Stopping The Sprawl At HP
When Randy Mott joined Wal-Mart (WMT ) fresh out of college in 1978, its in-house tech staff had only 30 members and company founder Sam Walton had not yet become a believer in the power of computing to revolutionize retailing. But Mott and his cohorts developed a network of computerized distribution centers that made it simple to open and run new stores with cookie-cutter efficiency. Then in the early 1990s, Mott, by this time chief information officer, persuaded higher-ups to invest in a so-called data warehouse. That let the company collect and sift customer data to analyze buying trends as no company ever had -- right down to which flavor of Pop-Tarts sells best at a given store. "Information technology wasn't Mr. Sam's favorite topic. He viewed it as a necessary evil," recalls fellow Wal-Mart Stores Inc. alumnus Charlie McMurtry, who has worked with Mott for years. "But later, Randy got [Walton's] ultimate compliment. He said, 'Man, you'd make a great store manager."'
By the time Mott took his latest job last summer, as CIO of Hewlett-Packard Co. (HPQ ), he had become a rock star of sorts among the corporate techie set -- an executive who not only understood technology and how it could be used to improve a business but how to deliver those benefits. Besides his 22-year stint at Wal-Mart, Mott helped Dell Inc. (DELL ) hone its already huge IT advantage. By melding nearly 100 separate systems into a single data warehouse, Mott's team enabled Dell to quickly spot rising inventory for a particular chip, for instance, so the company could offer on-line promotions for devices containing that part before the price fell too steeply.
Now, Mott, 49, is embarking on his boldest and most challenging project yet: a three-year, $1 billion-plus makeover of HP's internal tech systems. On May 17, the company announced it will replace 85 loosely connected data centers around the world with six cutting-edge facilities -- two each in Austin, Atlanta, and Houston. Mott is pushing sweeping changes in the way HP operates, slashing thousands of smaller projects at the decentralized company to focus on a few corporate-wide initiatives -- including scrapping 784 isolated databases for one companywide data warehouse. Says Mott: "We want to make HP the envy of the technology world."
If it works, Mott's makeover could have more impact than any new HP advertising campaign, printer, or PC -- and could turbo-charge the company's already impressive turnaround. HP posted profits of $1.5 billion in its second quarter, up 51% from the year before, on a 5% increase in sales. HP shares had been slipping, but they jumped on May 17, the day of the earnings call. All told, the stock is up 65% since new CEO Mark Hurd took over in April, 2005. If Mott is successful, HP's annual spending on tech should be cut in half in the years ahead, from $3.5 billion in 2005, say insiders.
More important, a Wal-Mart-style data warehouse could help HP make headway on its most vexing problem in recent years: how to capitalize on its vast breadth. While HP sells everything from $10 ink cartridges to multimillion-dollar supercomputers, the company has operated more like a conglomerate of separate companies than a one-stop tech superstore. "We shipped 55 million printers, 30 million PCs, and 2 million servers last year," says CEO Hurd. "If we can integrate all that information, it would enable us to know exactly how we're doing in Chicago on a given day, or whether the CIO of a big customer also happens to own any of our products at home."
A REAL FIX-IT JOB
It's a gargantuan challenge, even for someone with the credentials of Randall D. Mott For one, this will be his first real fix-it job. FedEx Corp. (FDX ) Chief Information Officer Robert B. Carter, who counts himself a big fan, points out that Mott had the advantage at Wal-Mart and Dell of building infrastructure largely from scratch. "Randy never had to go corral all the horses that had gotten out of the barn," says Carter.
Also, Mott's initiatives may well stir up a hornet's nest within HP. They will likely require thousands of layoffs, while requiring the support of remaining staffers in a company that has long resisted centralized control. Mott is testing the limits of the HP culture, taking away the right of thousands of IT workers to purchase their own tech equipment and, for some, their ability to telecommute. That's not to mention the stress of tearing up the tech innards -- and putting many existing IT initiatives on hold -- at the same time that Hurd is demanding a revamp of everything from sales to product lines. "Everyone is already averaging 60 hours a week," gripes one veteran HP manager, who requested anonymity. "At some point, you hit a breaking point."
But Mott has the absolute backing of Hurd, who began recruiting him shortly after arriving at HP in February, 2005. The pair have known each other for years. At both Wal-Mart and Dell, Mott bought data warehousing gear from Hurd, who was a leading evangelist for the technology during his years at NCR Corp. (NCR ) Hurd eventually wooed Mott in July on the strength of a $15 million pay package and a promise to support him if he'd sign on for the aggressive three-year transformation.
Since Then, Mott has been methodically building his team. He has quietly added nearly a dozen respected executives from his days at Wal-Mart and Dell, including McMurtry and Ron Griffin, the former CIO of Home Depot Inc. (HD ) who is now HP's senior vice-president in charge of application development and support. A key turning point came in September, when Mott won the HP board's commitment to buy or build the new data centers and the servers, storage banks, and networking gear to fill them. "Randy is the right leader at the right time for HP," says Michele Goins, a long-time HP executive who now reports to Mott, running the IT systems for the huge printer division. "If he'd come here three years ago, he would have left. Carly [former CEO Carleton S. Fiorina] didn't understand IT. She had a lot of things she was focused on, but IT wasn't one of them."
Still, Mott's greatest strength may be that while a technologist, he has the management skills to actually make IT take root in a company's culture. Linda M. Dillman, a onetime Wal-Mart CIO and now its executive vice-president for risk management and benefits administration, recalls how Mott championed the deployment of IT by showing how it achieved Wal-Mart's business goals. "Randy is very, very pragmatic," says Dillman. "He understands you can't just follow a dream."
Underlings say Mott's low-key Southern charm belies an intensity that typically brings him into the office by 6:15 a.m. He has no patience for quick summaries during grueling two-day-long business reviews he convenes once a month. "People will want to give him 50,000-foot Powerpoint presentations, but he wants the numbers -- not the picture," says Sue Braun, another new HP arrival who worked with Mott at Wal-Mart and Dell.
That certainly jibes with Hurd's view of the world -- which is why he's centralizing HP's balkanized information systems, even while working to decentralize the operational control grabbed by Fiorina during her tenure. The idea is to make sure all of HP's businesses are working off the same set of data, and to give them the tools to quickly make the best decisions for the entire company -- say, a single customer management system, so executives can know the full breadth of what any account buys from HP.
"NEVER ANY END DATE"
But Hurd and Mott also believe in speed over endless analysis. So within months of his arrival, Mott had trimmed 1,200 individual projects -- such as an e-learning application for new hires -- to just 500. But he also imposed real deadlines to make sure projects were completed. That way, teams could reap real benefits, then move on to the next priority. "In the past, there was never any end date, just lots of phases," says Mott. While HP had five or more IT workers in 100 different locations, he decided to reduce that to 25. To break the news of impending layoffs, Mott has held close to 20 "coffee talks" with HP employees in various countries. "I tell them that part of the reason we need to move so fast is that the problem doesn't get better with time," Mott says.
No doubt, that could lead to some trying times in the next year. But the benefits may be surprising. For example, HP has built its own fiber-optic network connecting the six new data centers to outposts around the globe -- an approach that should cut its monthly networking bill to phone companies by 40%. It's enough to prompt HP veterans such as Goins to wonder if Mott can do for his new employer what he did for his first one. "When I listen to Randy, I think `Why can't we have the kind of success that Wal-Mart has had?"'
By Peter Burrows
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