HP must bundle software, services

To succeed in the software market, HP must more closely tie its business technology optimization strategy with its services portfolio, says analyst.
Written by Eileen Yu, Senior Contributing Editor

VIENNA, AUSTRIA--The world's largest technology company knows it still has some work to do if it wants to be recognized in the same league as some of the industry's biggest software houses.

While Hewlett-Packard is making strides in its quest to be a serious software player, enterprise customers today still do not think of HP when they think software, acknowledged Tom Hogan, senior vice president of HP's software and solutions division. Instead, names such as Microsoft, Oracle and SAP, would typically come up.

"In general, from an industry perspective, we think we've made huge progress but there's still further room for growth in terms of brand and awareness," Hogan said Wednesday, during a dialog with Asia-Pacific journalists here at the company's Software Universe conference. He added that while most analysts have ranked HP as the sixth largest software company worldwide, this is not a well-known fact in the industry.

Michael Barnes, Springboard Research's vice president of software research, said in an e-mail interview, that HP must better link its business technology optimization (BTO) software strategy with the company's services capabilities. "More specifically, HP must better articulate its strategy for leveraging its consulting expertise and delivery capabilities in its services," Barnes said, noting that during the company's analyst summit in Boston earlier this year, HP did touch on plans to identify synergies between its software and services units.

"However, HP has still not adequately outlined its approach to delivering the prescriptive guidance that organizations require if they are to extend their focus, and spending, with HP beyond IT operations management to include application lifecycle management and SOA (service-oriented architecture) governance," he said.

Barnes noted that HP needs to better position itself more effectively against major software infrastructure or middleware vendors, specifically, IBM, Microsoft, Oracle-BEA, SAP and Sun Microsystems.

However, he added, HP's stance to be middleware-neutral in the IT governance and operations management space--based out of necessity and its overall strategy--will allow the company to "make a credible case for being the logical option" for organizations.

Cloud coming "very soon"
According to David Gee, worldwide marketing director for HP's software and solutions business, services will play a larger role in the company's strategy next year. Alluding to the rebranding of HP's software business as "Software and Solutions", to incorporate the company's services portfolio, Gee said some 40 percent of headcount from its services group had been added into the newly merged business arm to look at the delivery and enablement of applications as a service.

HP currently concentrates the bulk of its software-as-a-service (SaaS) offerings on the company's BTO software products, two-thirds of which are already available on a SaaS delivery model, he said. It plans to extend this service to other HP software products, he said, but declined to reveal any details on when or what these may encompass.

Gee added that the company will "very soon" unveil new announcements in the cloud computing space. "We have a strategy... We have a plan," he said.

Hogan reiterated the company's calculated measure against rushing into the cloud bandwagon and "avoiding the gold rush", but stressed that HP is very keen on this space.

"We're not just going into the cloud game. Our intent is to go in to lead [this market]," he said. "We think it's real and it's going to happen, but it's not going to be the panacea solution... We want to be able to deliver on the various delivery channels and allow customers to select the delivery model of their choice."

According to Springboard's Barnes, HP is taking a "methodical, pragmatic approach" to SaaS. Starting with offerings such as Quality Center, which is a natural fit for the SaaS delivery model, is a logical step for the IT vendor, the analyst said.

He noted that HP will likely focus on its BTO offering as the basis for its SaaS strategy because this would be a good way to leverage the cloud and SaaS hype with minimal risk, and at the same time, address a clear market need.

Barnes added: "To meet its aggressive software-related growth plans, HP must do a better job of positioning itself as a core part of [IT decision makers'] strategic IT portfolio. In practical terms, this means HP must raise its mindshare and level of awareness among IT decision makers well beyond the company's core stronghold with IT operations staff, to include enterprise architects, application development and integration teams, and software infrastructure or middleware planning staff.

"Securing this mindshare and credibility alongside vendors such as IBM, Microsoft and Oracle--among others--is critical to HP's chances of success [in software]," he said.

Eileen Yu of ZDNet Asia reported from HP Software Universe in Vienna, Austria.

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