Making the General Systems Division (GSY) and the Commercial Systems Division (CSY) work better together will demand being frank about each group's strengths, weaknesses and potential. Osaka will have to call on strong leadership skills, since the GSY and CSY have been competing for customers over the last seven years. That challenge may let Osaka demonstrate the training and drive that shaped his rise in HP. As a boy he worked to establish a career as a military officer -- joining military drill teams, including one that was an offshoot of the Devil's Pups, a group that Osaka describes as "13-year-old boys who wanted to be Marines and kill people." Osaka recently described the experience in an HP leadership seminar for its top executives, saying that he focused on bearing and carriage as a result of his training. But what he ultimately learned was how to motivate and train a team that won competitions without commands, showing through silent drills how closely aligned people could be without the command and control system. It was fine training for leading inside HP, a company with copious autonomy and no lack of leaders.
Osaka started his HP career in 1979 selling HP 3000s in Southern California, a territory which at the time had the greatest concentration of MPE systems per square mile of any place other than HP headquarters. Over the years has never been too far from the system, sometimes product managing software, at other times carrying CSY through a difficult time to a better, more customer-focused path. Along with present CSY GM Harry Sterling (who was then the R&D leader of the division), Osaka was first responsible for setting CSY on its present course of getting close enough to customers to ensure their satisfaction. Since he's had so much contact with the 3000 in the past, we asked him at HP World how he hopes his training, bearing and candor can improve the alignment between HP's two major business computer divisions.
One of the things I appreciated during your term as HP 3000 manager was your ability to give customers the straight answer. You could stand up before customers and say "We're not going to do that." What prompts the kind of action that not everyone in HP management embraces?
I believe in candor. I have been told it may not be good for the long term. But you have to do what you've done to get where you are, in order to continue to be successful. If our organization want to decide that somehow it doesn't fit, then I'll go do something else. It's a core value for me. I had periods of time in my career where for reasons of business I was expected to be less than honest. Every time I deviated from my values, it was the worst I ever felt. Not only did I feel like I failed customers and my responsibilities, I felt like I failed myself.What are the things that GSY is really good at that you want to cross-pollinate into CSY?
GSY is very good at creating partnerships in the marketplace to create enormous pull for a combined solution. A lot of the early growth has been fueled by the partnerships with Oracle, Informix and Sybase, application companies like SAP and Baan. I think CSY's done a pretty good job of learning from that. If we had learned it earlier, we probably would have a bigger CSY business.Mentioning SAP seems to call to mind an opportunity that's past for the 3000.
GSY is also good at imagining what the future will be like, and then creating a way to make sure that our customers can get to that future.
I think there are some opportunities. It's really a tough business situation. Success in the industry is no longer a product only of what you do. It's a product of what 20 companies do with you, and all the dynamics that are faced by those companies when they make their decisions. The environmental dynamics are making it more difficult to make all the planets line up around new opportunities for the 3000. I think there are some places where the continued strength of the MPE business are an intriguing linch-pin in the way that things like electronic retailing are going to emerge. You could imagine that our efforts around electronic retailing in the industry would sprout from what's being done today with the 3000 in mail order marketing. I'm confident that it is a seed, I'm just not sure what all the other seeds are going to be to make it happen.There's a small cadre of 3000 users who aspire to be developers. They want a low-cost development system, the kind of deal that Microsoft offers on development tools, or IBM offers with RS/6000 systems. In return for this generosity, they want to provide applications for the 3000. Why doesn't HP want to extend that generosity to these developers in waiting?
In the way we look at the business overall, we're relatively indifferent about where the profitable revenue comes from, as long as we can get a strong, sustainable position in the marketplace, one that allows us to grow a profitable business. We're trying not to be technology bigots, because we've learned that technology bigotry only sends us down pathways that are not always optimal.
I wish the world was fair, so that the best technology always won. The best overall management of a system across companies wins.
It may be faulty logic, but I think we view the 3000 as being in a phase of its life cycle where those kinds of programs are inappropriate. It's not putting our investment where our biggest return in the market's going to be. We may be wrong, but we've made that decision.You're making us glad we didn't ask you about the NewsWire's chances when we started.
The whole dynamics around the application software industry have changed. Because of Microsoft, it's turning into a volume marketplace, and there's not enough volume in the 3000 business to fuel the early growth of such companies. If I were a developer, depending on what kind of application, I'd say put it on Oracle, or Informix, or NT BackOffice. Then I'd feel more comfortable I'd get a return.
The NewsWire is an interesting thing. Information that is critical to this user community has high value, because HP has become less effective at delivering that information to the broad user base. That's a viable business plan, but there are others [in this market] that people talk to me about that don't quite make so much sense.Do you believe a computer system can remain a viable enterprise choice without growth in the number of its applications? Can a system like the 3000 maintain its place on in-house software?
I'd also argue there are people who have built a viable business on the 3000 who are now faced with the next incremental step challenge. That's also tough. If they want to make a shift into another platform, or into another business, they have a retooling challenge. That challenge is always what gets companies into trouble as they grow from one stage to the next stage. That's why so many businesses fail in the first five years.
There's a fervent belief in HP around independent business units. That's because if you have the wisdom to see an opportunity, you create it away from the current business, so you don't have people who are constantly conflicted with old versus new. They're allowed to grow at a pace which the market will fuel.
With the mainframe, there is very little new application growth going on. My guess is that we have at least 10 more years of very strong presence in large companies and medium sized companies with the 3000 in the marketplace. What I don't know is what people are going to buy. For a long time I have had as a core belief that the life of any computer is tied to the lifespan of the application. The same thing is going to apply in the MVS marketplace as in the MPE marketplace and in Unix and in DOS. Look at the AS/400 and burrow down to look for the System 34 applications. I have to give IBM a lot of credit for doing a masterful job around the AS/400. They've also learned some things from us. They've built the AS/400 on a strong series of platforms. They had a larger investment base [than the 3000] on which to build the AS/400.What if that 10 years doesn't cover a company's plans for the 3000?
I pick 10 years as an arbitrary time. We expect to be serving 3000 customers for a very long time. The philosophy within HP and CSY is that we are committed to this platform as long as our customers are. And I believe our customers are committed to the platform as long as the applications they have on it have value.What is the role that HP is supposed to play in application development issues regarding the HP 3000?
I can't speak to that question specifically for the 3000, but I can speak to it overall. Since we're not an application development company, we don't go and pick places to develop an application. What we do is we pick market opportunities where we think the biggest opportunity will be in the industry. The scan we do is to find the companies that best understand the problems those customers face and begin to bring together the best capabilities inside HP and with our other partners to go after that. The platform decision ends up being made in the context of those partnerships. If it turns out the best solution is delivered on the 3000, great. If it's a 9000, great. If it turns out it's NT, it's also great.It sounds like a process that's influenced by other companies' choices, where HP is following those partners instead of leading.
We can be a leader in the identification of new market segments. Because we're now the second-largest computer company, people pay attention to where we want to focus our intentions. But it's very difficult to get a software company to do something that is against their own best interests. They have a set of factors, some that are the same as HP's and others that are quite driven by their own view of the world, around volume. It's become a community of players, rather than one strong dominant player. It's not CSY's inability to partner that causes the challenge. It's critical mass.Since critical mass changes slowly, if at all, what can you say to the customers in the 3000 market who worry about the system's future to make them stop worrying?
Harry Sterling's presentation [at HP World] really encapsulated the way I would want our customers to understand how we look at any one technology. If you get tied to just one technology view, certainly you know over a 100-year timespan there's going to be a shift. Maybe at a 20-year timespan, or in some cases a five-year timespan. At the end of the day, what we want to be able to do is help our customers manage those shifts -- because those shifts do come.It may be a long education process to convince customers who love the 3000 as an application platform that other platforms may be needed in their environment.
To be very frank, I would for it to be a different story. It's much easier to deliver the value that customers expect on the 3000 than it is with other platforms, because we have control over more of the pieces.When you were GM of CSY, you told me that your intention was to pick the "low-hanging fruit of AS/400 customers" for HP 3000 migrations. What ever happened to that plan?
We executed that strategy with the 9000.Why the shift?
When we went to look for the application partners, it turned out they were very conscious of being caught by IBM on a closed platform, and having their business dictated by IBM's whims. They were very interested in creating a situation where that would not happen again. Their perception of the 3000 was that it was just like the AS/400. At one level they liked it, because it was a better packaged solution overall than Unix ever will be. On the other side, they wanted new markets, new volume and more flexibility as they went into the future.A customer tells HP they're looking for an application they can't find on the 3000, and they don't want to invest in NT or HP-UX (they think the former is too new and doesn't scale, and the latter takes too much maintenance). What do you say to keep them from investing in an AS/400 if the application is there?
They're going to buy an AS/400. Unless you can get the volume of the application up on whatever platform, the customer will never get the support or the latest enhancements, in order to convince the source of that software to make it a compelling choice. I hate losing a customer like that. But in the places where this is the scenario, the customer's got no choice. They're running their business, and they don't care about their computer choice.I don't know how many people want the 3000 to be HP's dominant choice, but customers here at the show are saying "Just let me hear that HP is trying to win new customers with the HP 3000."
We try to optimize for places where we think there's going to be a great opportunity for us to generate new customer activity and support the add-on requirements of our existing customers. If we become too dominant in our view of playing one of those cards, we actually sub-optimize our overall capability.
We are absolutely winning new customers with the 3000. But I will tell you if you look at the number of new customers we're getting with the 3000 and versus the numbers of customers we're getting on Unix and NT, the numbers are daunting. That's not happening because of what we're doing, it is happening because of this whole environment. A lot of companies have made choices about application platforms, and they look at it as Oracle, Informix and Sybase. They're not even thinking about hardware platforms until they think of what's the best platform for Oracle, Informix or Sybase.What's the most important thing HP can do to improve the interoperability of HP's GSY and CSY divisions? How close could they get after being so adversarial?
There is a community where there is overall momentum around MPE, and in those places where that community is strong, we're getting new customers. Sometimes I flog myself about my own contribution, or lack thereof, in building critical mass for MPE.
It was adversarial in 1989. I wouldn't say it's completely turned around, but there's very little in the way of adversarial relationships inside the organization today. I have a frustration that there isn't as much cross-organizational learning as I would like. I'm a big believer in knowledge being a big driver in our company. There are things in GSY and CSY that share know-how. As a company we haven't quite cracked the nut on how to make knowledge easily accessible in other organizations. We do it today by moving employees, and that is helping a great deal. The toughest part is that we have different subcultures within HP. Each division has its own, and the cultures are very strong.Do you think the arrival of NT will help GSY see that, now that they're seeing some pressure on their other flank?
I am so proud of what CSY has done in customer focus. It's just blossomed to be a religious fervor. I so desperately want that for the rest of my organization. I won't say it's not acceptable culturally, but they see what CSY does and they don't quite understand its value yet. Somehow I need to be able to get them to see the world in a different plane.
No. That in fact will be distracting. If what becomes a team motivator is another technology or a competitor, then the attention in the organization is focused away from the customers. I want to see a driving force that draws the attention of the people in the organization to customers. I have some ideas about how to do that. The continued challenge in a mixed-world environment is going to be how to keep the customer supported with an integrated solution, and how to create an advantage for continuing to do most of your business with HP. In order to get that to happen, we have to get everyone focused on the customer.