Posted by Tom Foremski - April 9, 2009
Robin Purohit runs the Software Products division of Hewlett-Packard's $3 billion software business, the most profitable group within the company, and its most strategic. As 2009 IT budgets continue to be slashed, the software group is becoming the point of the spear for the entire company, potentially driving hardware and services sales as corporate data centers seek to do more with less.
"This year is going to be challenging for everyone, it will very likely be the toughest year in ten years," for enterprise IT vendors, says Mr Purohit. "But we are ready, we've been preparing for this."
If HP's software business were a separate business it would be the 6th largest software company in the US. In just three years, HP has tripled the size of its enterprise software sales thanks to a series of canny acquisitions.
Opsware, Peregrine Systems, and Mercury Interactive, the largest acquisitions, were joined with several smaller software businesses. The goal has been to bolster HP's strong position in data center management and optimization provided by its OpenView suite.
This market is called Business Technology Optimization (BTO), and this type of software is designed to help CIOs gain a deep insight into how they are deploying their IT investments, identify which parts of their IT are strategic, and which parts can be cut. BTO also includes greater data center automation to try to reduce one of the largest expenses in IT: the large numbers of specialists needed to keep enterprise IT systems humming.
. . .CIOs are unhappy
"Everywhere I go, CIOs are complaining that they are unhappy with their IT spend, that it's costing them too much, and that they need to get more out of their IT systems. They complain that 60 to 70 percent of their budget is being spent on on all the things they need to do just to keep the lights on," says Mr Purohit.
HP's message is that its BTO software can map and optimize an enterprise's IT resources, automate many data center operations, and manage new IT initiatives.
A relatively small software investment can quickly produce several tens of millions of dollars in efficiency savings, depending on the size of the company, says Mr Purohit. It also frees up people and resources, that can then be deployed on new IT initiatives rather than the mundane daily tasks of "keeping the lights on."
Software As A Service (SAAS) is a key part of HP's software strategy and part of simplifying customer IT systems. "About two-thirds of our products are delivered as SAAS. Customers will still buy licenses but they want us to host and run the software."
. . . Change comes from the top
But BTO can only do so much. You can lead a horse to water but you cannot make it drink. Some companies are not able to implement the changes that BTO identifies because they aren't yet able to make the changes needed in their organizational structure.
"It all depends on the leadership within each organization. Our software can reveal the inefficiencies in IT infrastructure but the changes have to be driven from the top. For organizations that aren't ready, we will focus on one key problem and use that as an example of what we can do for the rest of the enterprise."
Services is a big component of implementing BTO, and HP's acquisition of EDS provides it with a strong IT services business. BTO customers frequently become HP hardware customers, says Mr Purohit.
. . . A tsunami of regulations
HP's software catalog includes business intelligence software, a key growth area as companies seek to understand an ever growing mass of transactional data generated by the daily commerce of their business groups. Much of this data is also required to fulfill new regulatory reporting rules. "There is a tsunami of regulations rules that businesses will have to deal with, it goes way beyond SOX."
In addition, large corporations have to deal with a relentless number of lawsuits that require them to comply with discovery requests of specific business data. If it fails to find that information within a short-time frame, it can face punitive fines. "A company the size of HP averages about one legal investigation per week. It can cost abut $100 million a year to comply with those investigations. Our software can reduce that to $5 million to $10 million a year."
In today's tough IT climate, HP is expecting a lot from its software business, to help it maintain profits and help drive its hardware and services groups. Fortunately, tough times are motivating enterprises to seek out the efficiencies and cost savings promised by HP's software.
"Our software business is the largest strategic weapon we have," says Mr Purohit.
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Robin Purohit speaks with Robert Scoble inside the HP garage on Fast Company TVTweet this story Follow @tomforemski
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