Q: Is there any particular reason for your visit to the Middle East now?
A: I am in town to be a part of our business review. We tend to do this regularly and in this case it is an annual business review to assess the progress that has been made in our business. On behalf of HP we do all the warranty and after-warranty stuff on everything from a single device to an entire data centre. Apart from all the mission-critical work we do, we have also been spending a lot of time building our business on the consulting side. We are doing everything from data centre transformation, to data centre consolidation, virtualisation, converged components and integrated networks.
Our business has a whole set of global centres around the world, and what we are focusing on is the client service. The question is, how do we create a common experience around the world? And this year we are moving to a common differentiating experience – the whole idea is branding that if it looks like HP, talks like HP, it is HP. It is about being different from any of our competitors. We think that we are one of the few companies in the world that touches many different customers any given day and we have an opportunity to change their experience.
Q: Following your review of the region, what is the progress you have noticed?
A: This region has a lot of emerging country aspects in terms of growth. It tends to be growing faster than most other regions. The industries are pretty much the same, but it tends to have different make-up of clients and in most countries the infrastructure is being built out. This is not just IT infrastructure, but infrastructure as part of building and we get to play pretty big in that. Governments are investing in capital and that is where we can play a huge role. In most cases therefore, it is largely build-out. But there is also a fair bit of expansion. There are a lot of these aspects in Brazil, China, India and Russia. And we are in the process of determining where the expansion is happening, which industry clients are growing and what resources we need to line-up to ensure that we are successful in addressing customer needs.
At the end of the day, our success is based on our customer’s success, so our aim is to get the prominent names and projects that differentiate us in the market place. It sounds straight forward and simple, but in reality you have to make sure that you have got it all aligned, to every business unit. For example, if IPG or PSG was coming in here and they are saying our expansion plan is to go from ten cities to a hundred, I have to support that.
In many cases, maybe the products group, maybe the servers, storage and network group will follow and build out enterprises. In some cases it is for the consumer and other cases it is for the commercial business. I am focusing on both though I have a heavy influence on the commercial business.
Most of it is a balance around how
we are performing against our commitments to our customers. And how we are lining up our investments with regard to the big players. So it is more than just a review, it is looking further across the year and assessing the progress we are making.
A: We use a lot of data from IDC and other market sources. In terms of how IT grows, we tend to break it down – how a market is growing across the support perspective, across the
Gary Budzinki, senior VP and GM of HP’s Technology Services Enterprise Business
consulting perspective and other aspects. In general, the CAGR with the business that we are dealing with tends to be a little higher. The Middle East, Mediterranean and Africa (MEMA) region is growing at a minimum of 9%, and in the Middle East alone you can see around 11%.
In contrast, you might see China gorwing at 22%. With expanded capability, they are growing out cities and industries. So that is where we focus our spend at times. Many of the telecom and government organisations usually aim for improve capabilities, depending on the regulation. You would see us playing heavily in construction and banking. You will also see a lot of consolidation going on in many industries. Anytime that happens there is a great opportunity to consolidate IT systems as well.
The other part is the building out of major infrastructure for future growth and this we can cover from the design, to implementation and support. One of the flexibilities that HP provides the client is that he can go in different ways and pick everything from an insourcing option all the way to an outsourcing environment, or have a combined strategy. And that flexibility is important to clients – that they can buy any way they want.
We have the power of the portfolio and that is what has changed dramatically at HP now. We are 30% of the company and we are 45% of the company’s profit. This is the dramatic change. And what makes this portfolio exciting is that clients have moved up in their buying pattern to more solutions in a more service-oriented approach. We are supporting this by trying to create a different outcome for them. Companies are trying to grow their market share and we are focusing on that and providing them the right solutions.
These days we are also seeing a whole lot of stuff happening around application consolidation as well. Customers are asking for guidance in this and we can provide this since HP itself brought together hundreds of data centres and applications together and cut back on the number we were dealing with effectively. We in Technology Services actually help our clients achieve that.
Q: Is it largely new build-outs in the MEMA region or is it more consolidation projects?
A: There is no blanket answer for MEMA. This is just because growth ratios are different for different countries. There is a lot of difference between what you are doing in Nigeria to what you are doing in KSA or Greece. All the countries are under different pressures. We have to react to that because we are in all those countries. The wide portfolio that we have allows us to choose components that really fit and solve our clients problems.
We still see a lot of build out of infrastructure in places like Africa. Then there are places like KSA where three or four cities will be experiencing major expansion. If you get into Greece where we are having heavy duty reconstruction of the banking system, they have some pretty big challenges and so the question is how do we help them with that process. So what we are doing there is we tend to get into more of a lifecycle management where we get into how they can fully utilise equipment in the data centre.
So different countries are at different stages. We have the capability to go to organisations anywhere here and say we can help you. And what is more, everytime we find something to help the client with in the lifecycle longer. That is a good thing for them as well. This flexibility was what allowed us to weather the recession better. While product business was declining by 30%, our business was not. People were saying we want to get more out of what we have, get more value. And since we were there to provide them the business value, not just IT value, for their investments, we could face the recession and help them better.
Our value proposition over the last two years has changed more dramatically from a support perspective than ever before. So we are focusing more on that peace of mind, and offering more services around enterprise uptime. Our slogan is when technology works, business works. So what is important to us is that the customer’s technology works so they can run their businesses.
Q: How is HP working to improve its consulting arm in the MEMA region?
A: We are making that investment. We recognise that more and more clients are having more solutions-led than product-led activities. We have solutions that will provide product support, and products with solutions support. We have organised ourselves around the global client. We know who the global clients are by country and we are aligning our campaign and infrastructure to support that and bring all of HP’s portfolio to the table.
Part of this is the consultants. We call them specialised sales agents and they know a whole lot about our business. When customers are planning for an investment and they are trying to get done some business objective we can bring these consultants to the table. Whatever they are interested in – whether designing or building a data centre, or validating a lifecycle – we can help them with that. We can even help them maintain or modernise their applications, and eventually it might turn into an outsourcing venture. It is interesting to give them the flexibility to do that.
All this requires some level of subject matter expertise, so we are investing heavily in getting our consultancy team up to speed. Even with that done, we will not have half the capacity for the market, which is a good problem to have. So then we will have partners. We have always been big on partners – smaller system integrators as well big players like SAP, Oracle and Microsoft – we have tremendous relationships with all of them. We have joint investments with them. We will be using our partners in big ways – we pull them and they pull us. This always provides better outcomes for the customer, and so this is how we do it.
We will also use localised applications from relevant third parties. Eventually we will look to either develop or integrate them into our own – whether these come from outside or within the company. This is all driven by the fact that customers are engaging more in discussions related to the business and are clued in more with the consultative approach. Mind you, we are not talking about changing the strategy of the company, we are just talking about doing something we are really good at, and that is recommending change around the technology and infrastructure.
Q: What are the challenges HP faces in emerging markets?
A: One of the major ones is building up the capacity that we would need to have for consultancy in these markets. Products get sold constantly and we have to attach services like warranty and after-warranty. These are no problem though, we are the best and we can and do deliver on that commitment without fail. We have capability and we have capacity but sometimes not enough for emerging countries. However, we are constantly building that out now. That is our challenge – to scale in that area. We have skills for support. But the need for expertise to change the infrastructure is required, and we have to get resources for the same. We recognise this and we are making the right investments to improve availability in this region.