HP Support Tuning Up

Hurd orchestrates financial turnaround, but customer service needs work.

Editors note: Due to a printer error, this story didnt appear on Page 11 in the Feb. 27 issue as intended. Here is a shortened version of the story. The full story can be found on eWEEK.com.

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 in Orlando, Fla., 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. Quickly, he moved to rein in the Palo Alto, Calif., companys expenses and restructure its operations. The result: HP reported a first-quarter operating profit of $1.5 billion on revenue of $22.5 billion, up 6 percent from a year ago.

"Were on track with our plan to strengthen our management team, implement our restructuring plan and reduce our cost structure," said Hurd during a 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.

"[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."

A key to Hurds 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 already are 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 have the authority to make decisions.

However, for Nardi, the transition has been difficult, particularly in the area of contract support. Over the past year, Yankee Candles 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 Candle has bought over the past few years. It also has led to support contracts expiring without any notice given to the customer, said Nardi in South Deerfield, Mass. "When I call up and say I need help, I expect support, and were not getting it," he said.

Senior Writer Brian Fonseca contributed to this report.