HP CEO Mark Hurd: Technology Transformation Takes Commitment, Investment

HP slashed servers and software applications. The experience holds lessons for California.

by / May 13, 2009

Photo: Hewlett-Packard CEO Mark Hurd/HP

SACRAMENTO, Calif. -- One day after California's sweeping consolidation plan cleared its last legislative hurdle, Hewlett-Packard CEO Mark Hurd gave state IT executives an inside look at technology transformation on a grand scale.

Speaking Tuesday at Government Technology's Conference on California's Future, Hurd said HP has modernized and drastically simplified its technology systems the past four years. And, although the benefits of those efforts have been significant, they didn't come without serious investment and management commitment, he added.


Video: Hear Mark Hurd's advice for the state of California.

Mark Hurd: Tough Transformation

"It's been tough work for us. I think many people focus on our IT transformation -- but it's really HP's transformation," said Hurd, who has turned the company into a $118 billion model of efficiency since becoming CEO in 2005. "This doesn't get done without the CEO's support. You can't delegate this to an IT group. Your chance of failure is quite high without executive sponsorship."

Under Hurd's leadership, HP replaced 87 data centers worldwide with six new facilities, reduced the number of software applications it uses from 6,000 to around 2,000, and slashed its annual IT budget by 40 percent.

Similarly, California Gov. Arnold Schwarzenegger hopes to save at least $1.5 billion over the next five years under an IT consolidation plan that was accepted by the state Assembly May 10. The plan gives control of California's largest state government data centers to CIO Teri Takai.


Video: Watch Government Technology editors comment on Mark Hurd's keynote speech at the Conference on California's Future.

Investment Is Necessary

Hurd cautioned state leaders that HP's transformation demanded upfront investment in modern technology.

"You can't transform an organization the size of HP or the size of California for free. You have to modernize the infrastructure," he said. "More spending doesn't necessarily equal better IT. But starving IT organizations of capital is not sustainable. You have to reinvest and modernize. We spent money to save money."

Hurd added that government leaders need to clearly communicate the value of technology modernization -- and stick to transformation decisions even when things go wrong.

"At the beginning of our transformation, if I had blinked, we would have gone backward. There were tens and tens and tens of things that didn't go as expected. And every time that happened, people said it's IT's fault. It's their transformation," Hurd said. "When we ran into those bumps, there was no substitute for very clear messages from the top. Leaders have to accept responsibility for the IT."

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