Saturday, August 14, 2004

HP: The adaptive enterprise that can't adapt

For quite some time now, HP has been trumpeting its Adaptive Enterprise idea to anyone that would listen. The basic concept being that companies need to use technology as a tool for making quick, fluid changes in their businesses. But after HP blamed a disastrous SAP roll-out for its third quarter failings, you have to wonder exactly how adaptive HP's own enterprise really is.

HP seemed to place more blame for the weak third quarter on an SAP implementation. The company struggled to get new SAP supply-chain software up and running with the process taking six weeks instead of the predicted three. HP's ordering system became chaotic. HP had to tap the channel to make sure deliveries were met and even missed some sales. "The migration was more disruptive than we'd anticipated," Fiorina said. All told, HP's hardware and software failings cost it $400m in revenue and $275m in operating profit in Q3.

On one hand, you have to believe the SAP problem did have a material impact. HP and SAP work together on numerous large revenue deals. One would think this relationship would prevent HP from outing SAP publicly as a culprit unless it really had no where else to turn.

On the other hand, starting at HP's third quarter in 2002 the hardware units' results are as follows: a $422m loss, a $152m loss, a $83m loss, a $7m loss, a $70m loss, a $106m profit, a $108m profit, a $120m profit and yesterday's $208m loss. These results don't compare terribly well with Dell's consistently massive revenue gains over the same period or IBM's solid gains. This isn't one quarter of poor execution; it's a tradition of poor execution with blips of success.

If HP is an Adaptive Enterprise, it's one heading toward extinction in its current form. Fiorina cannot afford to keep fingering others for HP's failings much longer. Read on...