The soft centre at the heart of HP’s universe

HP EMEA’s recent Software Universe event drew attention to the technology giant’s renewed efforts to make its software division a key area in its strategy for growth

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By  Peter Branton Published  January 22, 2006

|~|keynote-stagebody.jpg|~|Over 3,000 delegates attended the HP Software Universe event in Nice, France, last December, spurred on in part by the firm’s software business returning to profitability. |~|When former HP CEO Carly Fiorina launched her takeover bid for Compaq in 2001, the stated reason was taking on IBM: the merged company would be better able to compete on all fronts with Big Blue was the message to investors. However, while IBM has one of the largest software portfolios in the IT industry — generating some US$15 billion in revenues annually — HP’s software business is still something of a comparative minnow, contributing around US$1billion, according to its executives. Fiorina has now parted company with HP, and when new CEO Mark Hurd took the reins in March, many analysts did not see software as one of the key areas that he would focus on. However, Hurd has gone on record as stating that he sees HP’s software business as not only a key focus area for the firm, but also one of its best assets. A view that is perhaps even more surprising, as historically, software is an area that HP has struggled to actually make any money from. “Typically you think of the software business as high value but in fact at the time of the merger our software business was losing a lot of money,” Russ Daniels, vice president and chief technology officer for HP’s Software and Adaptive Enterprise, Software Business Unit, acknowledges, almost cheerfully. When the merger was taking place, the software business also didn’t get much attention in the “cleaning room” — the business unit that HP set up to oversee all processes of the two companies — because there was little overlap between HP’s software lineup and Compaq’s, Daniels says. The result was that when the merger was actually completed, “we spent the first six months cleaning up what Nora referred to as random acts of software,” Daniels goes on to claim. Nora is Nora Denzel, formerly senior vice president and general manager of HP’s global software business, who resigned unexpectedly late last year, citing “personal reasons”. Having just returned the software business to profitability after five years of mostly delivering operating losses, her departure was certainly something of a surprise: she had been scheduled to deliver the keynote speech at the HP Software Universe event in Nice, France, in December, but pulled out with just a few days to go. Since Software Universe is one of HP EMEA’s most high-profile events, with over 3,000 delegates attending, her absence might have been expected to cast a shadow over the whole event. However, HP seems currently set on talking up its software business, probably helped in no small way by that above-mentioned return to profitability. The software business is also arguably attracting more attention than ever before, with HP making some high-profile acquisitions last year, most notably the US$425million capture of Peregrine Systems in September. At Software Universe, Andy Isherwood, vice president and general manager for HP’s software business for the Europe, Middle East and Africa (EMEA) region, told delegates that Peregrine was just one of 11 acquisitions HP has made in the software space in the past two years to bolster its OpenView systems management software line — the main product in its software portfolio. He said that HP is the market leading company in the world in the distributed systems management space, an area which analysts believe could be worth as much as US$8.9billion by 2009. Further, while attention is focused on OpenView, 100 million subscribers currently use its Open Call telecoms software worldwide — the other key product in HP’s software portfolio — he also claimed. ||**||Strategic focus|~|Isherwoodbody.jpg|~|Speakers at Software Universe included Andy Isherwood.|~|Incidently, DeLaugher is ruling himself out of taking on the job of delivering that strategy, insisting he is not looking to make his acting role permanent. HP is currently assessing a range of candidates for Denzel’s post, both internal and external, and when the appointment is made DeLaughter will revert back to his role as head of the OpenView business only. Both DeLaugher and Daniels agree that increased automation is going to be one of the key issues facing the systems management software business in the future. Actually, HP is banking on automation being one of the biggest, if not the biggest, issue facing the entire IT industry. In fact, it is perhaps here that Hurd’s support for the software business can be explained. The HP boss told securities analysts in the US last December that the company was going to focus heavily on automation of data centres as a key business area. While outsourcing and offshoring (the transfer of labour to cheaper overseas companies) have been causing controversy in recent years, Hurd says it is automation that is going to emerge as the key IT cost-cutting tool in the years ahead. There is logic to this. People may or may not be a company’s biggest asset, but increasingly they are proving to be a big cost. “People costs are the biggest budget item in IT spending and these are growing quicker than the rest, so it makes sense to look at how you can reduce these costs,” says Dr Thomas Mendel, vice president at research firm Forrester Research. He believes that automating processes is going to be increasingly important, in fact essential for IT departments in the next few years. “We are going to see increasing pressure on CIOs to deliver IT value versus costs,” he says. In that world, then what DeLaughter describes as the “lights out” datacentre, where there are few technicians to run it, makes for an attractive proposition. However, HP is still a long long way away from achieving this level of automation for its own IT business, let alone selling the concept to other firms. For now, HP is focusing on convincing business users that OpenView can help with what Daniels describes as one of “the key IT pain points”, the failure of line of business managers to connect properly with IT managers, and vice versa. Dashboard help In all too many organisations today, the line of business manager does not have a clear idea as to just how IT supports business processes, or indeed how it can be used to improve them. At Software Universe, HP announced a number of product enhancements designed to address these issues. These included a ‘dashboard’ system for OpenView, software which allows users to see real-time information on their systems, as well as improved business process reporting and better integration with the Service Desk feature on OpenView, designed to help that all-important push towards automation. OpenView Dashboard 1.0 may have been received with some puzzlement by delegates, dashboards having been around for a number of years in the industry, but DeLaughter insists it is a strong development for HP. “Dashboards aren’t new, but what we’ve done here is unique,” he claims. “This allows you to bring in data from different management solutions to be presented on the dashboard,” he adds. Thus, users can bring in data from, say, their financial services applications as well as their telecom applications to get information about how the business is performing across a range of functions. This could cover events, outsourced components, security attacks and other incidents, all reported in real-time. By linking this function in to the OpenView Service Desk, IT responses can be automated, cutting down on staff time needed to deal with incidents, for instance security attacks. The Service Desk functionality overall was improved with the launch of version 5.0, which includes new reporting tools and a web start tool. HP has also worked hard to make Service Desk more compliant with the Information Technology Infrastructure Library (ITIL) change management process, a key area that HP is pushing for OpenView deployment. Customers in the Middle East that are using OpenView to help deploy an ITIL-based solution include Emirates Airline and Etisalat (see IT Weekly 8-14 October 2005). The upgrade to the business process software, HP OpenView Business Process Insight 2.0, also attracted a lot of attention. It allows business managers to check on the “health” of the IT infrastructure and see that it is delivering on pre-agreed business measurements. This makes it easier to set and regulate service level agreements. Along with the dashboard functionality, Business Process Insight effectively allows the IT department to present information about how IT processes are performing in ways that line of business managers can not only clearly measure, but perhaps more importantly, clearly understand. As HP executives acknowledged none of these product enhancements were massively significant by themselves, but the aim was to show that the software business is progressing on the right lines. With senior management (and they don’t come more senior at HP than Hurd) clearly backing software as a strategic part of the mix, the future looks healthy for HP’s software business. ||**||

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