An interview with Ann Livermore

Ann Livermore is the number two executive at the number one IT company.

As head of Hewlett-Packard’s Technology Solutions Group, she is responsible for a third of the company’s $106 billion annual revenues (the other two thirds come from the PC and printer divisions).

Her empire spans the company’s multiple server and storage lines, where sales hit $18.8 billion in 2007, HP’s $16.6 billion services organisation and a $2.3 billion software unit that grew by 79% last year.

Recently, she has been instrumental in the rapid ramp-up of the company’s software activities. Moving beyond its roots in IT service management, the company has expanded through multiple acquisitions, including Opsware (data centre management), Mercury Interactive (business service management) and, most recently, Tower Software (document and records management).

It has also crafted a data warehousing offering internally. A 26-year HP veteran, Livermore is undeniably the most powerful woman in the IT industry today

Information Age: Virtualisation is one of the hottest topics in IT; it clearly presents a huge opportunity for customers and vendors alike. But what are the barriers that are preventing customers getting the maximum value from virtualisation?

Ann Livermore: A lot of people associate virtualisation with the server. What customers really need to do is virtualise the entire data centre environment – virtualising the servers, the storage, the networking and the applications. The first problem that customers run into when they start down the virtualisation road is how to manage when they have a mixed environment of both physical and virtual servers.

So the management of these virtualised environments is key, and there are not many people with tools to do that. The real focus for Hewlett-Packard (HP) from a virtualisation perspective is exactly that. The software that we provide enables customers to manage both the physical and the virtual servers through a single pane of glass, and actually create the equivalent of a logical server environment that is being managed.

So we believe one of the biggest impediments has been: how do I manage this thing once it really is in production, with the ability to visualise it, plan the changes and then actually make these changes in the environment?

Are we are just at the beginning of that build-out of a portfolio of tools for virtualisation management – for provisioning, licence management, security and so on?

Absolutely. And most companies are going to go through a slow enough transition to a virtualised environment.

One of the things you didn’t mention in your list of data centre virtualisation is desktop virtualisation. Do you see a big trend for taking stuff off the desktop and into the data centre?

HP made an acquisition last year in this area. We acquired Neoware for our PC business, which gives us the capabilities to provide a virtualised client environment. So we feel good about that, between Neoware and our blade [technology].

Half of all virtualised environments use blades and [that puts us in] a strong position when people are thinking of virtualising their environment.

Can I ask how you are perceiving ‘the green agenda’ in IT? Many companies we talk to say they can’t justify any green IT initiative unless it also reduces costs.

The interesting question is: does the ‘green’ refer to the environment or to money? We very much see that businesses need a cost justification for almost anything they do. And the best outcome is when you have something that is both good for the environment and good from a business perspective.

We have put a lot of focus on power and cooling. We believe that, from a data transformation perspective, being able to reduce the energy consumption reduces the cost for the customer and it is also good environmentally. Dynamic Smart Cooling can reduce the power consumption by 40%. We implemented inside HP in our new three pairs of data centres and we are going to save about 60% of our energy consumption. So that has a huge impact associated with it.

Is the cost of greener technology passed on to the customer?

Our revenue here comes from a consulting engagement to set up the cooling or some of the technology we can sell into the environment. The customer captures the cost savings themselves, so they have to be able to measure the return on the investment they make in some services and technology. The ongoing savings are theirs.

Do you think there will be a political aspect to this? Maybe even the targeting by environmental activists of data centres that waste a lot of energy?

Well that should create lots of opportunities for us! Many companies are worried about the fact that they have reached a point where they can’t bring any more power into their data centre and they need to do something to transform it. So it is high on the agenda of most CIOs.

The IT industry is still reporting growth of around 14%. But in light of the current economic situation, are you changing course?

Inside HP, we certainly see the same things [as others] in terms of the financial services industry and some of the macroeconomic trends associate with it.

We are staying focused on our same strategy. In fact, we see many customers who still have the capacity to invest to save. And in the kind of data centre transformation [offered by HP] you are making an investment in a new infrastructure to then be able to generate savings over a longer period of time. So those companies that have a strong cash position will often chose to do that.

Our outsourcing business is also a very attractive opportunity for many of our customers if they are feeling economic pressure. We can take on the data centres and employees from some of our customers and so help them drive down the cost of their operations. Outsourcing businesses tend to be counter-cyclical in terms of growth.

We have very significant outsourcing relationships – Proctor and Gamble (which has outsourced its entire global IT operations to us) Nokia, Ericsson, BT, Unilever and Pfizer, as well as smaller relationships with many companies where we just do the desktop [services], or SAP area or Microsoft Exchange, or where we work in a specific business unit or geographical area.

Ann Livermore on… software-as-a-service

HP recently announced a hosted software-as-a-service (SaaS) offering under the ‘adaptive infrastructure as a service’ label, providing customers access to hosted SAP applications and Microsoft Exchange on an on-demand basis. What kind of potential do you see for this and a wider set of hosted applications?

One of the things we have seen is that many companies don’t want to take the time or make the effort to build the next generation data centre for themselves. What they would really love to be able to do is almost the equivalent of plugging into the wall and having the service delivered to them. Of course, with the wireless capabilities we have today, they wouldn’t even have to plug into the wall.

So what they are really interested in is how can they use the application, and do it in such a way that they don’t have to make any capital investment – pretty much turn it on immediately. So, for those customers who are willing to use a standard version of an application, these are good offerings.

Originally, we thought that this was mostly going to be attractive to small and medium-sized companies, but we also see single business units or a single geographical location of a large enterprise customer as good fits for it.

Many companies are looking to move more standard applications – email, sales force automation, and others – out of the data centre in order to relieve pressure on space, administration and other overheads.

It certainly fits with that. It could be an alternative to expanding a data centre or service or it could be a cost reduction benefit that they are after. For a lot of companies, they have not planned far enough in advance or don’t want to go through the effort of building out new data centres.

The idea of paying based on usage is also a very attractive alternative for many customers. They don’t have an upfront cost, but a more standard cost over a longer period of time.

So is this the beginning of a series of on-demand application services from HP, rather than something restricted to SAP and Microsoft Exchange?

That is our intention. We are going to start with those two and see how it goes. Part of making this sort of service work is how willing the users are to have a standard application package. And we know that there are SAP and certainly Exchange customers who are very happy with the standard applications.

Ann Livermore on… HP’s growth ambitions

At over $100 billion in revenues, HP is already the largest IT company. Just how aggressive are HP’s ambitions for growth?

HP’s ambition is not so much size focused. We aim to be number one or two in each of the markets in which we participate, so it is more in terms of leadership in the segments in which we participate. We want the best financial performance, the highest customer satisfaction, loyalty and to attract the best talent.

One of the dangers might be that, as the company grows so large, it moves away from its unique culture and identity – the so-called ‘HP way’. Can people see a difference today between HP and IBM, for example?

HP and IBM are very different companies. HP, at its heart, is a technology company; our focus is really on how we deliver technology for better business outcomes. We think HP’s portfolio is much better aligned to future markets. Zero per cent of our business is in mainframes [IBM still derives significant revenues from mainframe computing]. The percentage of our servers that are in blades and x86 servers and our Integrity line is 100%. So our technology is focused on things that are very forward looking.

Similarly our software focus – [on] enterprise management and automation – is clearly right at the top of every IT person’s problem list because they have to drive down the labour costs within IT. So we feel that our portfolio is much more technology focused and the services that wrap around that technology [are too]. We think that is better aligned to where the market is going.

Further reading

An interview with Steve Mills In a rare and exclusive interview, IBM’s software chief, Steve Mills opens up on the company’s agenda for software-as-a-service, virtualisation, Green IT, corporate social networking, Google and more

Cloud computing to cut IT jobs, warns HP

HP arms itself for data centre transformation race

David Cliff

David Cliff is managing director of Houghton le Spring-based Gedanken, a company specialising in coaching-based support and personal development. Cliff is an experienced trainer, manager and therapist,...

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