HP's Hinshaw At Center Of 5-Year Turnaround Plan

May 07, 2013 (06:05 AM EDT)

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Talk about jumping from the frying pan into the fire. John Hinshaw joined Hewlett-Packard 18 months ago just as his former employer, Boeing, was struggling to get its flagship Dreamliner 787 off the ground and HP was flailing under its third CEO in a year.

Things are starting to look up for the Dreamliner, which last week resumed commercial service, with a domestic Ethiopian Airlines flight, following years of delays culminating with the grounding in January of the entire 50-aircraft 787 fleet because of battery problems.

At HP, meantime, the five-year-turnaround plan initiated by CEO Meg Whitman last year has entered its second year, as financial results start to show signs of progress even if board turnover continues to distract the world's largest ($120 billion in fiscal 2012 revenue) IT vendor. Under Whitman's turnaround plan, 2012 was about diagnosing problems and shoring up HP's process and infrastructure foundation. This year is about fixing those problems and rebuilding, before HP heads into the recovery and expansion parts of its strategy in fiscal 2014 and beyond.

At the center of HP's turnaround plan is Whitman's very first executive hire, Hinshaw. As executive VP of technology & operations, he oversees six broad areas encompassing 50,000 employees and contractors: the IT organization (now led by former Kimberly-Clark CIO Ramon Baez and the four business unit CIOs who report to Baez and to their business unit heads); shared services (such as payroll and marketing collateral); real estate (including data and operations centers); security (virtual and physical); sales operations (process and compensation); and global procurement.

Hinshaw says his operations responsibilities are a natural fit with his IT oversight, and he sees CIOs at other companies moving in this direction so that "IT-business alignment" is more of a starting point than an end goal. Expansion of the CIO role now tends to start at the "CIO-plus" level, he says: CIO plus procurement, for instance, or CIO plus shared services. He thinks it will go even broader.

Beyond aligning internally with business units, CIOs must start meeting more with end customers, Hinshaw insists. He estimates that he now spends 30% to 40% of his time doing just that, in his role as tech vendor as well as IT leader, though he concedes that he spent only about 10% of his time during his four-and-a-half years at Boeing meeting with its airline and government customers. "Today's CIO must be out with customers as much as possible," Hinshaw says. "They must make the time."

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In terms of HP's internal IT, former CIO Randy Mott, now at General Motors, laid a "good foundation," Hinshaw says, by consolidating 85 company data centers to six, and 6,000 applications to about 1,200, while requiring a rigorous cost-benefit analysis of every new IT project. But Hinshaw says that strategy focused too much on streamlining systems and not enough on improving system capabilities. And those cost-benefit analyses, he says, focused too much on internal goals, such as cutting the time it takes to deliver an IT project, and not enough on business goals, such as helping the sales team shorten the time it takes to turn around a quote for a customer.

Along those lines, Hinshaw oversaw what he calls the largest-ever deployment of software-as-a-service, rationalizing the tools and processes for 30,000 sales reps worldwide. He maintains that only 7% of HP's salespeople gave the company's previous on-premises Siebel CRM software a satisfactory rating, while 70% give the new system and process a thumbs-up. Granted, that's another internal metric, but he says the improved satisfaction among HP's sales team will lead to faster product delivery times and improved customer service.

SaaS is now the default software model at HP, Hinshaw says, owing mostly to the speed with which it can be deployed at large scale (HP's 30,000 seats were live in 18 months), its cost flexibility and the relative ease of upgrading. HP's sales team, for instance, will get a upgrade four or five times a year, compared with every 18 to 24 months with the Siebel software.

Elsewhere, HP will complete a 330,000-seat deployment of Workday's HR SaaS by the end of this year, a system that will get upgraded four times a year. HP's use of DocuSign SaaS for paperless management of contracts already has cut the time it takes the company to sign up a new distributor from about five weeks to four days, Hinshaw estimates. HP's also using Fieldglass SaaS to size up service vendors vying for HP's business and then procure services. And HP is evaluating BigMachines SaaS to accelerate its quote-to-cash process, as well as SaaS providers for billing and travel/expense management.

As for the company's global deployment of on-premises SAP software, which HP calls the largest on the planet, Hinshaw says MRP/ERP in the cloud at "HP scale" isn't quite ready for prime time. But he thinks it will be in three to five years.

HP is also a voracious user of its own tech products -- and an unabashed self-promoter of that usage. In the area of big data, for instance, it says it's using its own Vertica product to analyze click-stream data to better understand shopping behavior and patterns on It's also using Vertica to identify and group common sequences that lead to product warranty events, in an attempt to reduce warranty costs. And it's using its Autonomy software to prioritize its high volume of end-of-quarter orders according to profit margin and other factors so that the most profitable and important orders don't spill into the next quarter.

Besides big data, the other three technology megatrends in HP's current world are cloud, security and mobility. But it's not promoting itself as the be-all-and-end-all in each segment -- it's more rounded in security and big data, for instance, than it is in mobile and cloud. As for breakthrough innovations, Hinshaw called out HP's Moonshot ARM servers and 3Par StoreOnce Backup systems.

The company's turnaround goes much deeper than products. It's a hugely complex undertaking that requires turning a bureaucratic, culturally hidebound behemoth into a growth-oriented innovator worthy of its two legendary founders. Hinshaw says the culture was "confused" when he joined the company. Among the steps HP is taking to promote an entrepreneurial culture: All offices at the Palo Alto, Calif., headquarters, including those of the top execs, are now cubicles, encouraging co-workers to stop by or shout over a wall rather than plod through endless email strings or secure time on each other's calendars. "It really speeds our decision-making," Hinshaw says. HP has also formed a group called the "bureaucracy busters," whose 20 dedicated people from HR, IT, finance and shared services have started crowdsourcing ideas submitted by employees for improving the way the company conducts business. It's a start.

Hinshaw says customers want to see three main things from HP right now: stability and a consistent strategy (which it has had for 18 months); renewed product innovation (there are signs, but the jury's still out); and "one HP face" as they buy from multiple company units (Hinshaw's role across the organization is helping to grease those skids).

Even longer term, what HP also needs to build is an identity. Under the Mark Hurd regime, it was mostly about cost cutting and efficiency. Under the short-lived Leo Apotheker era, it was about exiting the PC and mobile device businesses (Whitman later pulled back) to focus on higher-margin software and services. Whitman, who Hinshaw calls "the hardest-working boss I ever had" and someone "who can fly at 100,000 feet as well as 500," seems content with maintaining HP's product diversity while emphasizing speed, agility and customer focus.

The company's laying the groundwork, but the heavy lifting is far from over.

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