HP mixing R&D and M&A for innovation: COO Bill Veghte

HP blends research and development with mergers and acquisitions.

HP COO Bill Veghte shows off the Gen8 MicroServer at the HP World Tour in Beijing.

HP COO Bill Veghte shows off the Gen8 MicroServer at the HP World Tour in Beijing.

HP is focused on growing its core businesses as the company works to right its ship, according to HP chief operating officer Bill Veghte.

The comments followed an assertion by HP CEO Meg Whitman at the HP World Tour in Beijing that “HP is here to stay.”

The first thing HP set out to do this year was get its free cash flow in shape, Veghte told reporters after Whitman’s speech. The company had $5 billion free cash flow in the first half of 2013 and in Q2 had a 44 per cent improvement in cash flow compared to the first quarter, he said.

Now, Veghte said HP is doing “a blend of organic and inorganic innovation,” mixing R&D with M&A.

In storage, HP has a declining product—tape—and a rising new one—flash, said Veghte. That was reflected in HP’s announcement of an all-flash storage product, 3PAR StoreServe 7450, he said. At the same media event, HP also revealed a new tape-based product, the StoreEver MSL6480 Tape Library.

The flash storage business is growing at over 80 per cent year-on-year, he said. “But the tape business is going down. At some point in the not-too-distant future, those businesses cross over.”

Veghte pointed to storage as an example of HP’s ability to grow acquired businesses. When HP bought 3PAR it was a $100 million business, and now it’s worth $1 billion, he said.

On the device side of things, HP is focusing on crossover devices that work for business while still appealing to consumers, Veghte said.

Employees work in the office but they are also consumers and want to work on consumer-quality devices, he said. Currently, however, employees have to use an enterprise device if they want to do work, he said.

“The way we think about is: Start with what does it mean to deliver a consumer-quality experience, and then enable them effectively for the enterprise.”

For example, Veghte said the HP ElitePad 900 is a “consumer-class tablet, but the jackets give you compatibility, give you longer battery life, additional security and management capabilities.”

An advanced HP data centre in Aurora makes the Australian market “relatively unique for us,” Veghte said.

The Aurora data centre “gives us the footprint to provide particularly managed cloud services for enterprise customers.” As a result, under a partnership announced with SAP, HP plans to release HANA as a service first to the Australia and New Zealand markets, he said.

While a long “journey” remains, the market for cloud in Australia is growing, said Veghte. “It’s moving faster than many people predicted even a year ago.”

“Data sovereignty is a core issue with customers,” he said. “Who owns the data? Under what policies is it being managed? Where does it reside? How does that factor in the regulatory context?”

Veghte offered some advice for CIOs still wondering how to take advantage of the cloud.

CIOs should “be clear on the business outcomes that they want,” he said. That could be agility, speed, reducing costs or business model innovation, he said.

“The cloud has the potential impact any of those. The trick is figuring out which is most important.”

The CIO should then identify the “key workloads” where cloud may have the greatest positive impact, he said.

“Effective CIOs are the translators of technology to a business applicant,” he added.

“That means that they have to be very strong partners with the business to enable those business efforts. To do that, they’ve got to understand the business, and then they’ve got to understand how they can take the technology to deliver a better business outcome.”

Adam Bender travelled to Beijing as a guest of HP.

Follow Adam Bender on Twitter: @WatchAdam

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