Q&A: HP's Carly Fiorina

Hewlett-Packard Chairman and CEO Carly Fiorina last week addressed HP's Americas partners, underscoring their $50 billion contribution to HP's $73 billion in annual revenue last year as well as their critical role in the success of its Adaptive Enterprise strategy. Afterward, Fiorina fielded questions in an exclusive interview with CMP Media Channel Group President Robert Faletra, VARBusiness Editorial Director Robert C. DeMarzo and CRN Editor Heather Clancy.

Q: What do you need to do and what do partners need to do to be successful in HP's Adaptive Enterprise strategy, specifically as it compares to IBM?

Fiorina: You're right, the main battleground is IBM because Dell is not a technology company, they're a distribution company. There are really only two technology companies of any magnitude. So fundamentally, the Adaptive Enterprise is about more than a single contract or a single buzzword around technology. It is about HP and our partners working with our customers to enable them to think differently about technology, use technology differently--not just for the short term, but for the long term. And I point that out because I think it's really important for our partners to understand this is about the creation of a long-term relationship. The Adaptive Enterprise is a journey that our customers take and that we and our partners can take together with them. We will not be successful in the Adaptive Enterprise without our partners, and I mean partners broadly there. Because the Adaptive Enterprise looks at an entire business' organization. This is about process, application and infrastructure.

On demand, as IBM describes it, is a technology sale. It's one solution to a particular problem. Our competitive solution to on demand is utility computing. Utility computing is a solution that we sell with our partners; it is one piece of the Adaptive Enterprise.

Q: You mentioned that companies are in different stages when it comes to becoming an 'adaptive enterprise.' Is there a commonality about where most of them are starting?Fiorina: Most customers tend to realize that they are adaptive enough as an enterprise because one of three things happens. Either they realize that they are not utilizing the technology investment they've already made. So, they kind of look around and say, 'Gee, I'm only using 50 percent of the capacity I've invested in.' Secondly, they look around and they say, 'I can't get a hold of the information I want, and because I can't get a hold of the information I want, I can't make decisions fast enough, or I can't execute effectively the decisions I'm going to make.' Example: 'I want to introduce a new product. I want to introduce it in every country in which I have business, and I want to do it all at the same time.' A lot of companies literally can't do that because they don't have the information to support that. So, that's another kind of revelation that people have. And the third revelation that people have is that they're spending too much money because they are duplicating investments. They're duplicating investments, they've built more complexity into their system than they need to. I was speaking with a CIO who said, 'You know, I have 23 supply chains; I probably need nine.'

So, all the way back to your earlier question. One of the things that we want to do, that we want to do with our partners, with customers, is we go in and we assess. Where is someone? And we assess across time, range and ease. Time: How long does it take you to execute a decision that you want to make? Range: How broadly can you deploy a decision? Can you introduce that new product in one country, or can you do it in 20 countries? And ease, how much money and time does it take you do so something?

Q: What products do you see as being most fundamental to the Adaptive Enterprise?

Fiorina: The Adaptive Enterprise has become a strategy road map for us. So we literally have every product, service, solution and software we sell is part of the Adaptive Enterprise. The decision to focus on the Adaptive Enterprise is focusing our choices on a day-to-day basis. So, we are very focused on virtualization in the storage space. A lot of the storage offerings we have delivered over the past 12 months have been delivered in a particular way because of the Adaptive Enterprise. The software acquisitions in the last six months are all very specifically driven by a road map that comes from the Adaptive Enterprise that says, 'OpenView traditionally has managed in this area' [Fiorina points to infrastructure on a quick schematic drawing]. We have to deliver a management software suite that permits customers to manage infrastructure, applications and business processes with a service-level agreement kind of granularity, and therefore we have holes in these places in our software portfolio, and we have been buying companies to fill the holes. So, the Adaptive Enterprise is a map against which our current products, services and solutions fit. It is a framework for our partners to engage with us, and it is a road map for our strategic direction going forward.

Q: How will HP Services change its role as part of this, and what will the partnering strategy be there?Fiorina: We rolled out the Adaptive Enterprise initially a year ago. So we have been evolving our own capabilities and building partner programs to help our partners evolve as we've been going along. A very simple example of what's different for our services organizationwould be the assessment service that I talked about before. Going in and assessing for customers, and this is something that partners, we need to train and certify and do as well. Assessing a customer's environment against time, range and ease. That's a capability we didn't have four years ago, even three years ago--the focus we have around ITSM [IT services management] and training ITSM capabilities for partners, for ourselves and for our customers. That's an example of an evolution we've been going through as a result of the Adaptive Enterprise.

Back to the earlier question of what partners need to do is, understand this, get lined up with this, build the skills and capabilities to help deliver this. But the good news about this is you don't have to be able to do everything to be successful. There are partners who add a lot of value in simplifying, standardizing, modularizing and integrating the infrastructure. That's really important. It's really valuable. Those four words that I talk about--simplification, standardization, modularization and integration--those are really powerful words and there's a lot of work to be done on those words. Because a lot of customers' environments are complex, not simple; they are proprietary and custom, not standard; they aren't modularized, which means that you have capacity in the wrong places, which is why most customers only utilize 40 percent; and they're not integrated, so applications can't talk to each other, servers can't talk to each other, and they need to. There's a lot of work to do around those four words.

Q: I'm curious, what does the channel need to do and you need to do to be successful in that space? Does the channel need to be built to be able to build a consultative process with process understanding? Do they need to know about how the processes happen and take a completely different sales approach? What skill set is not there, and what should they invest in? And what is HP's role?

Fiorina: I think the answer to that is something that I said very briefly in my speech. The first thing, and we have a session designed to help partners do this: They have to understand how to line up with the Adaptive Enterprise. So, one of the things we want to do with our partners is to lay out the piece parts of the Adaptive Enterprise. The standards, the partners, the solutions, the technologies. They're gonna get lined up in that framework. And the second thing is to begin to build skills to allow them to have their conversations within that framework. ...

Part of what we have to do is to begin to help partners build new skills. And it's not that everything you know is not relevant anymore--it's not throwing things out, it's adding to it.Q: You made an interesting Linux PC announcement recently in Asia. Can you talk about where you see Linux playing out in the enterprise market, and will we see Linux PCs in North America at some point?

Fiorina: To be very honest with you, the Asia press made more of that announcement than we would ever have guessed. The reason you're gonna see certain things like Linux PCs occur in a market like China is because the cost points are so different, the price points are so different and the customers' requirements are very different. Linux-based PCs, in my judgment, are going to be an application for developing markets with very stringent price point requirements, and they're going to stay there for some time. It's not to say that Linux will never come to the desktop. Eventually, Linux will come to the desktop, but we have a long way to go before Linux comes to the desktop and meets the requirements of a developed market like the U.S.

Q: What about on a grander scale?

Fiorina: We're the leading Linux server player in the world today, by a lot.

Q: You mentioned that your third priority was accelerating growth. What, specifically, do you expect in the enterprise area, which you said has been a challenging area?Fiorina: I'm not going to give you projections and numbers in the enterprise. The estimates we have for our business are out there publicly.

Q: Do you feel a greater sense of confidence about the enterprise today than you did at the end of 2003?

Fiorina: I've never been more confident in the competitive position of this company. Never.

Q: What is HP's responsibility in the security area?

Fiorina: Well, we have in the $4 billion of R&D that I talked about [in my keynote], we have four principal areas of focus in that R&D that cut across every product line in the business: mobility, management, rich digital media and security. So, our thrusts in security are everything from, Let's make sure that each and every one of our products has the right kind of security capabilities' to introducing new security software products; we introduced a couple of them in the last several weeks. To methods and procedures that customers can use in an Adaptive Enterprise to include security. So, security is such an incredibly important requirement that it is becoming a bigger and bigger piece of our investment across our entire business. Whether it's processes or services or software or products or how we help customers manage those things.0