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Harvest of Focus
for the HP 3000
|Editorial: Hard Work Makes Ready for Luck|
|Harry Sterling is
taking bigger strides later in his journey. Hes led the HP 3000 out
of the wilderness of being only an adjunct to Windows NT and Unix, staking
out territory where the system can be HPs primary enterprise server
choice. As General Manager for close to three years, Sterling has led the
division through some of its most robust quarters of the decade
bringing the system back from the dead in some eyes, letting it out of the
dungeon for others who always believed in it. Sitting atop sales growth
better than anyone has seen since 1993, the 57-year-old former R&D
chief for the Commercial Systems Division (CSY) could well call the
turnaround his greatest accomplishment, and few would argue. Except
Thats because Sterling knows the sales rebound has only opened the door for another challenge with even longer-term rewards. Even without any firm promise of IA-64 architecture for the system, CSY under Sterlings reins has pulled along new sales faster than HPs corporate experts expected or imagined. Thats enough for now, but not enough for the future, which is why Sterling made a case for migrating the 3000 to its third major architecture. The facts about the 3000 market changed enough to shift Sterlings stance on 64-bit computing for 3000s. In the summer of 1996 he was convinced 64 bits wouldnt sell more systems. Now Sterling acknowledges that the market changes show that his customer base needed the assurance for the future, assurance which growth projects like IA-64 can bring. He committed to the project this spring, signalling a new beginning for a system already more than a quarter-century old.
A few months before that decision, Sterling celebrated his twenty-third year in HP by winning the Presidents Quality Award for the division he leads. In the glow of customer affection at HP World, we asked Sterling about growth other than that of sales: his own personal growth in digging out of a tough spot, managing the growth of the 3000s capabilities while keeping up with customer expectations of reliability and better price performance.
In my travels during the past year especially in Europe, where its a very different market with low-end and mid-range customers I heard a lot of complaints from customers about having to re-buy their software licenses. About how they were getting screwed by ISVs and HP when they did an upgrade from one tier to another tier. It helped me understand why the same processor board on the 9000 costs one-third the price it costs on the 3000. And why is the support price on the 9000 for one equivalent box lower than it is for the 3000?
Frankly, I didnt know a lot of this stuff was the way it was. I knew that our pricing was higher on the hardware. Midrange it was the same, or pretty close, but I knew it was not true on the high end. That kind of just happened over time, when [the 9000 division] went to their V-Class and we didnt, and we held our prices. They dropped theirs because it was an older box and they were only interested in upgrades. They really wanted people to move to the V-Class. It seemed to be an okay strategy for us to be priced higher because that was our high end, and thats where we were adding value.
It finally just got to the point where when you sit down in an individual case and a customer would ask you this question, you just couldnt explain it. It didnt make sense.
So about four months ago I got our pricing people together and Marisa [Morris, the CSY controller] and Roy [Breslawski, CSY Marketing Manager] and said, You know, were really got to take a look at our pricing structure. We havent really rethought our pricing structure in a long time. Weve just been doing tweaking and minor changes. We need to do a whole revamp.
I set the goals and objectives to take the concept that were not being fair out of the picture. Weve got to solve that. Weve got to work with the support organization to make their prices consistent across the product lines.
Roy took a look at it, and within a couple weeks said, We should do a pilot. Lets try something. So we put [Spring Has Sprung] together in two weeks, the 9x7 upgrade. In the meantime we were working out several pricing scenarios in the background, with the goal of announcing something here at HP World. We just saw that thing take off.
Marisa was very concerned about some of our new pricing. She is a great controller not your average bean-counter. Roy was convinced there was a lot of business opportunity, and we would make up the revenue in volume. It was the right thing to do for the customer, from my point of view, and so we did it.
We were also very keen on getting our prices in line for new business. If you take a hard look at the pricing youll see it is very competitive with the AS/400, for example. We are really serious about getting new business. Those are the combinations of things that drove [our repricing].
Whats truly amazing is that if you would have gone back four years ago and asked us to do that, we would have told you it would take 12 months to do. We started this thing in February, in a very short period of time. If you dont have any idea what its like to do changes on HPs Corporate price list, its a nightmare. We actually said well hire contractors to help us do the data entry.
Theres a lot in repricing the tiers, going from five tiers to three. We had to change every single product on the price list
Yes. The way our pricing system works is that every different option combination is different products. Its a huge data entry problem when you do something like this. We eliminated a lot of products. In some of the product lines we dont carry the odd-number of processors, for example. We simplified the pricing structures, because we have to pay a corporate tax on the number of products on the price list. We did a lot of hard work in the last three months. It was a big deal inside to make this happen.
Actually not. I started the process by sitting down with the support channel manager, Mike Rigadonzo, general manager of the Support Services Division. Mark Solle now has hardware support. Mike is from Geneva, where he had the support operation in Europe before coming to the US. He was brand new. I arrived at his office the day after he arrived from Europe. I basically told him what we were trying to accomplish in time for HP World, and pointed out to him some of the examples of the same hardware price but two different support prices.
I said, You know, sometimes I think we get in our tunnel vision for a particular product line we forget that customers have these things sitting side by side in the same room. They get this bill. Help me explain how this box can cost two different prices.
He said, Yeah, that doesnt seem right, does it? He committed to work with us to fix it. Hes worked very well with us.
Ive had a number of people come up to me at this conference someone came up to me from ORBiT and said, Weve tried moving into the Unix world and were just not making it, and were convinced the 3000 is here to stay. Were going to refocus all of our attention on the 3000. I think its gonna really help attract some new ISVs completely, and get some that have drifted away recommitted and refreshing their applications. Its going to be great for us.
I think we can. I think that we actually have some very strong vertical markets where we have better solutions, in some cases. One of the things thats really great about the 3000 is its simplicity and ease of installation and some of these other very large applications, because they are so complex, might actually hurt us. We dont take hordes of people to support the 3000, but some of these applications do. SAP in particular is just a nightmare to support.
I think we have many more thousands of customers out there where we can really target the solutions for their environments where they dont have large IT staffs. They want to focus on their businesses and not build huge IT organizations. Thats where were a really good fit. Thats what were seeing in the airline business. Theyre saying, We dont want an IT organization we want to buy that service from you, and we just want to run our airline. Most of these people are ex-pilots, or still pilots, and they just want to fly. They dont want to deal with all this other stuff.
Exactly. Thats why partnering with some systems integrators is really a good model for them. Were seeing that start to happen, too.
Client Systems has been doing a really good job of bringing these partners together and creating solution vendors. Im really glad to see that happen. Pat Malley from Client Systems had exchanged a few words a couple years ago. Basically I said, Pat, youve either got to get off the fence or Im going to stop giving you the support that Im giving you. Youve either got to commit or not. He was unsure whether that was the right answer, finally thought about it and decided hed give it a try. When he did, his business just took off. Hes doing phenomenal this year. He was kidding me last night, saying You taught me my lesson. Focus really does work.
I just think that continuing what were doing, making the business successes more visible, making our new customers more visible which I think youre beginning to see us do is going to cause some of the ISVs to consider being on the 3000. Ive learned that dragging them kicking and screaming just does not work. From my side I cant carry their business and make it work for them. They have to be committed and want it to work. So I would rather get a few really committed partners than go after some that are really not that interested.
In the next couple of years, particularly as we make visible the customers who have recommitted like HP, whos come out of the closet and admitted were using 3000s inside HP I think a lot of this is going to cause people to reconsider. Were going to keep on that track and keep information flowing. We work very well in mixed environments, we work very well with partners.
I want to have some really strong, happy resellers that I can point people to, so they can ask them about their relationship with HP. I think theyll eventually discover theres a better opportunity working in a smaller pond where you get a lot of attention, a lot of active participation from HP that you dont get when youre out in this huge ocean with no direction and no relationship with your vendor.
I told you last year that one of the things were trying to do is to expand what weve learned in customer focus and take it to the channel. This is just the next step.
I dont know I still learn something every day.
Ive worked with the 3000 the whole time CSYs been in existence. The 3000 existed before I joined HP, because I didnt join HP until 1975. It was originally part of the Data Systems Division, the old 1000, and then it split off into GSD, when Ed McCracken came aboard. Then it split again and became CSY about 1980.
I actually started in the manufacturing organization, working on the Materials Management MFG/3000 product. In 1980 they split the General Systems Division and took the terminals to Roseville and split off the HP 250. It retained the GSD name when we created the Commercial Systems Division. Then I went away for a while with manufacturing systems and was in the Materials and Productivity Division for three years, and then I returned to CSY. So I havent been there the whole time.
Ive challenged my engineers that I want to see it happen before I retire, and Im planning on doing that probably at 62. Thats when all my plans would be ready. Five more years is about what it will take for us to get completely to [IA-64].
The answer is yes. We have different businesses, and you can only go down so far and have common leverage. The hardware level, even there sometimes its questionable. And youve seen cases where we havent necessarily supported all the different platforms that HPSD [the 9000 group] has supported. We created some intermediate price points with our products that they havent done with theirs, because its a different market. Theres a different set of needs, a different set of customers and different sizes of the businesses. Theres a certain level where you can leverage the investment, and above that level there are unique investments. In those cases, the applications you need to be on top of are going to have duplicated effort.
The same thing is true of [HPs] workstations. You look at the workstation business and youll see theres duplication on their side on some of the things theyre doing versus what IASD [the Internet software group] is doing. At some point you have to become unique to your business aspect. But just consider the leverage we get from HP that IBM is not getting for their AS/400 versus their mainframe. Theyve got complete parallel investment levels all the way down to the chip.
We have moved that up a level. Im not convinced you can get it all the way to the end, where its just a repackaging thing. I dont think you can get quite that level of customization without some duplication. Even HP has some duplication in terms of functional staffs. Would it be more functional to throw it all together, and have one controller instead of two? Probably, but wed lose focus that way.
If and when we need to, we can certainly do that. It will probably require that we do a lot of the porting work, as we have in the past. Thats all being done in Bangalore, India, where Oracle has their porting center. We have three engineers who work at Oracles site for MPE. Thats an ongoing commitment that we have to Oracle and they have to us.
The reality is that we do not have a lot of customers using Oracle. Its a very small number. Weve not been successful in that. You know what happened when we tried to push customers to relational databases. We learned our lesson there. We basically leave it up to the customers to choose whats the best solution for them. We want to give them the maximum flexibility.
The reality is that a lot of the reasons for doing Oracle was to have new applications available on the 3000. Frankly, Oracles not been been real successful with their applications suite. So thats kind of been a failure, from our perspective.
We have a few customers who are using Oracle, and were certainly going to make sure that we continue their success. Im just not sure Im going to spend a whole lot of money in getting something to the platform that we may not need. This is a perfect example of one that were going to drive based on customer need, not necessarily based on any perceptions.
But we know thats not true. It has not happened. It would be an investment strictly to satisfy the needs of a few current customers, not for new business.
From a cost-benefit point of view, we could do it pretty economically in Bangalore. Its not so much the porting expense as its the ongoing support expense thats the issue. I think that we could probably get some assistance from Oracle. If we do actually move to the next release, its less of a support problem for them. Then theyre not supporting an older release and a newer release. They have committed to supporting the current release for as long as we need them to support it.
Weve got some options and some things we can do. But its going to be an investment, and Id rather not use engineers for that if its not really necessary. So Im going to drive it from a customer need. Youre right, I might ask the customers to pay for some of it.
If theres a good business case to do it, then Ill do it. Its just that right now, looking at the number of customers weve got, it doesnt make a lot of sense to do.
One of the things that really excites me is learning something new. I still am thrilled about learning software. Im currently teaching myself Visual C++, because I like to stay in the bits and bytes every now and then. But from a career point of view, I really like to be challenged and learning something new.
I was an R&D manager for a number of years, and it got to the point where I really wasnt learning a lot of new things. When I made the shift into the customer-focused kind of activities [as R&D manager], it really broadened my horizon and my opportunity to learn new things. It became a new challenge and it gradually shifted away from the technology. I still go back to the technology as a comfort, a fun thing to do.
Exactly. Thats what I spend time doing. I have a little vacation coming up, and Im actually planning on staying home and twiddling on my PC, probably upgrading it. I built my own PC last Christmas.
I know. See, Im still basically a techie underneath all of it. But from the job point of view, I really wasnt being challenged as much. In my new role, its the relationship kind of thing thats become the new challenge. And Im seeing all kinds of benefits, not just in the business side with the customer relationships, but even in the relationships within the organization, with my people and now with other general managers.
Ive been asked to come and speak to other [HP] organizations. I was in Fort Collins and spoke to two different HP entities there about customer focus. Ive created a whole interesting little pitch that I do with customer focus. In Bangalore, India theres a technical seminar series they run every month. There were people there from Motorola, Oracle, IBM and all the major companies, and they asked me to come and speak about customer focus. As always, its targeted for an hour, and then theres Q&A. After a half hour of questions they had to cut off the Q&A. People are so interested in the topic.
Yes, but its had all kinds of benefits. I thought it was just for the business, but its helped me in creating a higher level of morale in the organization. Because the bottom line is when you take the time to have those kinds of discussions with people, they feel that you care about what their problems are and needs are. They same thing is true for people who work for you. If you take the time to listen to them, then they feel you really do care about them as individuals, you really do want to make their environment better. Thats what I strive for.
Theres a difference between customer focus and customer advocacy. We started out with a term called customer-driven when we started this whole program. We realized that implied you would go to a customer, they would tell you their top the customer always has a list of 10 things they want you to do. At least 10. Sometimes theyll start with three, and then you take them off and theres three more, and then theres another three. Theres always something thats on their list. Because most people are problem solvers, they give you the answer they dont tell you the problem theyre trying to solve. They say if you will do this, this, and this, Ill be very happy.
Well, we were concerned that our engineers would go out, the customers would give them a list of the three things they wanted, and everybody would come back and churn those things. That really wasnt what we were after. What we really after was understanding the problems across a large set of customers, and then coming up with a solution to meet the needs to this. Thats where you continue to provide the innovation and creativity because youre still solving problems.
When you see this a trend across many customers you can solve it in many different ways. Then youre more creative about a way to solve it, to satisfy the needs of the majority. Thats why we then realized customer-driven implied the wrong thing. Customer focus was what we were really after customers environment, customers problem, the customers business. From that understanding develops solutions to meet their needs.
No, customer advocate is equivalent to customer-driven. We didnt want our engineer to become a customer advocate. That was the point. They would come back, be really connected to that customer, and they would become an advocate for that customer. Whatever that customer wanted, they would want to drive to do. We made it very clear to our engineers that was not what we wanted.
The whole thing behind this is change management, and creating change. Thats a very interesting topic for me that Ive put into this talk. Changing your organization and changing your people: Theyre entrenched doing things they way theyve always done them. Theres an attitude sometimes in HP in particular that goes, Well it doesnt matter. If the business tanks, HP will take care of me. We say, No, no, no. Ive seen some people with this attitude in some of the other organizations theyve asked me to come visit. They say, Why should we change? This is the way weve always done things before. Its a real hard thing to create that change.
Its been an interesting evolution of the idea. One of the things thats happening now is that because other entities in HP are paying attention to us Ive been on this circuit now for about six months its really helping other entities who realize they need to do this to jump-start it and avoid some of the things that we went off in some roundabout way.
One of the things weve created in CSY is this whole value of being very flexible, being very reactive. The reality of it is that were an organization of change.
I can remember just four years ago, as an R&D manager, complaining to Olivier [Helleboid, then marketing manager], Why cant you come up with a plan that lasts 12 months, so we at least have time to execute it? The model then was that marketing told R&D what to do. I would be so frustrated with it. Wed put these plans in place and three months later theyd come back and change the priorities. It was constant flux, and we would always be reactive.
The reality now is that this is exactly what were still doing, but were doing it with a positive knowledge that we have to do it. This is the way the world is, and we have to react this way to stay competitive and our whole organization is behind it now. So there isnt this in-fighting going on, the way there used to be.
Absolutely. Its also a lot more fun. You can talk to Winston [Prather, R&D manager for CSY] about that, but he tells me hes having fun.
No. Im basically an introvert, and I like to be by myself. I like to go walk in the woods alone, and doing this kind of stuff in front of people, the talks, is not something I ever believed I would do. But its been challenging and its been fun. Ive learned a whole lot about myself, and people and about the business. Its a fun time.
I dont even think they understand what I do. My youngest son does because hes into computers, and he has his own business in Los Angeles. Hes a struggling screenwriter, but he makes his living with his own computer business, doing customized databases for small companies. My parents never did. I still have to take the trash out on Wednesday mornings.
Copyright 1998, The 3000 NewsWire. All rights reserved.
Copyright 1998 The 3000 NewsWire. All rights reserved