Hurd's first move--reengineering sales

Hurd's first move--reengineering sales

Summary: During the conference call announcing the layoffs and restructuring HP CEO Mark Hurd explained his reasons for dissolving the company's Customer Solutions Group (CSG), which was tasked with sales to corporations, small and medium-size businesses and public-sector customers. The bulk of the sales organization will be integrated into the Technology Solutions Group, which will now both develop product solutions and sell to large corporations.

TOPICS: IT Employment

hurd.jpgDuring the conference call announcing the layoffs and restructuring HP CEO Mark Hurd explained his reasons for dissolving the company's Customer Solutions Group (CSG), which was tasked with sales to corporations, small and medium-size businesses and public-sector customers. The bulk of the sales organization will be integrated into the Technology Solutions Group, which will now both develop product solutions and sell to large corporations. The Personal Systems Group (PSG) will target medium and small business, and the Imaging and Printing Group (IPG) will focus on consumer sales. Hurd said that he doesn't like matrices, and that the multiple handoffs between CSG and TSG meant too many decision makers were involved in the process. "We are streamlining the accountability structure and creating a shorter line between the creation of an idea and delivery."  With the majority of layoffs coming from internally facing groups (HR, finance, IT), maintaining the R&D spend and refocusing its sales efforts, Hurd is making clear that HP's problems are more about internal processes and sales than product offerings.

Like his predecessor, Hurd will have to prove quarter-by-quarter that his decisions are paying off. When asked during the conference call how his performance should be measured, Hurd said that it should be the same way he measures HP's performance. Good answer...

Topic: IT Employment

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  • How is he measuring HP's performance?

    The two measures I believe should not be used are:
    - stock price
    - profits

    In both cases, layoffs and other cost reductions that eventually prove damaging have short term benefits. The stock market likes layoffs and reduced expenses can increase profits briefly.

    Remember when the evaluation of Ms. Fiorina's performance based on profits looked good? But that was only because post-merger layoffs happened faster than officially anticipated. We know what the final evaluation of her stewardship was.

    And if sales are being emphasized, the outward looking aspects of operations as you term them, shouldn't we expect there'd be no layoffs in this category? Doing more with less sounds fine, but with structural changes going on at the same time, ones with a learning curve, why should one expect that fewer people will be able to do substantially more?
    Have there been layoffs among the sales staff?
    Anton Philidor
  • Lay off the salesdroids

    and let the techies do the sales? How BRILLIANT! Why didn't everyone else think of this first? ;)
    Roger Ramjet
    • Roger

      Problem with techies doing sales, they aren't
      business guy, they think on bits and bytes and
      tipically can't see the whole picture.

      CEO, CIO don't speak bits and bytes anymore or
      probably never spoke on techie terms...

      There are techies that are able to transfer
      techie stuff into business stuff... yes there are.
      Does HP had them? yes, few but they do.
      • I agree with Roger.. techies should do sales

        HP's original reputation for engineering excellence arose (like Sun's) because the company put engineers face to face with customers - and those engineers listened.

        A big part of what's wrong with these guys now is that the techies are pretty much gone - witness David berlind's recent adventures with a centrino expert at HP.
        • Part of R&D, no?

          Strange to think of HP insisting that all lab projects turn promptly into saleable products. And R&D is one of the targets of the layoffs.

          Wall Street has been suggesting Sun target R&D as well.

          Techies can answer questions, find solutions once the situations have been defined and arrangements made. They should be involved directly.

          But a sales force is needed for all the rest of the connection with customers, including finding them, and a lab is necessary to have non-commodity products to sell.

          So, your comment is correct, but you identify only part of the problem HP has created and is creating for itself.
          Anton Philidor
          • Thank Anton

            Wasn't my intention to minimize techie guy at all.
            If I did, really sorry.
          • R&D Cutting

            Take away R&D from HP and IBM will be the last server company innovating, EMC will be the last storage company doing anything new. Dell can get away with a slim sales force because they are truly re-selling commodities. Tier 1 players like IBM, HP and Sun have HUGE amounts of value they need to sell. Solaris, AIX, and HP-UX are not like Windows. Even maintaining a Linux group to support drivers for sophisticated hardware is a cost.

            I guess the days of blue-sky labs in gone, which is a pith, since it was just such an environment (Xerox PARC) which gave us the GUI, MICE, etc. At the same time, why should HP bear the burden of expensive R&D just so bottom feeders can adopt these technologues six-months later and commoditize them ?

            Demonizing HP for having a more expensive cost structure than Dell is only hurting us all in the long run. Making Hurd dance to Wall Street's jingle will only put engineers out of work, and drastically reduce the pace of innovation our industry has enjoyed for the past few decades.
    • Lay off Salesdroids

      It is abundantly evident by your post that you have never been called on by a Corporate HP sales team. In addition to an Account Manager (Salesdroid) you will typically see a Systems Engineer (alternately called a Solutions Architect or Customer Technical Consultant.) There are also Sales Specialists for Servers (both x86 and Risc/Itanium), PC's and laptops, Enterprise Storage, Imaging Solutions and software (OpenView products.)

      HP has no lack of customer facing technologists in the field, and has been pointed out by another person here, hard-core techies have a VERY different skill set than more traditional sales people. As a customer, you are better off defining your needs to an Systems Engineer who is more concerned with the quality of the solution than the size of this quarter's spiff for a particular product. Once you and the techie specialists have defined what you need, then negotiate with the Account Manager on price. It's a pretty good model (one that IBM invented) and you will certainly get a lot more valuable resources gratis than you will with a Direct-Only mail-order house.
  • Completely out of the blue idea (not really)

    I wrote about this on my other blog (the one that's not about Open Source) earlier today.

    Could these moves be the start of a dance which leads to H-P making Macs?

    Fiorina created a profitable relationship with Apple regarding the iPod. Jobs now sees the shelves are filled, even while sales are growing and market share remains strong. H-P could do the same thing in the PC space.

    If Hurd engineered an agreement he would no longer be completely tied to Windows, unlike Dell. It wour provide a huge lift to the stock.

    But in order for that to happen, H-P must get its costs in line, in particular its sales costs. It needs to get rid of a lot of the "account reps" who have been pushing Windows on corporations under Fiorina.

    Could Hurd and Jobs get along? Jobs got along with Carly OK. The Apple iPod move was one of her few really bright ideas.

    Pure speculation mind you.
    • If Apple licensed anyone...

      ... to make macs, why not dedicated cloners?

      Hasn't Apple had enough of being a minor client of a major producer? And what kind of reputation would HP bring to the Mac pc?

      Apologize in advance if I'm overthinking, but the main advantage you indicated was HP's ability to separate itself somewhat more from Microsoft. That would not be a significant enough advantage to guide major strategic decisions by two companies, I think.
      Anton Philidor
    • Apple - HP

      With all due respect, I disagree.

      No doubt HP could extend partnership with Apple
      but an HP Mac sound harder to do. Isn't easier to
      follow Dell Direct sales model?. I mean current HP
      PC lines are as good or as Bad (depends on the
      eyes of the beholder) as Dell.

      As you mention one of HP problem is sales cost.
      Lets name what sales cost is: Reseller Discount
      + Sales Bonus, HP sales rep. salary + bonus, Sales
      Manager salary + Bonus, Reginonal Sales Manager
      salary + Bonus, WW Sales Managers salaries +
      Bonuses CxO salaries + bonuses.

      Man I do hate the firing move, so help me God I
      do, but Dell has 60% of HP work force and overall
      sales are closing the gap to HP overall sales and
      Dell doesn't have OpenView, Unix (HP,SW), Storage
      of their own, Printers of their own (Laser or
      Ink), not even a service dept. (Unisys does it).

      I can't see the way you see it that by adding
      an HP Mac will safe HP's PC position.

      Stream line current "add value" resellers,
      focus them at enterprise customers, keep or hire good administrators to handle Web base PC orders
      and go direct.