HP’s new Adaptive Enterprise initiative

In line with utility computing initiatives launched by global IT majors, HP too threw its hat into the ring with its Adaptive Enterprise strategy aimed at helping organisations “foresee and react to change”. Rahul Neel Mani looks at HP’s new business plan

The goal of Adaptive Enterprise is to have infrastructure that is standardised, modularised and integrated, says carly fiorina

It seems that Hewlett Packard (HP) wants to shake up and redefine its IT business. Immediately after a major re-organisation drive in the Server Group (now known as Enterprise Server Group), the company announced the ‘Adaptive Enterprise’ (AE) strategy. The announcement comes at the end of the first year of the merger between Compaq and HP and was made by HPCEO Carly Fiorina. HP mapped out its vision to focus its resources on helping enterprises optimise their technology investments by tightly linking IT and business operations. HP’s "Adaptive Enterprise" strategy touches all aspects of its software, services and hardware portfolio.

HP’s strategy centres on reference architecture called Darwin, and is designed to integrate business processes with virtually every enterprise product, service and standard that HP supports, ranging from J2EE to .Net, to software from People Soft and SAP. Company officials say that the goal is to have infrastructure that is standardised, modular and integrated.

Balu Doraisamy, HP CEOand president said that some of the ideas behind this strategy were developed within HP as the company struggled to integrate its infrastructure of 1,200 networked sites, 7,000 applications and 21,671 servers that the HP-Compaq merger created last year. "We are bringing to our customers the experience and technology that we have ourselves tested, implemented and practiced," said Doraisamy. Company officials also said that the cost of IT at HP has been reduced by 25 percent from the time of merger. A wide array of partners have lined up to support HP in this new initiative. This list includes the likes of Accenture, BEA Systems, BearingPoint, Cisco, Deloitte Consulting, Oracle, PeopleSoft, SAP and Siebel Systems. With the goal of simplifying IT management and integration, partnering with other major players will be key to carrying out HP’s vision, according to company officials.

It’s not true to state that HP is late in the utility computing game. In fact, Adaptive Enterprise builds on products Compaq and HP had in place long before their merger last year, namely Compaq’s Adaptive Infrastructure and HP’s Utility Data Center. What Adaptive Enterprise does is expand HP’s focus beyond the IT department to create efficiencies across an entire business. AE will use a framework for building an IT environment that revolves around business processes. The idea behind it is that IT infrastructure should be broken down into standard components that can be modified without affecting other systems and components.

HP is rolling out some good products to support its AE strategy, but the question whether it might be promising too much that it can bring harmony to the multiple units that make up a large corporation is still debatable. In terms of deliverables, HP has a lot going for it but those are deliverables at the infrastructure level—what will happen at the consultation, integration, and maintenance level is yet to be seen and proved. "We admit that HP doesn’t have all the expertise in-house and partnering with systems integrators, software makers and others to make it easier to respond to heterogeneous needs within enterprise data centres would be the best solution in sight," said Doraisamy.

Talking about AE and utility computing looks very exciting but the real challenge for HP is to prove what utility computing can mean for customers. A lot of IT users, here in India, don’t even know what utility computing is all about. HP needs to communicate to users what the strategy will do, how it will work and what benefits accrue from it. Most people are headstrong on how they manage parts of their network. The change is not going to happen overnight.

Doraisamy said, "CIOs do not require to throw everything out of their enterprises. The AE strategy does not require companies to take a fresh look at the IT infrastructure from the position that they have already taken." Our take on this new announcement is that the cautious IT managers must consider self-managing systems that vendors are promising, but adopt them only after a careful evaluation as to the benefits.

The breadth and depth of HP’s offering is quite impressive. It includes services, virtual storage, virtual processing, server provisioning, management software and virtual application environments that will allow workloads to move from machine to machine as required. Unbeatably it’s one of the most comprehensive offerings that the industry has witnessed but it’s hard to pinpoint products that will be available immediately and those that will be available in future.

This strategy from HP has come at an opportune moment when all its rival companies are busy announcing similar strategies, most notably IBM, which has been seriously pursing a similar strategy known as ‘on-demand computing’. With this announcement, HP joins Computer Associates, IBM, Microsoft and Sun, laying out plans for the so-called utility computing. But as compared to IBM’s initiative "e-business on demand", HP claims that company’s adaptive strategy is about demanding more. The company believes that the thrust in technology should be and can be understood in terms of the results it can deliver.

Though comparisons with IBM are inevitable, HP and its Services division operates at a smaller scale on parameters of size, revenues, human resources and worldwide presence. IBM Global services, which is the world’s largest IT services provider, has more than twice as many employees, about three times as much revenue, a bigger service portfolio and an undisputed leadership position. This will be a tough challenge for HP to take on. But the company is on the right track towards its ultimate goal that it announced at the time of acquiring Compaq which stated that the new HP will offer the industry’s most complete set of IT products and services for enterprise businesses. That the company is a top notch player as a viable service alternative became clear with the recent win of the Procter & Gamble service contract worth $ 3 billion for 10 years against competition of the likes of IBM and EDS. Although HP officials are claiming that they are at least 18 months ahead of their prime competitors, it’s difficult to differentiate their offerings and focus areas. Commenting on the difference of service offerings between HP and IBM, Neelam Dhawan of HP said that HP is committed and working on Open Source Software but a few days ago even IBM had gone on record announcing their huge initiative of ‘on-demand’ services based on Open Source, especially Linux.

As of May 2002, about 62 percent of the merged company’s services staffers worked in the support unit, which generated about 42 percent of HP’s revenue in fiscal year 2002, according to estimates published by Summit Strategies in a December 2002 report.

Should we say that HP is following IBM blindly on everything? The restructuring of the server groups in HP was also on the same lines as IBM did a few years ago. Comments Kevin McIsaac of Meta Group, "IBM did this some years ago. They wanted to simplify the product range and get greater reuse of components across the range and share technologies. I suspect this is the same for HP."

In the last earnings report, for its first fiscal quarter of 2003, HP’s services unit had $3 billion in revenue, down 3 percent from the previous quarter. The unit’s operating profit fell
6 percent from the previous quarter.

These initiatives will give HP a wider presence in all the markets including products, maintenance and services. But with these new initiatives, it can be said that HP would give IBM a run for its money.