HP's new CEO drives fearless growth strategy

Hewlett-Packard Co. brought in a new CEO to energize the company. What has been the impact for the government business?

Hewlett-Packard Co. has no fear of change. In 2010, newness defined the company, starting at the top and working its way to acquisitions and contracts.

In September, Léo Apotheker, formerly CEO at SAP, became HP’s CEO and president. He took the job amid growth at the Palo Alto, Calif., company. HP’s revenue was $126 billion in 2010, up 10 percent from $115 billion in 2009, for net earnings of almost $9 billion last year. The firm ranks No. 7 on this year's Top 100 with $3.8 billion in prime contracts.

“The appointment of Léo as our chief executive officer and president of HP was a great move for us as a company,” said Dennis Stolkey, senior vice president of HP Enterprise Services’ U.S. Public Sector. “As we have gone out to some of our federal and state customers, a lot of them already know Leo, and that’s a very comforting thing for us.”

Enterprise Services was integral to HP’s success last year. Its revenue grew to $34.9 billion in 2010 from $34.7 billion in 2009, according to company reports.

Apotheker isn’t the only new face at HP. Enterprise Services added several managers. Retired Navy Rear Adm. Betsy Hight, formerly of the Defense Information Systems Agency, leads its cybersecurity practice; retired Navy Vice Adm. H. Denby Starling joined as vice president of command and control for infrastructure services; and Executive Vice President for Enterprise Business Ann Livermore is temporarily leading Enterprise Services while the company looks for a permanent leader.

“We’re not going to miss a beat here,” Stolkey said. “We’re dedicated to our clients’ mission and to shareholder value, and we’re going to continue moving in that direction.”

That direction includes a company investment of $1 billion in Enterprise Services to promote growth. Under the multiyear plan, announced in June 2010, HP will consolidate the group’s commercial data centers, management platforms, networks, tools and applications. About 9,000 jobs are expected to be eliminated in the process, but Stolkey said that won’t affect the Public Sector business.

“We’ve been on the growth side of the equation, and instead, we’ve been hiring and growing our business,” he said.

One path to growth last year was through acquisition. HP made several strategic purchases, including Palm in July 2010 at a value of $1.2 billion, with an eye toward the company’s webOS for mobile devices. September saw other major additions: 3Par Inc. at a value of $2.4 billion, largely because of its storage systems designed for cloud computing; ArcSight LLC, a security and cybersecurity firm, valued at $1.5 billion; and Fortify Software, an applications security specialist, for an undisclosed amount.

Contract wins also helped. In July 2010, the Navy extended its continuity of services contract — valued at more than $3 billion — with the company to help transition the service from the Navy Marine Corps Intranet to the Next Generation Enterprise Network. At year’s end, NASA tapped HP for the Agency Consolidated End-User Services program. Under the contract, worth $2.5 billion, HP will manage, secure and maintain the IT infrastructure across NASA’s research and flight centers.

Going forward, Stolkey said the focus will be on cybersecurity, cloud computing, health IT, applications transformation, mobility and data center services, all with an eye toward reducing government costs.

“Our federal economy [has a] $1.3 trillion deficit,” he said. “The interest that we’re paying on the deficit alone is $4 billion a day of taxpayer money. That’s a huge amount. It’s a challenge for us to try to figure out ways to fulfill the government’s need to save money without devastating HP or the other suppliers and partners that are around the Beltway that supply government with products and services.”

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