Users: Some say HP board shuffle a good move; others see deeper problems

The media leak scandal at HP is making waves with IT users

Hewlett-Packard Co.'s decision to replace board chairman Patricia Dunn with CEO and President Mark Hurd on Jan. 18 is being viewed by some HP customers with concern, while others see the scandal as unrelated to their use of HP technology.

In interviews today, HP users and analysts offered a wide range of opinions on what the revelations about a company probe of leaks from HP's board of directors means for HP and its customers.

"To be honest, it doesn't bother me at all," said Jose Martinez, director of information systems for the Pacific Maritime Association in San Francisco, which uses HP servers and SAN systems. "It's more of an internal, administrative issue" for HP, he said. "I don't think it affects their strategy. I don't see any impact in regard to how we do business with HP at this point."

HP today announced that Hurd will take on the role of board chairman from Dunn, who will remain on the board. The move follows last week's disclosure of probes into media leaks by the board. HP eventually hired private investigators to ferret out the sources of the leaks, and the investigators obtained phone records of nine journalists as part of their probes. The U.S. Department of Justice is now looking informally at whether illegal tactics were used to obtain the phone records through the use of "pretexting." That involves someone posing as a phone company customer to get access to that person's phone records.

At Computerworld's Infrastructure Management World event today in Scottsdale, Ariz., James Hull, director of IT network and data center services at the Harris County Hospital District in Houston, said he doesn't expect there to be much of an impact on HP's customers from today's move. His operation relies heavily on HP services and HP OpenView management software, he said.

"When a change in a chairman or a CEO of a vendor happens, it usually doesn't mean that much to us," Hull said. When Compaq was purchased by HP, technical service to Harris County slipped, he noted, but it has improved in recent years. Overall, Hurd and HP seem to be doing a good job, Hull said, rating the company an 8 on a scale of 1 to 10.

Asked if the change in chairmanship will be a distraction to HP's growth, Hull said, "I don't think so."

Two other IT managers agreed.

"She overstepped her bounds, probably, and HP probably needed to get rid of her," said Robert Schramm, vice president of operations at Polo Ralph Lauren, an HP customer based in Lyndhurst, N.J. "It makes for good headlines, but I doubt it will have any effect on the IT community."

Geoff Caras, vice president of system infrastructure at Shop.com in Monterey, Calif., said that "the intrigue over Dunn's departure is just about as important to me as which celebrity is wearing a new dress." Shop.com uses HP hardware and some software and has found the technology strong -- although HP's service could use some improvement, he added.

Another attendee, John Bostick, president and CEO at dbaDirect Inc. in Florence, Ky., said that following HP through the past few years has been "like reading a Greek tragedy, going back to Carly Fiorina's departure." He said Dunn deserves to be replaced because of the pretexting brouhaha.

However, Bostick expects that Hurd will move the company forward and that in the next year, Dunn's lessened role will not hurt HP.

Meanwhile, at the AFCOM Fall 2006 Data Center World Conference and Expo in Orlando, attendee Steve Dunlap, manager of network engineering at Alaska USA Federal Credit Union in Anchorage, said HP's board controversy reinforced a decision his firm made two years ago to move to Dell after being a predominately HP IT shop.

Until HP filed documents with the U.S. Securities and Exchange Commission admitting that it had used pretexting, it seemed to be putting the management problems that led to the ouster of former CEO Carly Fiorina behind it.

The recent news is a sign that "the internal turmoil is continuing," said Dunlap. "I think a lot of this turmoil has affected the way they provide service, and I think it's distracted them from providing quality service."

But Stephen Colbert, operations manager at Baptist Health Care in Louisville, Ky., said the board's problems won't undo his longtime relationship with HP. He said the vendor has consistently delivered good products and service.

"It does not have any impact," said Colbert. "We have had such a good relationship with them for over 30 years."

Rackspace Managed Hosting Ltd. in San Antonio uses IT equipment from multiple vendors, including HP. And Bob Mielke, the principal engineer at Rackspace, said he hopes that the board's problem doesn't become a customer concern.

"I certainly hope it won't be a distraction," said Mielke. "I haven't seen any yet in our dealings with it."

Mielke said HP's board problems won't affect purchasing decisions "because our buying decisions are based on the availability of the product, the price of the product and reliability of the product."

Kirk Jones, a senior systems engineer at BNSF Railway Co. in Topeka, Kan., said the controversy does affect how a company is perceived and "shows the reliability of the company and management." He pointed out that getting telephone records "tells of distrust" in the company.

Industry analysts also had varied opinions on the recent HP events.

"I think the announcement by the Department of Justice and by the Congressional subcommittees that they're going to look into it probably hastened the decision" to replace Dunn as chairman, said Charles King, principal analyst at Pund-IT Inc. in Hayward, Calif. "This was totally self-inflicted," King said. "Their actions to monitor reporters was totally inexcusable."

If any DOJ probe results in a large-scale investigation or "very messy public hearings" by congressional subcommittees, it could "impact the standing of the company with its customers over time," he said. "It will depend on how long it goes on."

Gordon Haff, an analyst at Illuminata Inc. in Nashua, N.H., said that by removing Dunn as chairman and giving that post to Hurd, HP hopes it can quiet the scandal and head off future related legal problems.

"That's certainly what they're hoping," Haff said. "They're putting on a full-court press to get everything under their control. From Dunn's statements and others, it's pretty clear to me that people [at HP] don't necessarily feel that they did anything wrong."

Momin Khan, an analyst at Technology Business Research Inc. in Hampton, N.H., said he is surprised that Hurd will take the chairman's post in addition to his other duties. "I thought he had enough on his plate already," Khan said. "I realize there were violations of people's privacy by a third party by people hired by [Dunn]. I basically see all these moves as a wider strategy of Hurd's to clean house.

"Hurd is trying to introduce a culture of ethical business practices and is trying to restore credibility to the HP organization and, of course, this scandal didn't help."

Sound Off: Did HP go far enough in its boardroom reshuffle? Post your comments and read what others have to say.

Computerworld's Matthew Hamblen and Patrick Thibodeau contributed to this story.

See more coverage:

  •  Hurd to replace Patricia Dunn as HP chairman in January

  •  HP says chairman has no plans to resign over leaks investigation

  •  HP: 'No Surprise'

  •  Opinion: A demand for immediate and full disclosure

  •  Reporters' phone records accessed by HP during leak probe

  •  California AG probing HP boardroom leaks

  •  SEC filing shows board infighting, leaks at HP

What do you think of HP's boardroom changes? Share your thoughts or read what others have to say on the Sound Off blog.

Copyright © 2006 IDG Communications, Inc.

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