Giants: HP - Group Force

It's the widest range of tech activities in India: systems, storage,

printers, software, services. But at the core of HP's all-round performance is

a sales engine that's robust and stable. Both in people (most senior

management has been around since before the HP-Compaq merger) and structure.

The one change was global: the disbanding of CSG (the customer solutions

group, a common enterprise sales force), handing back sales control to SBUs. It

was driven by a new CEO who found HP “complex, matrixed, difficult to deal

with... up to nine layers between CEO and customer...”. Mark Hurd, the low

profile former NCR chief who took over HP's reins in April 2005 from fallen

superstar CEO Carly Fiorina, also brought with him turnaround and services

experience from a small but similar company.

BALU DORAISAMY Group MD, HP INDIA

HP India Sales



HP has seven SBUs: ESS (enterprise storage and servers, HPS (services),

Software, PSG (personal systems), IPG (imaging and printing), HPFS (financial

services); and corporate investments, which doesn't operate in India. ESS, HPS

and Software form TSG (technology solutions), an enterprise sales group for

servers, storage, software, services, and SI alliances. PSG and IPG now handle

their own enterprise sales, apart from managing the company's retail network (IPG)

and reseller channels (PSG).

HP India MD Balu Doraisamy handles TSG directly. TSG includes enterprise

systems and servers, storage, software-and HP services (HPS). With big banking

and telecom deals (including Bank of India, Bank of Baroda, and SBI), HPS,

though just 7% of sales revenue, is crucial both for its margins and the

strategic entry it can provide for product sales.

IPG rules the market in its product areas: printers, multi-function devices,

scanners... Its real income is from supplies-ink, toner and paper-which HP

has to defend against refills and third-party brands. HP led a shift from inkjet

and laser printers to all-in-one devices. And to the low-running-cost

'business inkjet', to fill its low-end laser portfolio gaps.

PSG sells desktop PCs, which saw good growth, and notebooks, which had a huge

jump. It does sell iPaq handhelds too, but with zero focus thus far. PSG also

manages the reseller channels, excluding SIs and retail. It manufactures some of

its PCs in Bangalore.

Overall, HP India matched the global focus on services, and on “product

margin improvement”. This included bundling and cross selling, such as

services with products, printers with PCs; and pushing services and ink and

toner supplies.

Across the Spectrum



GDIC, the Global Delivery India Centre (once Digital GlobalSoft) has now

split into two. Som Mittal heads GDAS (Global Delivery Application Services

center), for application solutions to customers worldwide.Â

The new GSCB (Global Solution Center, Bangalore) contact center provides

tech services, such as a helpdesk, for enterprise customers-“laptops owners

to data centers”.

		IPG (imaging and printing) remained HP's most profitable SBU worldwide. Though much of the topline growth of 8-9% in each of the past two years came from PSG and TSG. In its actual fiscal year (Nov '04 to Oct '05), HP's net revenues were $86.7bn, with a fifth coming from services (including HPS). In that year HP spent $1.1 bn on branding and advertising.
Source: HP Annual Report % of total revenues (and margins). Figures above are for May 2005 to April 2006, the closest match to India's fiscal 2005-06. Figures in (brackets) are operating profits.

CCC, the Consumer Contact Center, is part of IPG, Americas, providing support

for imaging and printing customers. Its 'process improvement initiatives'

have been replicated across HP's partners.

Global e-Business Operations, a subsidiary of HP Global Investments, Europe,

has moved from HP back office to 25% BPO (going on to 50% by 2008, with 2,000

more people). It handles finance and admin processes for global customers, such

as P&G (part of HP's 10-year, $3 bn outsourcing deal).

HP Labs India focuses on ICT research for emerging markets:Â

language and interfaces; social, cultural, economic and tech drivers, to

assist product and service designers; affordable access devices; and mobility.

STSD, the Systems Technology & Software Division is an HP subsidiary

focusing on R&D for products such as HP-UX, diagnostic tools, storage, and

HP OpenView, largely for the APJ region markets.

GPSI (Global Procurement Services India) focuses on chip heatsink design,

thermal modeling of data centers, mechanical parts/assembly designs, electronic

product design, supplier identification & development and sourcing of parts

for HP in 18 countries.  GPSI also

'markets local capabilities to product generation groups'.

The IPG Development Centre is a part of Offshore Services Development, an

extended R&D centre and “development partner” for software and firmware

on all-in-one devices, and PhotoSmart and LaserJet printers.

The large spectrum and all discrete entities leads to some complexity. Global

e-Business is a subsidiary of HP Europe; CCC is a part of IPG Americas; HP

GlobalSoft Pvt Ltd still lives on... Parallel to Hurd's global restructuring

that's due to end by October 2006, Doraisamy says that some consolidation is

being considered for the year ahead.

Prasanto K Roy



pkr@cybermedia.co.in