HP Gets a New Tune

 
 
By Jeffrey Burt  |  Posted 2006-02-27 Email Print this article Print
 
 
 
 
 
 
 

CEO Hurd orchestrates a financial turnaround, but customer service needs fine-tuning, customers say.

Hewlett-Packard CEO Mark Hurd is receiving accolades from industry experts for orchestrating the companys finances during his first year at the helm of the computer giant, but for many customers their top priorities have been service and support, areas some say still need work.

At the HP Technology Forum last fall, Hurd, in his first address to a large collection of HP technology users, said a priority was improving the companys relationship with its customers.

"You have all of our commitment to making HP an easier company to deal with," Hurd said during his keynote.

Most users interviewed said HP has improved significantly in this area, particularly given Hurds push to grant employees working directly with customers greater autonomy and responsibility. However, one customer said that since Hurd took over for Carly Fiorina in March 2005, parts of the companys support structure—in particular, contract support—have failed.

"I understood service was going to be a focus [when Hurd arrived]," said David Nardi, senior systems administrator at The Yankee Candle Co. "HPs services have just gone to pot. Ive had so many problems with support, I dont know what Im going to do."

Hurd took over an HP that was big on vision but short on execution. In short order, he moved to rein in the Palo Alto, Calif., companys expenses and restructure its operations. The result: HP reported first-quarter operating profits of $1.5 billion on revenue of $22.5 billion, up 6 percent from a year ago.

Click here to read more about HPs recent revenue reports. "Were on track with our plan to strengthen our management team, implement our restructuring plan and reduce our cost structure," said Hurd on the Feb. 15 earnings conference call. "There is a lot of opportunity, but there also is a lot of work for us to do at the same time."

Hurds moves thus far have enabled HP to continue to aggressively price products such as PCs while also improving profit margins—which rose in the companys fiscal first quarter to 7.5 percent—something the company struggled to figure out under Fiorina.

And while revenues for the $15 billion HP Services unit declined 2 percent in the companys fiscal first quarter, that was due in large part to Hurd reining in the business to ensure future growth.

"[Hurd] has brought stability," said Louis Bernstein, CEO of IT training company MindIQ, in Norcross, Ga. "[Under Fiorina] the company was fractured. They didnt know what to do. I think he brought a healing to them. ... [Now] if you get the feeling that the vendor is trying to make you happy and trying to help your business, you want to give him the benefit of the doubt."

A key to his efforts was revamping the lines of command throughout the business.

"The [previous] reporting structure inhibited accountability," said Roger Kay, an analyst with Endpoint Technologies Associates, in Wayland, Mass. "He evolved all that and made a clearer hierarchical structure."

Some customers are already seeing the results. Crossmark Holdings, a Plano, Texas, business services company, for several years has outsourced its PC environment in the United States to HP. Two years ago, while HP was still under Fiorinas tenure, Crossmark decided to do the same with its offices in Canada. Negotiations with HP to make it happen took more than six months, said Charles Orndorff, Crossmarks vice president of infrastructure services.

"It took an inordinate amount of time," Orndorff said. "A lot of times, it felt like our [HP] account reps ... kind of had their hands tied behind their backs because of all the different levels they had to work through."

Last year, Crossmark wanted to extend the outsourcing program to its Australia and New Zealand offices. It took less than three months, thanks to HP reps who now had the authority to make decisions. It not only sped up the process, but it gave Crossmark employees overseas confidence in the decision to outsource the PC environment. "Just being able to get it done in an efficient manner gave them peace of mind," Orndorff said.

However, for Yankee Candles Nardi, the transition has been difficult, particularly in the area of contract support. Over the past year, Yankees HP contract support representative has changed twice, and because of confusion in that group, HP has been unable to keep track of many of the systems Yankee has bought over the past few years, and it also has led to support contracts expiring without any notice given to the customer, Nardi said.

"HP service [representatives] have no idea what we have here," said Nardi, in South Deerfield, Mass. "Theyve told me they cant look [the systems] up through serial numbers. ... For some reason, [the HP reps] dont know what equipment theyre supporting here. If I want to put a contract on something I bought in 2002, they dont have the serial numbers on them. Im just not able to get the kind of support I need for the equipment."

The certified engineers HP sends to fix or upgrade equipment are very good, however, Nardi said. Oftentimes its the HP engineers and channel partners who end up helping Yankee with the contract support.

"Its huge for us," he said. "Were a public company, and when I call up HP for support, I dont want a lot of questions. When I call up and say I need help, I expect support, and were not getting it."

In contrast, Premiere Bankcard, a division of First Premiere Bank of Sioux Falls, S.D., is finding a much more responsive HP. Scott Erkonen, director of information security for Premiere, said that the new HP is much more receptive to listening and taking steps to solve more finite customer demands.

"They listened," Erkonen said. "We provided feedback from our various channels and at HP events for an area perhaps we felt they were lacking in."

Senior Writer Brian Fonseca contributed to this report.

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