Kirk Klasson

Dither, wither and die…HPE’s PointLess Strategy Strikes Again

Well, its official…

HPE is strategically clueless or maybe PointLess would be more in keeping with their latest branding scheme. This week HPE’s PointNext service division announced it had acquired Cloud Technology Partners (Cloud TP). A curious move for several reasons. First, HPE has just finished selling its own services business ostensibly to become leaner and improve margins. At this point, well beyond the knee of the cloud computing curve, there is nothing all that unique about moving from a proprietary, on-prem to a public, service-oriented, time-share environment, in fact, nearly all tech consultancies boast they have the chops to get this done. Next, HPE sold its software, including any assets and interests in its Helion Openstack infrastructure to Micro Focus where it was merged into the SuSe kitchen junk drawer of open source stuff. (see HPE Builds a Boat in Its Basement – December 2016) SuSe and HPE consider themselves strategic partners when it comes to marketing to the open source, Do-It-Yourself private cloud builder set, a market of minuscule proportions given the amount of open source, Do-It-Yourself private cloud deployments.

On the other hand, Cloud TP was a staunch acolyte of AWS and they made no bones about it. Next, while HPE has been messaging it wants to be a leader in agnostic, hybrid technology infrastructures, the folks at Cloud TP have a history of backing public cloud only deployments and suggesting that anybody who thinks private clouds are economically and technically viable is a brain dead rube. Maybe that wasn’t apparent during the diligence phase of this transaction. Cloud TP was also marketing a proprietary version of cloud monitoring software where HPE had recently acquired Cloud Cruiser to fulfill that mission.

The Cloud TP transaction comes on top of a bouquet of head scratchers when one tries to sort out what exactly is HPE up to (see Something Weird This Way Comes – June 2015). That is other than wasting shareholder money. Take Simplivity. HPE was already a leader in hyper-converged hardware, was even a reseller of Microsoft’s open-compute Hyper-converged 250 cloud rackable appliances. So $650m got HPE a shop with a revenue run rate well south of $200m, let’s be generous and call it $160m, for a product with an 18 month obsolescence horizon and a less than .000001 increase in market share. Let’s see… divide x by z and carry the 1 equals… batshit crazy.

Now all of this might make sense if there was some unified Theory of Everything (TOE) guiding these decisions. For instance, if HPE were attempting to position itself as the primary supplier of ¬†hardware to the public cloud providers. That ain’t happening. Or say, the primary supplier of consulting services to public cloud providers. AWS needs HPE’s PointNext “like a fish needs a bicycle”. Or maybe becoming the primary service provider to large scale private cloud deployments instead of, say, DXC who recently acquired all of HPE’s consulting and technical skills.

Scant wonder that the rumors surrounding Meg Whitman’s imminent departure weren’t leaking from the Uber board but likely started by the folks at HPE.

Hope, like delusion, springs eternal.

Oh, and BTW…

Immediately after HPE announced the planned acquisition of Cloud TP, they announced that they were going to reduce headcount by 10% worldwide. Now that’s the kind of visionary thinking that captures the imagination of PE folks of every stripe.

And for those of you waiting for the other shoe to drop, this just in. According to stock analyst Simply Wall Street HPE’s EPS is down by 99.2% Y-o-Y. A couple more quarters and they’ll be selling the furniture.

 

And those of you holding this turkey waiting for PE to come along and bail you out you just might want to reconsider. By the time the buzzards make up their minds there might not be anything left.

The Fat Lady Books an Uber

Well, it ain’t over yet but things are drifting in that direction. Yesterday HPE announced that CEO Meg Whitman has decided to declare victory and order the chopper off the embassy; I think that’s on Hanover street. Her mission accomplished, its time for her to decamp to the next great chapter in her astonishing career. Given the sorry state of HPE one might ask exactly what the mission was in the first place. What exactly was her vision? If she had one. What exactly were her values? If she had any. And what exactly is her legacy? Most leaders actually care about their legacy. But given the current state of HPE, Meg doesn’t seem to be talking much about hers.

So, it might just be time to put this moose on the table. There are a very small number of very high profile, high tech female executives and most of them seem snake bit. Meg, Ginny, Ursula, Melissa. Now it would easy to conclude that they own it. But statistically speaking that wouldn’t really amount to much. Given the number of male CEO’s that have failed spectacularly these women don’t even put a dent in the curve. They are simply more visible. I would conjecture that the reason they seem snake bit is because, indeed, they were.

We are at a moment in corporate governance where for institutions of a given size and in given industries it becomes imperative to demonstrate your political correctness. However, there’s one small rub, virtue signaling doesn’t have a seat on the board, even when the board is doing its best to signal how politically virtuous they are. Most of us have been taught that there are three primary constituents that make up a publicly traded, going concern: shareholders, customers and employees. Private shops are off in their own “through-the-looking-glass” world. But once the board of a public company decides that it needs to choose its leadership on the basis of what is politically correct it has decided to serve a constituent who has no legitimate basis for being there. And to the extent boards subscribe to this nonsense they inherently undermine the leadership of the person who accepts such an assignment. Imagine a world where we all look different but all think alike.

aka Snake bit.

Once you go down this road you have signaled that the expectations of your primary constituents are subordinate to those of your political ambitions. At that point you can take all your Dupont metrics, all your customer stat surveys and employ engagement analysis and toss it out the window; you’re serving a different, corrupt and illegitimate agenda that belies your agency to your real constituents and the markets that you mean to serve. You are no longer an honest actor and should be treated as the charlatan you intend to become.

Leadership is never easy. Burdening a leader with a bunch of virtue signaling is a sure way to attenuate their tenure and ultimately that of the board that decides to go down this path. If you’d like a new perspective on how to address the challenges of leadership in a technology based endeavor you can find one here.

Good luck, Meg.

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