HP Sees A Gold Mine In Data Mining
It was an awkward situation for Mark V. Hurd. Last summer, Hewlett-Packard Co. (HPQ ) began quietly promoting Neoview, a data-mining technology aimed at big corporations that's key to its growth plan. But Hurd, 15 months into his tenure as HP's chief executive, couldn't get out and sell Neoview like the company's other products.
That's because Neoview pushes HP into the turf of Hurd's old employer, NCR Corp. (NCR ) Hurd headed up NCR'S Teradata business as recently as 2002, then ran all of NCR before jumping to the top job at HP in March, 2005. Even after his noncompete agreement expired in September, Hurd waited another four months before easing into personally trying to sell Neoview. As HP's corporate-products group Executive Vice-President Ann M. Livermore delicately put it, that delay served "to allow enough time and separation from his previous employer." It also didn't seem like a great idea to push a data-crunching product just as HP was knee-deep in its scandal over snooping on reporters and board members.
Starting on Apr. 24, though, HP will be going all out to formally launch Neoview. The system, which costs from $600,000 to over $15 million, depending on the size of the setup, consists of a combination of HP servers, storage machines, and software that helps companies retrieve and organize huge chunks of data.
This near-instantaneous number-crunching, known as data warehousing, is the unseen hand that allows all manner of everyday decisions: the airline rep pulling up how many miles you've flown to determine whether to give you a seat on an overbooked flight, or the grocer discovering a link between sales of pretzels and sales of small plastic bags handy for packing snacks, and stocking shelves accordingly.
With sales of $92 billion last year, HP nudged past IBM (IBM ) as the world's largest high-tech company. But to meet Hurd's goal of 4% to 6% revenue growth, HP needs to locate at least $3.7 billion in additional sales. Hurd has been snapping up software companies and investing in the data business. A year ago he created a separate research group to solve some of the issues that keep chief information officers awake at night. HP also is adding salespeople to focus on selling data-warehousing systems, hiring talent from Teradata as well as from IBM and other software-consulting firms.
Teradata is the market leader and expects to boost its $1.5 billion revenues by 7% to 9% this year. But the top brass there don't sound worried about Hurd's push into their territory. "We've got the best customers. Every year is a record year," says Robert E. Fair Jr., Teradata's chief marketing officer. Says analyst Stuart Williams at Technology Business Research Inc. in Hampton, N.H.: "HP has the challenge of gaining recognition."
NCR expects to spin off Teradata, which had 2005 operating profits of $340 million, to its shareholders later this year. But when Hurd took over Teradata, NCR was a fading company best known for cash registers and automated-teller machines. His team latched onto the need to pull together and analyze large pools of data that lie scattered among many dissimilar computer systems.
Consolidating data onto a single large system can lend a vital advantage. The more complete the body of information you can mine, the better and faster you can make decisions. One example: Merchants at any of the 279 Bon-Ton department stores already tap into Neoview to analyze merchandise sales by supplier. That helps them see precisely which vendor's products are selling and when, and better plan buying decisions.
Hunger for those insights is driving a boom in big data warehouses. A survey of 479 companies last fall by researcher IDC found the vast majority of respondents expected their largest data facility to grow within 12 months; 18% expected a doubling and 42% projected a 25% to 50% boost.
HP is now in full-blown sales mode with Neoview. And it's rolling out the heavy guns. CIO Randy Mott, legendary in tech circles for his successful implementation of data systems at Wal-Mart Stores and Dell, is available to chat. And if need be, Hurd--now free of any conflicts--is ready to step in to help close the deal.
By Louise Lee