Global CIO: HP CEO Apotheker Has Deep Expertise But Checkered History

Sep 30, 2010 (03:09 PM EDT)

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Hewlett-Packard's clearly excited about new CEO Leo Apotheker, noting that he was a "driving force" behind SAP's growth, a "strategic thinker" with "proven operational discipline" demonstrated across his two decades at SAP, and remains "a leader in anticipating the transformation taking place in our industry."

I wish HP and Apotheker well as they embark on what is without question an incredibly important new chapter for HP and in the wake of several weeks of relentless questions about the company's board, its leadership, its strategy, its stock price, and its prospects. (See my colleague Alex Wolfe's news story on HP's much-anticipated announcement here.)

With 300,000 employees and a proud history and deeply strategic engagements with thousands of large corporations around the globe, HP has been and will very likely continue to be a source of vibrant technological innovation, aggressive competition, and laudable corporate citizenship.

And perhaps Leo Apotheker will far exceed HP's expectations for him to be the visionary seer and disciplined manager and transformational force.

Perhaps. And perhaps not.

Let's take a look back just eight months ago at the state of SAP when Apotheker was ousted by chairman Hasso Plattner at a time when the company had clearly lost its way in the market, was getting hammered by Oracle, seemed unable to get vital new products out the door, and was frighteningly out of touch with its customers.

I know, I know—HP is not SAP, and perhaps Apotheker heroically salvaged what he could at SAP, and maybe without his self-sacrifice the company would have unravelled completely and been acquired by NetSuite. All things, as they say, are possible.

Two examples of possibilities that turned into realities during Apotheker's final months as CEO: Oracle certainly found it possible to dramatically close the gap between it and SAP in enterprise-applications market share, and SAP customers found it was possible to threaten mass rebellion when SAP announced an across-the-board hike in annual maintenance and support fees, a potential disaster from which SAP backpedalled.

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Here was the state of SAP at the time of Apotheker's ouster in early February: Plattner said SAP had lost the trust of its customers and its partners, and that SAP employees were "not happy" employees. He said the company's development models were outdated. You can read extensive analyses of Plattner's comments, as well as his verbatim remarks themselves, in these two columns: Global CIO: An Open Letter To SAP Chairman Hasso Plattner and Global CIO: SAP's Last Chance: It's The Customers, Stupid!.

To me, though, the most-dangerous of all the troubles swarming SAP at the time of Apotheker's departure was the stunning disconnect that existed between, on the one side, 99% of SAP's customers, and on the other side, Apotheker and Plattner. Here's how I described that disastrous schism 8 months ago when Apotheker was forced out and co-CEOs Bill McDermott and Jim Hagemann-Snabe were appointed:

"Plattner and other SAP executives have had spectacular and long-term success with some of the world's largest companies, which have each invested at least many tens and often many hundreds of millions of dollars with SAP. And Plattner and SAP have every right to be enormously proud of those relationships and those outstanding achievements. But their myopic mistake has been to project the mindset of those top 100 accounts toward SAP across the wildly diverse universe of 90,000 SAP customers worldwide. Plattner said that at a conference with those top 100 customers, they all expressed nothing but unfettered joy and happiness at SAP's maintenance fees and quality. So SAP based its disastrous decision to announce significant maintenance hikes for all of its customers on the input from those 100. How could that happen? More important, how can SAP change the mindset and culture that allowed such narrow and amateurish thinking to prevail?"

That's the primary reason—but certainly supplemented by all the others I've mentioned and that are described in extensive detail in those two columns—why I'm scratching my head a bit over the HP board's decision. Let me turn that head-scratching into some specific questions:

  • How will Apotheker—at a company eight times larger than SAP was when he left it—avoid the same mistakes that weakened the company and got him fired?

  • How will someone who's spent his last 20 years in the world of enterprise applications project onto HP the vision to transform a company whose products consist primarily of hardware and include zero enterprise applications?

  • How will Apotheker prove himself capable of immersing himself in the needs and desires and requirements of his extremely demanding legions of global customers, and then use what he's learned to remake HP?

    I realize the guy hasn't even worked his first day yet, and that what I'm asking will require many months of work. But I also know that, over the past eight months, his replacements at SAP—McDermott and Snabe—have been leading and are continuing to lead a sweeping and end-to-end overhaul of how SAP develops products,how it interacts with customers, how it positions its products, how it defines and delivers value to its customers, and how it presents itself to the world.

    We also know that if Apotheker leans on his history in shaping the future of HP, then HP will be moving aggressively into the field of applications. And that the twin forces of market demand and HP's expansive engineering prowess will lead HP to optimize the performance of its vast line of hardware products with those likely additions to HP's software roster.

    And that means HP will be competing much more aggressively with its two primary rivals: its clear enemy, IBM, and its love-hate object, Oracle. You know—Larry Ellison and former HP CEO Mark Hurd.

    So it's fitting that in one of the comments attributed to Apotheker in the HP press release announcing his appointment, Apotheker says this: "As we move forward, HP will continue to be a valued partner with our customers as well as a fierce competitor."

    Truer words were never spoken, because the competition with Ellison and Hurd and IBM will bring new meaning to the word "fierce." But even before Apotheker fully commits himself to those wars without end, he will need to ensure himself, his colleagues, his customers and his partners that he's really got HP's house in order.

    Because based on his previous tenure as CEO of SAP, Leo Apotheker has much to prove.


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    Global CIO: Larry Ellison Is Rewriting The Golden Rule Of IT Strategy

    Global CIO: IBM Doubles Down On Red-Hot Optimized Systems

    Global CIO: The CEO Of The Year Is SAP's Bill McDermott

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    GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

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