Isherwood: HPE acquisition trio not a sign we're trying to get big again
HPE's EMEA boss Andy Isherwood said pre-split HP was a 'technology supermarket' - not something he wants to go back to
HPE's EMEA boss Andy Isherwood has urged the industry not to think that just because the company is on the acquisition trail, it is aiming to return to being anywhere near the size it was before HP split in two. He made the comments in a keynote at the HPE Technology and Solutions Summit in Cannes, during which he candidly opened up on the firm's progress over the past five years, and addressed some concerns about the company's "spin-mergers".
HP split up in 2015, creating HP Inc - focusing on printers and PCs - and storage and server firm HPE. Since the separation, HPE announced plans to spin off its Services and its Enterprise Software arms, in deals which will close this year. The rationale behind the split and the subsequent offloading of the two arms was that being smaller and more agile would help the company and its partners thrive in the long term.
But so far this year alone, HPE has snapped up CloudCruiser, Niara and SimpliVity. Isherwood (pictured) said it is no secret that the firm wishes to remain acquisitive in its smaller form, but insisted that getting back to its original size - or anywhere near - is not the plan at all.
"I don't think we are looking to become big again, we are looking to become relevant," he said. "I was always told revenue is vanity. We're not chasing to become another $110bn business. That is not what the game is about. The game is about our vision and strategy addressing customer needs now and moving forward. How do we then build it out to make sure we have capability which is relevant?
"We did [the split] on the basis that [we were] a technology supermarket which is what we had become - $110bn selling everything from an inkjet cartridge all the way through to running the biggest government department from an outsourcing perspective"
"Over the last couple of weeks, the good news is we are starting to acquire. Meg said we would - she has been very open with the analysts to say we will go out and buy assets which are important to us moving forward. SimpliVity was one - $650m - it really puts us in a leadership position from a hyperconverged perspective. Clearly there are a lot of software assets in there; don't be confused, it's not hardware. This is about software and software-defined.
"The second one was CloudCruiser, a small, tuck-in acquisition. It really enables our flex-capacity offering, going back to the strategy of what we're trying to address from a consumption point of view.
"The third one, announced last week, and I thought it was interesting, was Niara. This is about next-generation security. What Niara does is really look at the edge and making sure we understand the ability to control security right at that edge."
Isherwood opened up about what the former HP business looked like five years ago before Meg Whitman came on board, admitting that there was a lot of work to be done.
"Five years ago when Meg, our CEO, took over, we were in a state of flux - I think that is the best way to describe it," he said. "We'd lost sight of our core. Research and development had been starved. We had lost sight of what our channel and alliances partners needed to do. Our balance sheet was in a bit of a mess - negative $8bn on the balance sheet. We'd been through a number of CEOs who had made a number of acquisitions, some of which we had to do major write-downs on. We'd been through this period of fundamentally fixing the things we needed to move the organisation forward.
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Isherwood: HPE acquisition trio not a sign we're trying to get big again
HPE's EMEA boss Andy Isherwood said pre-split HP was a 'technology supermarket' - not something he wants to go back to
"We had to re-invest in R&D, we had to reignite the innovation engine. We had to fix and make clear what our relationship was with our channel and alliances. We fundamentally had to deliver quarter on quarter, not only to correct the balance sheet, but also to give confidence to the financial community that we're a company that can deliver and will be around for the foreseeable future to create the new world. For us as an organisation, this was a key leadership moment. We had to take and fix the company, and I am glad to say we did that.
"It was fundamentally built on three core beliefs: hybrid was going to be core; the intelligent edge and IoT were going to explode; and thirdly, we needed to build a business around services and solutions which delivered on what customers needed. We've ended up with a company which is more agile. We're more agile - the journey is not done yet. But I think we have clarity of purpose and hopefully this comes through loud and clear."
Isherwood's keynote was structured as a Q&A session, with HPE's CTO for EMEA David Chalmers interviewing him. Chalmers asked Isherwood to further explain the rationale between HPE's spin-merger efforts, admitting that lots of people ask him why the firm did it and what the plan is, adding the messaging is "not resonating" with everyone.
Isherwood said that it all goes back to the wider strategy behind the overall HP split.
"We did [the split] on the basis that [we were] a technology supermarket which is what we had become - $110bn selling everything from an inkjet cartridge all the way through to running the biggest government department from an outsourcing perspective," he said. "We were a very broad company. So we decided, as you know, to separate the company and that's been very successful.
"It's not because the assets are bad, it's because they are not aligned to our go-forward strategy. That's the key thing."
"As the year progressed, it became apparent that the world continues to evolve. Workloads were moving to the cloud - public cloud and also we had to create different economics to make private cloud a go-forward plan. Software-defined took off in a really significant way. You can say that happened three, four, or five years ago, but we saw this accelerating so we felt we had to move. The data explosion we all know about exploded, and mobility clearly became more and more important. So we took the opportunity to spin off two big bits of our business - ES, our services business. We had to give that organisation the right level of focus and [it needed to go to an] organisation which can invest the right level into research and development and has the right cost structures to deliver margins of 11 and 12 per cent and be given the head room to start to grow.
"Secondly we announced the spin-merger of our software business. This was a spin-merger with MicroFocus which will take effect in August. That, again, was to make sure those assets were given the right focus. We really felt those organisations needed the level of focus within organisations which have the metrics for them to be successful. Those are two very significant moves. It's not because the assets are bad, it's because they are not aligned to our go-forward strategy. That's the key thing."