HP Details Multiyear Roadmap to Turnaround the CompanyOctober 3, 2012
The printing group within HP PPS has been focused on developing new business models such as Ink Advantage, a program targeting price-sensitive customers in emerging markets that has expanded to 82 countries, and the Ink in the Office initiative, which is targeting business customers. The group has expanded differentiated services and solutions by leveraging HP’s portfolio of hardware and software, including combining multifunction printers with Autonomy management solutions to develop cloud-based document management services.
HP Enterprise Services
Mike Nefkens, acting global HP Enterprise Services leader, and JJ Charhon, senior vice president and chief operating officer, HP Enterprise Services, will give an overview of the turnaround plans for HP’s Enterprise Services group. Due to several factors, including exceptional runoff in four major accounts and selective pursuit of deals to ensure the appropriate margin structure, HP anticipates revenue declines of 11 to 13 percent in fiscal 2013 with operating margins between 0 and 3 percent.
Nefkens and Charhon will outline a detailed turnaround plan for HP Enterprise Services with the objective of driving margin improvement over time. The four pillars of the strategy are: improving the portfolio through innovation in the core and expanded offerings in higher-growth services such as cloud and information management; strengthening accountability and empowering account executives; optimizing the cost structure with a focus on account performance and improving account performance; and improving operating excellence with tools and processes and a formalized operating cadence.
Nefkens and Charhon will lay out an expected long-term operating model with HP Enterprise Services growing revenue at 3 to 5 percent annually, operating margins between 7 and 9 percent, and 15 to 25 percent return on invested capital.
Long term, the company expects to improve the mix of services revenue so that about 80 percent of HP Enterprise Services revenue comes from the company’s core data center, applications and business process outsourcing, and 20 percent of revenue is generated by the higher-growth, higher-margin services including cloud, security, mobility, applications modernization, transformation and integration, and information management and analytics.
HP Enterprise Group
Dave Donatelli, executive vice president and general manager of HP’s Enterprise Group, will address the company’s strategy to transform the infrastructure industry and lay the foundation for widespread cloud adoption. The HP Enterprise Group has brought together its industry-leading server, storage, networking, management software and technology services offerings to deliver Converged Infrastructure solutions for enterprise customers that will help them make this critical transition.
Donatelli will detail the company’s strategy to simplify the HP Enterprise Group’s product portfolio through common architectures and convergence. By selling Converged Infrastructure, Converged Cloud and Software-defined Data Centers, HP expects to grow over the long term both revenue and market share in the key areas of networking, storage and cloud, while increasing revenue from HP’s industry-leading x86 server business. In addition, the company’s Project Moonshot is developing new ultralow-power server technologies that will address the fast growing HyperScale server market. HP was the first large server vendor to announce these servers, and the company expects that by 2015, ARM and Atom servers will represent 15 percent of the global server market.
George Kadifa, executive vice president of HP Software, will detail how HP’s software portfolio has grown through organic innovation and acquisitions to become the world’s sixth largest software company. Today, HP Software serves almost the entire Fortune 100 with No. 1 and No. 2 leadership positions in key segments within the enterprise software market, which is expected to grow to a $54 billion market in 2015.
In addition, Kadifa will talk about how HP Software is focused on integrating its acquired businesses and technologies with its existing software portfolio to deliver innovations in cloud management, security, big data and meaning-based computing.
HP Converged Cloud update
Finally, Bill Veghte, HP’s chief operating officer, will present an update on the company’s progress on Converged Cloud. He will detail how the company is developing and delivering the essential components and solutions for businesses to build and consume all forms of cloud offerings. HP’s approach is differentiated by its ability to give customers choice in platform and delivery model with confidence in management and security to deliver an enterprise service level agreement. The company grew cloud revenue 39 percent in 2012 to nearly $4 billion, making HP the world leader in cloud infrastructure. Veghte projected that estimated cloud revenue for the company would continue to grow, reaching $8.4 billion by 2015.
HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. The world’s largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure to solve customer problems.