OPENWORLD - HP looks to shed strategic partners

Part of HP's ongoing cost cutting and restructuring will involve reducing its strategic partnerships, though Oracle is a keeper, HP's head said.

HP continues to simplify its operations to cut costs and streamline its interactions with customers, and plans to reduce its number of partners, according to its top executive.

In reasonably feisty form, given the boardroom-level spying scandal dogging his company, HP chairman and CEO, Mark Hurd, laid out HP's moves to reinvent its operations in a keynote address at Oracle's OpenWorld conference in San Francisco.

"I could scare you and tell you how many people we bought from in the last two years," Hurd said. "I found companies I'd never heard of. We purchased a little something from everyone."

HP is now trying to galvanise its operations around having fewer partners. "We want less partners and more skin in the game with deeper relationships," Hurd said. "We'll focus on a few key partners instead of a plethora of partners."

He assured his host Oracle that they were a keeper. "Oracle is a key, key partner for us," Hurd said.

HP uses Oracle's database to manage its supply chain, runs its human resources on Oracle's PeopleSoft applications and its customer relationship management software is Oracle's Siebel applications. HP is also very bullish on Oracle's Fusion middleware, which it had used to help its customers accelerate their service-oriented architecture (SOA) deployments, Hurd said.

The message HP still gets from its customers is: "We love your technology, services and support, it's just hard getting stuff done," Hurd said. He reiterated a message he's espoused since joining HP back in March 2005: the need to dramatically simplify HP's operations so it can better serve its customers.

"We've got a lot of work to do in every dimension of our business," he said.

So far, in restructuring and flattening its business, HP has removed three layers of management between the CEO and staff.

"We want to drive accountability for P and L [profit and loss] as low in the company as possible," Hurd said. That move should help free up those lower in the company to make decisions and get back to customers quickly with the information they require.

Like many companies, IT had been a huge cost centre for HP, Hurd said.

The company continues its plans to consolidate its 762 data marts around the world into a single enterprise data warehouse which Hurd first announced last December. He didn't mince words about his thinking on data marts.

"I hate these things," Hurd said. "They give you different stories about the company."

HP was also on track to reduce its 85 data centers in 29 countries to only 3, he said.

In previous public statements, Hurd had talked about 6 being the final number of data centers.

HP is cutting back on the applications it uses to run its business from 5000 to less than 1500, according to Hurd.

Instead of 22,000 internal servers providing utilisation only in the high 20 per cent range, HP would have 14,000 servers operating at very high levels of utilisation and taking advantage of virtualisation technologies, he said.

The vendor was moving the mix of its IT staff from 50 per cent focused on maintaining systems and 50 per cent working on innovation to a shift where 20 per cent worked in maintenance, while the rest concentrated on innovation, Hurd said.

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