The ICT Professional: Craig Wilson, HP

“Our IT costs were described as ‘out of control’,” says Craig Wilson reminiscing about the IT environment of HP. “At one point, we employed more people running our IT than selling our stuff - this was in 2005/06 – There were more than 85 different datacentres and 6,000 applications running our business.”

Wilson is talking to PublicTechnology.net about the dramatic ICT efficiency measures made at the technology giant in recent years, thanks to the company’s then newly appointed CEO, Mark Hurd. Since Hurd’s arrival in 2005, HP has managed to reduce IT spend by half – from $4 billion to $2 billion (about 4% to 2%) – all the while expanding its operations and acquiring the likes of Electronic Data Systems (EDS) in 2008 and more recently Palm earlier in 2010.

Leadership
“The first thing Mark did, and it sounds trivial but it’s probably the most important thing, was to go after cost control. He said it was an essential part of the transformation of the firm.”

Wilson continues, “There’s an interesting analogy with the government; if you think about Francis Maude coming into the Cabinet Office, there’s a lot of stuff on his plate he could have chosen to go after – going after their own internal costs isn’t perhaps where people anticipated him starting. In the same way Mark Hurd did, he’s made this an important priority.”

Tracking IT spend was an important starting point for HP, after it was discovered 70% wasn’t even tracked by the central organisation; it was tracked by the separate business divisions. Once costs had been understood and taken control of by the company’s central hub, it meant the business units didn’t have a way of dragging their heels to the IT changes Hurd and his team wanted to instigate. “The result is several years later, our IT costs have halved; today we run the whole of HP from three pairs of datacentres down from the 85 we had before,” explains Wilson.

“It’s remarkable. We went from having amongst the highest internal costs in the industry to what we believe is one of the lowest costs in the industry relative to revenue. That has not just made it more efficient and slicker to do business inside HP; it’s also a source of making it a competitive advantage.”

Wilson continues to argue the changes made at HP weren’t down to a ‘silver bullet’; instead he says leadership was the most important factor in reining in control of ICT spending, and bringing in tight controls into the way the company managed IT. “I would almost describe it as ‘brutal’,” he says. “But the results speak from themselves.”

Turning his attention once more to the current strategy being employed by Francis Maude, Wilson says he believes the government “has a very good sense of the strategic use of IT”, and states “there’s nothing inconsistent between having that vision and having the sense of what IT can do, and also being focused on eliminating redundant costs”.

“I think he [Maude] is doing exactly the right thing in this regard. Obviously one of the things that is a likely consequence is HP – along with other IT suppliers – is asked to look very hard at what they bill the government” Such measures may sound provocative for the public sector, but Wilson says it’s far from a worrying move; in fact, he draws comparisons to the private sector. “That’s not notably different to the dialogue we have with our commercial clients who are facing tough markets we’re all familiar with.”

He adds, “This is a robust commercial discussion, and yes there’ll be some give on our part but I expect in the long run there’ll be some gets for us as well, and how we can use ICT to make public sector more efficient.”

“What we’re doing is looking across our contracts with government to think of ways in which they can be changed, restructured, and amalgamated, to try and find some savings for government. Obviously we want to do that in a way that protects profit, as you’d expect. So with a bit of negotiation and trading we’re pretty confident we can square the circle and find things government finds attractive – and that works for us as well.”

Redundant duplication of IT systems, together with costs associated with just keeping the lights on is one of the key things stopping government from strategically using ICT, according to Wilson. “The Government has broadly the number of datacentres HP did in 2005, and faces similar challenges. If government could be far more efficient in the way it uses datacentres then it has a political choice in how it deploys the savings which come from that – it could flow it back to the Exchequer or it could choose to invest in the kind of projects that would have a real impact on the deficit.”

“Just saving money from ICT isn’t going to touch the sides of the deficit the government is facing.”

So what would his advice be for the government as it looks to implement some or all of the Government ICT’s Strategy, published by CIO John Suffolk earlier in the year, which included datacentre consolidation?

“My simple advice would be for them to not worry about that, and to outsource the problem. When we take on a big outsource contract we would typically take on hundreds of existing contracts the client has built up over a period of time. As part of the outsourcing process, it would leave us to wade through the jumble of supply contracts they’ve got. On datacentre consolidation or any other part of the ICT strategy, if government thinks it has to wade through it all by itself then we could be waiting for some time.

Wilson continues, “I would say to government don’t take on the task of doing all that sorting through; leave it to the people who do it for a living to sort through the complexity as part of the undertaking.”

Procurement and a change of attitude
The procurement and framework structures in place within the public sector are often cited by suppliers of all sizes as a hurdle to overcome, something Wilson flatly disagrees with. “People always pick on the procurement processes. The first thing to say about them, is the way open procurement rules operate do not make it impossible to procure very effectively or quickly, even though they’re often highlighted as the reason why things take so long to procure things in government. I think it’s about leadership and will. Where I’m talking about leadership, I’m particularly talking about we’ve seen some very successful procurements in the past – and some poor ones.”

“I don’t think there’s anything fundamentally wrong with the procurement processes.”

The drive towards improving ICT services across the public sector, including the rollout of shared services in the local government, is one area where Wilson is attitudes are beginning to change. “There has been an ‘us and them’ attitude between the centre and spending departments, and that’s made it difficult for the government to drive through its IT agenda forward in a coordinated way. I do detect – and I stress this is early days – the greatest determination to change that.”

“My view is there’s a real determination to get after this in the way HP has done.”

Determination is one thing, but there’s a difference between driving through just wholesale changes in the corporate and public sectors. Wilson explains some governments have taken a lot of these spending decisions away from departments and into a “central dictat”.

“Constitutionally once a spending package has been agreed with a department it’s up to the accounting officers in that department how to spend the budget. There is a power and control issue, and at this point there’s a lot that has to be done by agreement. Having said that, once you’ve got the Cabinet Office and Treasury on your side it’s a pretty powerful combination.”

He adds, “My own view is with the right level of leadership I think government has all the powers it needs.”

The implementation of shared services and other efficiency measures across local authorities is another subject that remains firmly on the news agenda, yet HP Enterprise Services’ pre-cursor EDS never looked away from central government. Wilson acknowledges this, and says while EDS was focused on central government, “HP has always been strong in local government, principally selling the technology portfolio, the hardware and software to support local authorities. It has the breadth to address a wide market like that, and EDS didn’t.”

He confirms that the combined company now has the ability to “address a wide range of local authority needs, and already a relationship with a number of local authorities. That’s one string to our bow.” A change in attitude on the local and regional levels is also prompting HP Enterprise Services to act. “The other thing is under pressure there’s the first signs local authorities are acting collectively to address their back-office needs, and I think there’ll be more of that. As those opportunities emerge there’s the chance for us to take repeatable service and offer it to a range of local authorities.”

Wilson adds the company will press on with a renewed drive into local government because it now can, wryly commenting: “It’s not that we’ve got out of bed one day and thought we’d have a crack of local government now.”