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Hurd: HP can do better

IBM, Dell, Carly all get it

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OpenWorld Rivals and predecessors were in Hewlett-Packard Co boss Mark Hurd's crosshairs as he paced the stage during a Tuesday morning keynote at Oracle's OpenWorld.

First, though, there was a little humble pie for breakfast. Hurd warmed up the crowd with pointed references to the spying scandal that blasted company executives across the media and bought Hurd a front-row seat at the US House Energy and Commerce Committee, where he was grilled by showboating politicians.

Clearly getting used to the limelight, the once publicity-shy Hurd opened in San Francisco saying, "I was here last year - we've had a few changes since I spoke to you. I personally try to stay out of the news. As you know, I haven't executed that strategy very well."

Warm chuckles from the crowd, and then down to business. "For the sake of today, when I talk about news, I mean news related to our customers and partners - not some other things you've heard about."

Hurd targeted HP's carrier-class systems rival IBM by announcing a partnership with Oracle and Intel encouraging customers to dump their dusty old mainframes. The Application Modernization Initiative will provide services, architectural design and guidance to update applications to HP's Itanic servers and Virtual Server Environment Reference Architecture, and Oracle 10g with Real Application Clusters, Oracle Fusion Middleware and Oracle Enterprise Manager Grid Control.

That'll certainly make interesting reading for IBM which on Tuesday morning announced a Linux on mainframe deal with Oracle. The companies will train sales teams pitching Oracle's database, business applications and collaboration suite on Linux for System z servers to customers.

Next up for Hurd, Dell. Outlining a massive IT consolidation program Hurd said HP will put an additional 20 per cent of IT staff into research during the next two years, moving them out of systems maintenance. R&D will account for 80 per cent of IT staff, he said.

Hurd's policy contrasts with PC and server rival Dell, which gets regularly dinged on R&D, having developed a reputation as an assembler of other companies' component pieces. Less than 24 hours earlier, Michael Dell announced the latest phase in his company's strategy by unveiling four- and two-socket PowerEdge AMD servers.

"Most R&D in the industry today is 'D'. We are one of the few companies spending (on) 'R'," Hurd said.

In outlining plans for IT, Hurd made it clear HP's re-invention is far from over despite improving financial results and having usurped Dell as the world's largest supplier of PCs during the last three months. It was a dig at predecessor Carly Fironia who's been on the book signing circuit claiming some credit for HP's current success.

According to Hurd, IT is a huge cost center and HP must put into practice the policies it's been encouraging customers to follow. In other words, HP's IT was a tangled and expensive mess despite Carly preaching the virtues of the adaptive enterprise.

"I do not believe we are the most efficient IT organization on the Earth," Hurd said. "We have datacenter complexity and a distributed IT organization. Labor costs were high - in my opinion, too high. Eating into dimensions of IT strategy. Eating into operating margins and spending growing faster than revenue."

What's Hurd's big ticket for efficiency? Consolidation: HP will reduce 85 data centers to three, 5,000 applications to 1,500, 22,000 servers to 14,000 and cut 700 data marts to one during the next two years to reduce costs, lower risks and get better business data from systems using HP technology. "Nothing that we do at HP is perfect, great or superior. We've got a lot of work to do to get better," Hurd said.®

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