wouldn't distract senior management. But IBM's initiative is heavily strategic, which suggests the true benefits for the company will emerge in the second half of the decade. HP is more tactically focused, and is demonstrating an adjustment into an area that is closer to their new CEO's skill set.
This isn't about one approach being better than the other, but rather about how each approach defines the significant differences between the companies.
HP hybrid cloud
One of the primary goals of CEOs brought in from outside is to change the company they manage to better reflect their skill set. Meg Whitman's background at eBay is tied to what became a cloud service built from the ground up to address a defined customer set. It wasn't in hardware, software or traditional IT services. HP's Hybrid Cloud adds a public cloud component to the company's more traditional hardware solutions.
While this is tactical, it responds to a current critical IT need for a public cloud service that meets corporate security and compliance requirements. It is also much closer to Whitman's core strength. This means she'll be much more likely to have a solid understanding of the new offering and add value as opposed to having to rely on other subject experts. This gives her an initiative that is truly hers and helps to turn HP into a company that better matches her unique skill set.
Just because it is tactical doesn't mean it can't be forward-looking. The Hybrid Cloud initiative anticipates the growth of companies like Google and Amazon - and the likely entry of Yahoo and others - in this space and provides a guard against their incursion into HP's markets. So it has both offensive and defensive elements and it should provide a higher likelihood of near-term revenue and profitability benefits, given that it is an area where Whitman has previously been successful.
In short, this strategy showcases HP's changing focus and the influence Whitman is bringing to the company.
IBM Expert Integrated Systems
IBM has changed CEOs as well even more recently than HP, but its succession process has been in place for the greater part of a century and the new CEO comes uniquely trained to run today's IBM. In addition, IBM has maintained a massive focus on R&D and currently leads in artificial intelligence technology with a unique division, Watson, focused on this area.
IBM's new initiative, IBM Expert Integrated Systems, reflects this vastly more strategic thinking. The concept here is to build systems that are increasingly intelligent, and arrive fully configured with software and with all related hardware wrapped with intelligent components that optimise the solution in place.
This is more of a path than a destination, and much of the benefit will come from how these systems learn and adapt themselves over time. Benefits include faster implementation time, less administrator overhead and near constant optimisation of the hardware, networking and storage resources. But even though the initial benefits are impressive, like any learning system in its infancy this one will get dramatically better over time.
This is far more strategic than HP's approach, and it is designed to give IBM an increasing competitive advantage tied to its unique focus on creating ever more intelligent systems.
Contrasting HP and IBM
HP's Hybrid Cloud is a destination in and of itself and addresses a critical IT need for a line of accessible resources that comply with company policy and can easily be swapped with comparable, on-premises systems as needed. It is a highly tactical move, but could also yield considerable value as it becomes a showcase offering for the company's new CEO.
IBM's Expert Integrated Systems have similar on-premises hardware, but it is on a path to becoming an additional intelligent resource, addressing the increasing shortage of both administrators who are well trained in current systems and the time needed to train them. This will increasingly bring to light IBM's massive investments in artificial intelligence, as the systems can be expected to demonstrate immediate benefits that will only multiply as the technology gains experience and intelligence. It is a path that highlights IBM's greater historic stability as well as its massive and continued R&D investment in intelligent systems.
Both HP and IBM are optimizing around their distinct sets of resources, and the results they demonstrated this week are dramatically different. HP is responding the threat and problem of public cloud services entering the enterprise, while IBM is jumping to intelligent systems and has its sight set on dominating the future. Both companies will eventually have to address what the other announced, but, this week, their differences reflect the unique position each firm occupies.