Andy Isherwood, the UK managing director of HP, is a tough man to interview. It wasn't that it was a tough interview - on the contrary, he is very approachable. It was more that it was difficult to get him to deviate from the HP corporate message.
HP is a company with considerable strengths and considerable problems. Isherwood can’t avoid the issues, but he acknowledges them in a remorselessly upbeat way.
The company, he says, is halfway through a five-year turnaround plan and everything is (obviously) going great guns. But then most tech companies that survived the 2008 crash have seen some recovery.
And for HP, the issues remain, including U-turns on whether to stay in or leave the PC market in the face of a dramatic decline in the number of units sold, a stumbling mobile strategy and question marks over its success in the far higher margin services sector.
Its 2008 purchase of EDS, one of the world’s largest outsourcing companies, was far from trouble-free and continues to be challenged. In the UK, for example, Isherwood is facing issues such as government restrictions on contract size, so the questions about how the IT giant continue to recoup its fortunes over the remaining two years of the plan remain.
The UK MD role is a new one for Isherwood, who describes himself as an “evangelist” of HP. He was appointed to the role in October 2013, but Isherwood joined the tech giant 25 years ago straight out of university with a business studies degree - shunning a job offer from IBM because HP paid a bit more - when the company was worth a mere $4 billion and employed 70,000 people. When he came on board, HP’s founders, David Packard and William ‘Bill’ Hewlett, were still around to eat lunch alongside employees in the canteen.
This demonstrates how “incredibly personable” the company’s founders were, according to Isherwood, who describes their management style as “management by walking around, management by objectives”.
During his time at HP, Isherwood has seen the company grow to a $125 billion company with around 300,000 staff. Though the latter number is expected to fall after the company announced 16,000 job cuts in its latest quarterly results. Isherwood claims that current CEO Meg Whitman has brought the founders’ traits “back” to HP, when she joined from online auction giant eBay in 2011.
“She truly is a people person and she truly is a humble person,” Isherwood gushes. “She will listen to everyone and anyone.”
When asked how Whitman differs to past HP CEOs, it is telling who Isherwood name checks - and who he fails to mention.
“I’ve seen a few CEOs, from John Young (1978 -1992) to Carly [Fiorina] (1999 - 2005), all the way through to Meg,” he says, omitting Mark Hurd (2005-2010) and the CEO Whitman replaced, Leo Apotheker (2010-2011).
Hurd, now president at rival Oracle, resigned from his position as HP CEO in August 2010 after he was investigated by the company over allegations of misconduct. He was accused of sexual harassment by a former independent contractor at HP, Jodie Fisher, and although HP’s formal investigation of the allegations cleared Hurd of sexual harrassment, it found that he had at times submitted inaccurate expense reports that were intended to conceal or had the effect of concealing his close personal relationship with Fisher.
Apotheker, who joined from SAP, lasted less than a year in the HP role. Many of his decisions and announcements as CEO were unpopular, such as talk of spinning off HP’s PC division, which sparked a major downturn in the company’s stock price.
But Isherwood has nothing but praise for the “down to earth” and “collaborative” Whitman.
“She listens intensely to customers and partners, she focuses on the external not the internal, and she’s built a team which is of strong team players rather than strong solo players,” he says.
“We’re seeing that increasingly filter down the organisation. ‘One HP’ is about what we can achieve together, not about what we can achieve in printing or in services.”
The fact that HP is on track to achieve the goals Whitman set out in the five-year turnaround plan she implemented when she joined is an indication of the new management style working, says Isherwood.
“We’re in year three, we’re growing in year three, that’s what we said we’d do, and importantly we’re delivering on the technology roadmap and innovation,” he says.
‘New style of IT’
While HP continues to develop new products - the company invests $4 billion each year into its two R&D centres in Bristol, UK, and California, and created over 36,000 patents last year - it is the services side of the business that Isherwood is keen to highlight, to deliver what he refers to as the “new style of IT”.
When HP announces a new product, “It’s not just about a new product, it’s a new way of doing things,” says Isherwood.
“[It’s about] how do we take people through this major change to a consumption-based, service-oriented world, while protecting and helping them through that transaction. My job andHP’s job is to bring these new technologies and services to deliver on the ‘new style of IT’.”
But it sounds like this is just a long-winded way for Isherwood to refer to HP as the “number one” provider of private cloud.
“Our skillsets are about advising people on which workloads to do in-house, which to move to the cloud, which to have in a hybrid environment,” Isherwood says.
This is “probably” the biggest infrastructure topic that HP customers are asking about, and he believes that hybrid cloud “is the way forward”.
“That’s what I’m hearing from customers. There are very few customers that would say we’re going to move all of our workloads, all of our systems and processes to a public cloud. That is not happening today. We’re not seeing it today apart from at the very low-level SMB level,” he says.
“Our view is, look, we’re the number one provider of private cloud, hybrid cloud, and hybrid cloud feels what the customers are asking for today.”
CIO = Chief Innovation Officer
With cloud services becoming more common and accessible to the whole business, Isherwood recognises that IT requests are not just coming from the IT department anymore. He believes that CIOs need to embrace this trend, not stop it.
“Their [CIOs] role evolves into the chief innovation officer,” he says.
“Why does chief marketing officer (CMO) want to invest in a digital maketing solution? One is because the tech is out there, that he can buy on demand, but secondly, he’s at the forefront of what he does and it’s really important that he has the latest and greatest tech to enable him to be effective.
“For me, the CIO needs to think and work with that CMO to work out what his requirements are, whilst developing and delivering on the core infrastructure to deliver it, or to provision it.”
HP itself has ‘embraced’ this by appointing a CIO, John Hinshaw, who is head of both technology and operations.
“Because [Hinshaw] owns operations as well as technology, he can link these two things very closely. The business process and the technology is not one or other, they’re always very intertwined,” says Isherwood.
“The CIO needs to do more of that and he needs to be more of the person thinking and helping those CXOs to be at the front end of the innovation curve, otherwise they’re just going to be left behind.”
‘Citizens respect what we do’
During the interview, Isherwood makes a big deal of the large size of HP and its history. While it is a testament to the company’s success, it is also a risk for the tech firm - at least in the eyes of the the UK government.
At the beginning of the year, Cabinet Office minister Francis Maude announced that no new IT contract would be allowed to be worth more than £100 million in value, unless there is an exceptional reason for it. This is the government’s bid to increase competition in the sector, and to free departments from longstanding, inflexible contracts with large IT providers.
HP has a large number of public sector contracts, including an £88.1 million contract to provide hosting payroll and HR services to the Ministry of Justice, a £13.5 million contract to provide IT support to the Ministry of Defence and a £316 million desktop deal with the Department for Work and Pensions (DWP). It recently lost a £350 million desktop outsourcing agreement with the Foreign and Commonwealth Office (FCO) to Computacenter.
“People are getting confused [that] big technology companies are so-called ‘not good’. I look at it differently. I think, we do a huge amount for citizens. I think citizens understand what we do, respect what we do and are pleased with what we do,” says Isherwood.
“I think there’s then a discussion of, so why does government want to change that? Quite often, I think it’s a lack of understanding of how we manage contracts effectively. What are the expectations of government at a central level and what do we deliver? Are the contracts delivering value for money? I would say they are.”
However, he concedes there are areas of improvement to be made in the relationship with government: “I’d say the communication and connection between central government and technology companies is probably not as good as it could be. So I think there’s a great opportunity to do that better.”
Isherwood also warns that the government is taking risks by not awarding contracts greater than £100 million.
“The danger with that is you don’t create economies of scale, which I think is very important. I think you end up creating short-term contracts that are typically ineffective, and there’s also a little known fact that it’s not just about HP and other companies like us delivering big contracts, because we actually employ a huge amount of SMEs within the supply chain,” he says.
“It’s actually quite difficult doing business with government. Smaller companies have pulled out of contracts with government [because of the difficulties].
“So there has to be a role for HP in making sure we can deliver through the SMB and SME communities, but also deliver value to government. I think that’s the balance we strive to achieve.”
‘We always catch up’
Although Isherwood is slick in his delivery of the positive HP message, he at least has enough self-awareness to admit that the tech giant has had its failings.
“Potentially, we’re late to the market in some places,” he says. “But we always catch up, and we always will.”
Fighting words indeed. Let's hope he sees another 25 years of HP delivering on these promises.