Service and software

Robin Purohit, HP discusses relevance of SaaS to enterprises, during trying financial times

Tags: Economic crisisHewlett-Packard CompanyUnited Arab Emirates
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Service and software Our view on SaaS is that it is a service level agreement. - Robin Purohit, vice president and general manager of information management for software at HP.
By  Sean Robson Published  January 24, 2009 Network Middle East Logo

Hosted services, together with software-as-a-service (SaaS), are markets that will take on increasing relevance. How much emphasis will HP be placing on these sectors in the coming years?
We are now ranked among the top 10 SaaS providers in the industry. In particular, because of the economic environment we will be pushing more aggressively with our sales, though we have half to two thirds of our portfolio in there already.

I believe that the archiving software market and the back-up market will survive the downturn even in the Middle East, because you will see the regulatory environment become even more important.

This is a little bit of a weird beast and sometimes our sales people are not sure on whether they should introduce it or not, or whether it's insulting to the customer to say we will run it for you, but I believe that this conversation will change. It's not so much as whether we push the offering, but whether or not our sales people get more confident about having that conversation with clients.

I think in particular this applies to elements like monitoring and testing, its not core competence for most companies to want to run these themselves. They would rather get the benefit out of monitoring, use the testing capabilities, but is there a lot of unique added value that they can create from running the tools themselves? Probably not, so letting us do it for them is a better proposition.

When it comes to SaaS, how responsible should software vendors be to ensure that the service meets the requirements and standards of enterprise customers?
It's critical. As far as we are concerned, we are not a cloud provider, we are a SaaS provider. In my opinion, the cloud is a very organic thing; an individual makes a decision to use the service in the cloud and then tomorrow they decide to stop and go to another monitor. The cloud is a much more dynamic environment.

Our view on SaaS is that it is a service level agreement. When we do a SaaS agreement with an enterprise we would sit there and present our service level agreements, negotiate it and then make sure we adhere to them. We do monthly check-ins to make sure we are doing what we said we would do.

To HP, it's an extension of our services arm versus just a cool way to deliver our software, especially because of the type of products we are selling in SaaS; they are business critical monitoring and business critical testing. They are really essential functions and you cannot take them lightly. It's not like just putting your e-mail or sharepoint in the cloud.

What sort of adoption have you seen for the Business Technology Optimisation (BTO) software portfolio, its expansion and add-ons?
I would say that adoption has been very good if you just look at the raw growth and the size of the business now. Revenue of US$3 billion worldwide through licence management services is pretty significant. So for us it's not about whether our strategies are being adopted, but how do we win everywhere.

Our size of business means we want to win mid-market enterprise customers, we want to win all over the world and want to have a network of channel partners increasingly educated to take to market.

One thing we are doing in the quality management area is using very high value channel partners, like SAP. So SAP sells our quality management products as part of every SAP upgrade they do. And just a month ago we agreed to let them sell that to non-SAP markets, because they were seeing so much value being created for customers.

We are always looking to expand our presence but we think that we have significant growth left. In the area surrounding applications the broader strategy is about the application lifecycle. We are getting a little out of our traditional business to extend to this new space and cover the entire operations aspect with our methodology and approach.

That will take us to more head-to-head competition with IBM‘s rational product line, but we believe that in the operations space there is still a lot of space left. Customers are going to want to go with fewer trusted vendors.

Data storage is a massive issue for enterprises around the world as well as the Middle East. What challenges does HP face in addressing this need?
My information management business in the Middle East is doing very well. Apart from just managing information growth, we are also seeing that almost all of the Middle East's oil companies are preparing themselves to have western regulations applied to them.

With all of the market fluctuations there are a lot of regulatory actions, regulatory investigation and price fixing issues cropping up. All of the Middle East's oil companies I have spoken to are anticipating this coming trend.

We have been very successful in establishing our back-up software and our archiving software in particular, which allows us to wrap ourselves around all that unstructured content - e-mails, sharepoint, content management systems. It makes sure that it is retained according to regulatory policies and then can be easily located. This whole process, which is known as e-discovery, is a very hot one for us in the region.

I believe that the archiving software market and the back-up market will survive the downturn even in the Middle East, because you will see the regulatory environment become even more important. That's akin to what I saw in 2001, I think the same thing will happen this time.

In emerging markets, hardware still remains the primary component of any IT budget. What is HP doing to turn this to more software-oriented purchases?
You have to have the business value conversation. We are in an interesting place because for us at HP it's not about ‘buy less hardware and buy more software'.

We do two things, we show how our software in some cases, like in the storage area, can add value to the hardware environment by doing more with it and being smarter with it.

I was in the hardware business for years and it is a different conversation with customers, it's about price performance versus the competition and now it's about power and cooling as well.

It's a spec level conversation, where software is all about what values you can bring to my enterprise. Show me how you can cut the labour cost, show me how you can do something that somebody else can not and why I should pay a premium. So we just become very good at focusing on those business problems with the customer.

What I find interesting is that if you do that properly the IT people will involve the business stakeholder and all of a sudden there is more budget available. That is very different from hardware where the budgets are extremely centralised.

In software, if you position yourself carefully, and add value to finance departments or marketing departments, then there are other budgets that will apply and you can expand the pie. This is where I think BTO has been very successful for us.

Increasingly, software companies are moving into security. Are we likely to see HP get more into this space in the near future?
We have a very important thrust around applications security, and particularly web applications security. We bought a company called SPI Dynamics last year.

If you think about all the companies that have put up web portals or built web interfaces into their enterprises the vulnerabilities are pretty extreme. Most applications have not been designed to be firewalled or to prevent someone from extracting data so there are all sorts of exposures in there, which can be potentially very detrimental to an enterprise.

We have a complete suite of products that will allow us to show customers where those vulnerabilities are, how to test them so that as you are releasing applications you can detect when an application will be vulnerable and design the relevant patches into them to secure them.

We are not a big security player yet so we are trying to find these pockets where there are new problems such that we can innovate there.

What impact will the coming year and the global financial crisis have on growth, specifically in emerging markets like the Middle East?
I think the reaction to this crisis is very different to what we saw in the previous downturn in 2001. I have been tracking things in the Middle East, and although a few enterprises are turning some knobs back, I think they learnt a lot of lessons and got their cost structures in order after the last bubble burst. So for them it is a matter of re-prioritising, adjusting and doing some of the smart things we have been talking about.

But I can see that in some of the other emerging countries the opposite is happening due to the amount of cash available. It took a year in Silicon Valley for the reality to set in and that could be the same in the region.

It is an interesting time that we find ourselves in and so the strategy that we have been advising our customers on is even more important now than ever before. We have always taken the view that IT should not only be run like a business, but everything that IT does should be linked to the business, because otherwise why are you doing it. In a time like this it becomes of paramount importance and we are not stopping with this approach.

In terms of the Middle East and emerging markets, what sort of investment in staff will we be seeing or will expansion be frozen at HP?
We have a very strong international presence. One of the unusual things about HP is how much revenue comes from outside the Americas. In the software business, however, I think we have a long, long way to go.

So as I work with my team on the business plan I have told them that Eastern Europe, the Middle East and Asia Pacific-Japan are where we are going to be able to double our business. We actually don't even have a very big market share in our largest markets in those territories.

I think that this is because even though HP has been there, HP Software has not had the channel partners, or a software sales force built up as we have done effectively elsewhere, and the companies we have acquired were not strong in these emerging markets. We are now shifting a lot of our focus onto the emerging markets.

Similarly, when I was with Veritas back in 2001 we had just hit a billion dollars when the bubble collapsed but the next few years we doubled our business. Take into account that our licence growth in the Americas at the time was flat, and so all of our licence growth came from overseas, so basically we went where we had not been before. Simply put, this will be a big part of our strategy.

I think we have done pretty well in the Middle East specifically. We have recently had a lot of presence for HP Software in the region. It is something I have been speaking with management about, how is that going to shape out?

Are we going to see the same type of demand or should we shift our energies to SE Asia? We haven't made any decisions yet, but I think we are watching the same sort of suspended belief in the region as regards the financial crisis.

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