Q&A: HP's Ann Livermore addresses company's services issues

She also talks up 'green' technology and her potential as a future CEO

LAS VEGAS -- At the HP Technology Forum user and partner conference here yesterday, Ann Livermore, executive vice president of Hewlett-Packard Co.'s technology solutions group, spoke with Computerworld about a range of issues, including concerns about the performance of a services operation that's increasingly moving offshore. Excerpts from the interview follow:

Three months after we last spoke in April of 2005, you underwent a kidney transplant. Has that experience changed you in any way? I just feel great. No major thing other than feeling very fortunate and very healthy.

In that interview, you spoke of a new services model that has a substantial offshore component, with 20% of your 65,000 services business employees in India, China, Eastern Europe, Costa Rica, and the Philippines. What's that percentage look like now, and where's it heading? It's a little higher now. One of the things that we've found is that we need to get the right balance of work that we do on-site, close to the customer, and resources that the customer really doesn't care where they are as long as the expertise and quality are good. We're always trying to balance the geographic distribution and hire where there's good, ample availability of skilled resources.

That expertise and quality are the issue. Last fall I spoke with two high-profile HP partners who are OpenVMS consultants. They were very concerned about services being outsourced to places like China and India, because they said the support technicians there simply don't have the expertise that's required and aren't getting the training they need. What's your response? My view is that customer satisfaction and loyalty are at the heart of everything that HP does and stands for, and that the long-term success of almost any services business, and more broadly for almost any corporation, has to do with how well they satisfy customers.

No matter where your resources are, at times you'll have an employee who, for some reason, may not meet the quality or performance standard. What we try to do is take the feedback and address it. We actually followed up on the feedback from those partners to see if we had a training issue specifically with some individuals or if we had a turnover issue, or what the nature was. In particular for our OpenVMS customers, we are very focused on our installed base. We want our installed base to be happy, and if or when they ever want to migrate, we want them to migrate to another HP platform. What I feel very strongly about is when we get feedback from partners or customers that critique us in any way, we've got to act really fast to get to the source of it and figure out whether there's a systemic problem or a problem with the performance of an individual. Either way, we have to address it.

Have you found a systemic problem? No. Some people believe you can just look at statistics when you think about customer satisfaction. I think you have to look at every single customer and every single instance. It's not good enough to get 999 right out of 1,000, because even then you've got one person who wasn't happy.

Also last fall, an HP worker in Nashua, N.H., whose job and others were outsourced to Costa Rica, complained to me that the replacements were unqualified and that HP is "trying to take my 10 years' experience and give it to them in six months." Does he have a legitimate gripe, or is it just the natural venting of someone who's the victim of offshore outsourcing? One of the things I love about HP employees is that they care about and worry about customer satisfaction, and that's a strength of HP. You gave me a partner example before; with employee input, too, we try to make sure if there's anything we can learn from their comments, that we follow up on it. It's hard on any individual if your job ends up moving to another geography, and we take that really seriously, because we want employees who leave the company or change jobs inside the company to be loyal HP customers and big HP supporters. These transitions have been hard. We take very seriously the pain of some of our employees that comes with jobs moving locations. So, much like the partner comment, I take every single piece of feedback [and believe] that there's something in it you have to look at and act on and learn from.

You're no stranger to high-profile boards of directors, having served on the board at UPS since 1997. Given that experience and perspective, would you say it's fairly easy or fairly difficult to understand how something like HP's leak probe mess can happen? I think that the good news about the issue around the HP board and the leak was that it didn't have any impact on the operations of the company, or how we interacted with our employees or our customers. I think [HP CEO] Mark [Hurd] did a very good job not having any of the HP employees or executives other than himself have to deal with this. So he had a couple lawyers who had to be involved, but he did a super job keeping the focus of the executive team just on serving our customers and running the business.

Is it something we feel good about? Well, we certainly regret it, yet at the same time, it's behind us. We feel like we're building a really strong board of directors -- Mark has added some really great new board members. It's behind us, and the good news is that most of our customers and our employees just stayed focused on the operations of the company, which were going pretty well at the same time.

HP today announced "green" storage technology that you say can cut storage array power and cooling costs by 50%. It seems like in the past year, "green" has become the new sales pitch of all the big technology vendors, replacing the utility/on-demand/adaptive pitch. What's your response to someone who says the green bandwagon is just another sales and marketing vehicle? We feel strongly that it's important for corporations to take into account the impact that they have on the environment. You go all the way back to Bill and Dave -- part of Hewlett and Packard's beliefs was that corporations had to be concerned about the community and environment that they were part of. So this isn't a new thing for HP -- it actually goes all the way back to our roots. Inside HP, we've committed that our own corporation will reduce our power consumption 20% by 2010.

We had earlier, over the past year, announcements of our thermal logic technology to drive down power and cooling for servers, on average, 28% per server. We introduced our dynamic smart cooling technology, and for an overall data center it drives down power consumption 25% to 40%. So this is something we've been working on for a long, long time. And it certainly fits in with HP's leadership from a blades computing perspective, because blades really demand a very dense computing environment.

We've got over 1,000 patents surrounding power and cooling, so this is something we look at as a differentiator for HP. It's a reason people buy our products, in addition to it just being something that's good to do. And if you look at power and cooling, there's a green aspect, but from a customer perspective, there's a cost aspect, too. So we're helping them reduce costs; in general, we're helping them get a better return on their investment, because with the green often goes better utilization of the assets. So there are lots of good business reasons to do this.

In what area do you think HP has the most room for improvement? I often link improvement with more opportunity for growth, looking at it from a business perspective, and we think we have tremendous opportunities for growth in our services business. We still have many, many customers who are looking to outsource some part of their operations, and HP is a good choice as one of the contenders for that kind of work. We have a lot of opportunity around our consulting and integration business, helping people build out plans for these next-generation data centers.

We also believe we have an opportunity to take a bigger part of the storage market. When we look at the storage market overall, our [Enterprise Virtual Array] business has grown over 10% for 10 quarters in a row. Yet at the same time, we think there are even more growth opportunities for HP in the midmarket.

In 2006 you were No. 14 on Fortune's list of the 50 Most Powerful Women, and No. 19 on Forbes' list of the 100 Most Powerful Women. Do you feel that powerful? I know that in the job that I have, my team and I have the opportunity to impact the success of thousands and thousands of companies, because we're selling the IT that they're using to run their whole corporation. And I have a big employee base. So when I look at the ability that my team and I have to marshal the resources to make really big things happen in the marketplace, it's huge. I also think that HP has a portfolio that's very well positioned for what customers are demanding today and what customers are going to need over the next four or five years. So I would say we have a very big opportunity to make a powerful impact on the marketplace, and that's what's exciting for many employees about being at HP right now.

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