Organizational Change: HP Dyniecia Barnes Keller Graduate School of Management HR587 Managing Organizational Change Prof. Alberta Lloyd Aug 21, 2011 Table of Contents Executive Summary3 Assessment/Diagnosis4 Analysis of the Change Strategy4 Results/Outcomes6 Evaluation of the Effort8 Conclusion9 References11 Executive Summary Assessment/Diagnosis HP is the world’s largest technology company. Their area of expertise and services range from printing, personal computer manufacturing, and software packages to IT infrastructure and services in cloud computing and connectivity. Analysis of the Change Strategy Mr.
Leo Apotheker outlines a four-point strategy for increasing HP’s market leadership by extending HPs leadership in managing and optimizing today’s traditional environments what focuses on three specific areas; cloud environments, connectivity, and software. Results/Outcomes HP has to discontinued one of its operations, consumer business revenue suffered a decline while a number of the business units experienced revenue hikes amongst commercial business. Evaluation of the Effort Despite HP’s aggressive strategy for growth and advances in technology progress has been slow in some areas, but there has been progress in others.
From the time of the change initiative to date not enough time has passed to give an accurate picture of progress or regress, but the results thus far look promising. Assessment/Diagnosis HP is the world’s largest technology company. Their area of expertise and services range from printing, personal computer manufacturing, and software packages to IT infrastructure and services in cloud computing and connectivity. Its customer base consists of home PC users, small to enterprise businesses, and various levels of government from city to federal.
Although HP is large, business as usual as lead to the need to improve HP’s focus on customer-facing businesses that they depend on for continued success, progress, and growth. HP also recognized a growing trend from a traditional hybrid environment that used both an on-premise, proprietary computing resource and a separate open cloud computing resource. With further advances in technology and the need to remain competitive, businesses are seeking a more robust cloud computing and connectivity resource that is able to bring the gap between public and private cloud computing resources without sacrificing the security of their information.
An additional area of interest to HP that has triggered a need for organizational restructuring is the desire to advance their market shares in both China and India in an effort to obtain the corporate objectives to profit by achieving sufficient profits to finance growth by recognizing and seizing opportunities that builds upon their strengths and competencies, and by becoming a market leader by developing and delivering useful and innovative products, services, and solutions. (Hewlett & Packard, 2011) Analysis of the Change Strategy
The Chief Executive Officer of HP is Leo Apotheker. On March 14, 2011 Mr. Apotheker outlined a four-point strategy for increasing HP’s market leadership. * Extend HPs leadership in managing and optimizing today’s traditional environments * Leverage HP’s core strength in cloud [computing] to build and manage next-generation cloud-based architectures * Be the trusted partner to customers by enabling the seamless transition to hybrid computing models * Define and deliver the connected world from the consumer to the enterprise (HP News Release, Mar 4, 2011)
In addition to Mr. Apotheker’s four-point strategy for market leadership, HP underwent an organizational restructuring to make customer-facing business units that are critical to HP’s ability to deliver on the demands of an evolving IT industry to their customers who play a vital role in HP’s overall success. Under the restructuring the executive vice presidents of customer-facing business units Enterprise Servers, Storage, Networking, and Technology Services; Software, and Global Sales will now report directly to Mr.
Apotheker. The goal behind the restructuring was to give these business units greater visibility throughout the organization, increase transparency relative to the strategic roadmap, to receive support from the entire HP organization, and to make better use of the HP’s full portfolio so that they are able to deliver more integrated solutions.
Lastly, Apotheker’s strategy will focus on three areas, cloud environments, connectivity, and software. Cloud Environment * Build a full cloud stack to support increased scalability, reliability, and security in its current hardware, software, and service offerings * Build an open applications marketplace that integrates consumer, enterprise, and developer services * Support multiple languages Build device-aware HP cloud that is able to configure and send services to the customer’s devices Connectivity * Build and distribute webOS enabled printer and PC devices that is ready to exploit the opportunity to build an HP customer- and HP ecosystem-driven innovation * Build context-aware experiences for customers with secure data creation, digitization, transformation, and consumption with 24/ 7 availability anywhere in the world Software Build software to address and process the combination of structured and unstructured data sets * Build digitization software that is able to provide information management capabilities that can be verticalized for specific industries * Build software that provides security and information backbone for companies that rely on visibility across infrastructures and hybrid environments. Results/Outcomes The following outcome or results of the organizational changes are interesting. As of Aug 18, 2011, HP has discontinued operations for webOS devices because they failed to meet internal milestones and financial targets.
To further HP’s objective to offer cloud-based solutions, HP announced an offer to acquire a leading enterprise information management software company, Autonomy Corporation with the intention of selling off the shares of the company at $42. 00 per share in cash. HP’s commercial business revenue grew 5% over last year’s earnings, but their consumer business revenue was down 15% in comparison to last year. Revenues are flat in the Americas, Europe, Middle East and Africa, but increase 9% over last year in Asia.
In the Americas revenues declined 2%, in Europe revenues declined 5% over last year; and in the Middle East and Africa revenues were up 1% over last year. Business Unit Reports * Services revenue grew 4% year over year with a 13. 5% operating margin. * Enterprise Servers, Storage and Networking (ESSN) revenue grew 7% year over year with a 13. 0% operating margin. * Networking up 15% * Industry Standard Servers up 9% * Business Critical Systems down 9% * HP Storage up 8% * HP Software revenue grew 20% year over year with a 19. 4% operating margin. The driving force was growth in licenses and services of 29% and 30%, respectively. Personal Systems Group (PSG) revenue declined 3% year over year with a 5. 9% operating margin. * PSG remains the PC market leader in terms of units, revenue and profit share. * Commercial Client revenue grew 9% * Consumer Client revenue declined 17%. * Imaging and Printing Group (IPG) revenue declined 1% year over year with a 14. 7% operating margin. * Commercial revenue was down 7% year over year with commercial printer hardware units up 1%. * Consumer printer hardware revenue was up 1% year over year on 7% unit growth. * IPG continued to drive innovation and momentum with digital presses and eb-connected printers. * Financial Services revenue grew 22% year over year with a 9. 4% operating margin. Evaluation of the Effort Despite Mr. Apotheker’s aggressive strategy for growth and advances in technology, expansion has been slow but with some noticeable progress. Areas Negatively Impacted HP discontinued their webOS device operations due to failure to meet project milestones and financial targets. The devices primarily distributed with this capability are printers and PCs, but the devices more heavily impacted were their Touch pad devices and webOS phones.
Although they were not able to successfully expand product line with these devices, continue to explore other options for enhancing the value of their webOS software. Consumer business revenue suffered a decline of 15%, but only a 2% decline in the Americas and only a 5% decline in Europe overall. Areas Positively Impacted Although growth in the Pacific, particularly China, was not as significant as in other areas, but they did experience a 1% growth in revenue in the Pacific. A few of the business units took a small hit in revenue, but majority grew in revenue by the 3rd quarter.
Many of the units experienced revenue hikes ranging from 8% to 30% in commercials sales. This leads me to believe that in increasing their focus and visibility on customer-facing business units this focus was geared more so towards commercial businesses. With the changes in the economy, businesses are thriving to survive in this economy. In doing so expanding their technology, accelerating advertising and marketing to increase visibility, and growth in their customer based has increased demand for HP’s products and services in the commercial business market.
If they continue at the pace they are going and they continue to remain open to changes and new opportunities, I believe HP will achieve all of their objectives. Conclusion HP, being the world’s largest technology company recognized a growing trend from a traditional hybrid environment that used an on-premise, proprietary computing resource and a separate open cloud computing resource. Also a desire to advance their market shares in both China and India triggered a need for organizational restructuring that would provide greater visibility hroughout the organization, increase transparency, receive support from the entire HP organization, and to make better use of the HP’s full portfolio. Mr. Leo Apotheker outlined a four-point strategy for increasing HP’s market leadership by extending HPs leadership in managing and optimizing today’s traditional environments; leveraging HP’s core strength in cloud [computing] to build and manage next-generation cloud-based architectures; being a trusted partner to customers by enabling the seamless transition to hybrid computing models; and by defining and delivering the connected world from the consumer to the enterprise.
Mr. Apotheker’s strategy would focus on three specific areas; cloud environments, connectivity, and software. As a result of the changes implemented by Mr. Apotheker, HP has experienced more ups and downs. HP discontinued two of webOS device operations, their Touch pad device and webOS phones, but continues to explore other options that will optimize the value of their webOS software. Consumer business revenue suffered a decline of 15%, but several of the business units experienced revenue hikes ranging from 8% to 30% in commercials sales.
Although the strategy for growth and advances in technology expansion has been slow, there have been noticeable progress within this small period of time and I wish HP much luck and success with their change initiative. References Apotheker, L. , CEO. (March 14, 2011). News release. In HP Sets Strategy to Lead in Connected World with Services, Solutions and Technologies. Retrieved July 31, 2011, from http://www. hp. com/hpinfo/newsroom/press/2011/110314xa. html Hewlett, B. and Packard, D. (2011). HP Corporate Information. In HP Corporate Objectives and Shared Values.
Retrieved July 18, 2011, from http://www8. hp. com/us/en/hp-information/about-hp/corporate-objectives. html Palo, A. (June 13, 2011). News release. In HP Announces Organizational Changes. Retrieved July 18, 2011, from http://www. hp. com/hpinfo/newsroom/press/2011/110613b. html Palo, A.. ( Aug 18, 2011). News Release. In HP Reports Third Quarter 2011 Results and Initiates Company Transformation. Retrieved Aug 20, 2011, from http://h30261. www3. hp. com/phoenix. zhtml? c=71087&p=irol-newsArticle&ID=1598003&highlight= Palo, A.. ( Aug 18, 2011). News Release.