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Craig Zarley & Steven Burke
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HP Names New Chief Executive

The search for a new Hewlett-Packard CEO is over, but Carly Fiorina's successor, NCR's CEO Mark Hurd, faces a tough challenge in rebuilding HP's channel.

Hewlett-Packard on Tuesday said its board of directors unanimously selected Mark Hurd as president and CEO.

Hurd, 48, president and CEO of NCR, takes the helm at HP on April 1 and joins its board. He takes the chief executive reins from interim CEO Robert Wayman, who took over when the HP board ousted Chairman and CEO Carly Fiorina in February.

A 25-year veteran of Dayton, Ohio-based NCR, Hurd will need to get up to speed and move quickly to solidify HP's channel strategy or risk losing more market share, solution providers said.

"He needs to act fast to energize everyone and if he acts slowly, people will question him," said Timothy Joyce, president and CEO of Roundstone, an HP solution provider in Alameda, Calif. "I don't think he has to come in and expound on an entirely new vision. He needs to execute on the vision that is already there, much like with Lou Gerstner [former IBM chairman and CEO]. He needs to be a leader, not a cheerleader."

Said John DeRocker, senior vice president of sales and marketing at Nexus Information Systems, Plymouth, Minn., "He needs to clean up the channel conflict."

Other solution providers agreed that Hurd needs to get all of HP's disparate organizations in sync on a common channel vision.

"IBM has an organization that is very large, but it is seamless and it is all aligned [in its channel strategy]," said Laurie Benson, CEO of Inacom Information Systems, a solution provider in Madison, Wis. "HP has all of these pockets of talent but they don't view each other as one wonderful organization serving [solution provider] clients. The first thing that the new CEO needs to do is state what is important to Hewlett-Packard because there are a lot of different opinions. Who are they? What do they stand for? This isn't about getting the top line revenue up tomorrow. It's much more about the very roots of what the business is about."

It is unclear whether Hurd is channel-friendly, NCR partners said, adding that they weren't sure how much of a role he took in setting the $6 billion technology company's channel direction. One source said Hurd has relied heavily on the heads of each business unit to set the sales strategy.

A top executive for a retail point-of-sale solution provider said that NCR, under Hurd, has maintained higher commissions for the NCR direct-sales force. That has caused channel conflict in the high end of the NCR retail POS market, the executive said.

The NCR commission structure stands in contrast to the channel-friendly approach taken by IBM's POS channel effort, the executive added. "IBM doesn't want to sell direct," said the executive. "They want to sell through the reseller. That's not the case with NCR."

NCR generated 90 percent of its $627 million retail POS product revenue in 2004 through its direct-sales force. The company also derived 75 percent of its $1.1 billion in sales of financial self-service or ATM products through its direct-sales force. NCR does have partner links with system integrators--including EDS, Accenture, Capgemini, BearingPoint and Bull--through its $1.36 billion Teradata data warehousing business.

Rich Peterson, president of Abacus Business Solutions, a Clearwater, Fla., NCR solution provider specializing in hospitality POS systems, said Hurd appears to have had a positive impact on NCR's channel efforts. "NCR has really come back in the last 18 months," Peterson said, noting that his NCR sales are up about fivefold. "They definitely know and understand the channel."

Hurd rose through the ranks at NCR and was named CEO in 2003. Before that, he was president and COO and was responsible for driving the company's businesses, including retail store automation systems, Teradata data warehouses and automatic teller machines.

By tapping an external candidate, HP passed over Vyomesh Joshi, executive vice president of its Imaging and Personal Systems Group, who many VARs had hoped would succeed Fiorina. Solution providers saw Joshi as the strongest channel advocate among HP's current executives because about 90 percent of his division's product sales went through the channel.

"V.J. would have been terrific," said Roundstone's Joyce. "But it was an absolute requirement that HP bring someone from outside the company to get a fresh view."

In a prepared statement, Patricia Dunn, HP's non-executive chairman, said the HP board unanimously selected Hurd based on his track record leading a complex organization.

"Mark came to our attention because of his strong execution skills, his proven ability to lead top-performing teams and his track record in driving shareholder value," Dunn said. "He demonstrated these skills by turning around NCR, which, while smaller than HP, is a complex organization with multiple business segments."

This story was updated at 4:10 p.m. EST.

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