Carly Fiorina

AGE: 48

CLAIM TO FAME: Executed the largest merger of its kind in history with Hewlett-Packard Co.'s acquisition of Compaq Computer Corp. Prior to working at HP, as the first woman to be named a top female executive at AT&T Corp., she guided the spin-off and IPO of Lucent Technologies Inc.

WHAT SHE'S DOING NOW: Chairman and CEO of HP

What drives the consolidation that the HP/Compaq merger exemplified, and how long will those drivers continue to exist? There are a couple things that drive consolidation -- customers' absolute requirement for interoperability and for a more global-scale and solutions-based orientation. That's a trend that will continue into the foreseeable future. The software industry is going to consolidate; you'll see the services industry continue to consolidate. You will have players with scope and scale that win.

Carly Fiorina, HP chairman and CEO
Carly Fiorina, HP chairman and CEO
As a former telecommunications company executive, to what do you attribute the severe downturn in the telecom sector, and what will it take for it to recover? And did you foresee any of this happening? Well, I'll tell you the piece that I think in retrospect was clear: ... Through both regulation and legislation, a false set of economics was created.

You had on the supply side a whole set of companies who were building capacity based upon economic models that were driven by regulation and legislation, not dollars and cents. And on the demand side you have a set of constraints, in part driven by economics. For example, broadband isn't getting deployed aggressively because companies who have the capability to deploy it can't see how to get an adequate return on their investment. So we've got demand and supply issues that have been exacerbated by how legislation and regulation have been put together. And until we solve those, I don't think telecom can come back. I think that's a serious issue for the economy and for the IT industry. And, frankly, consolidation in telecom has to occur as well, on both the service provider side and the network equipment side.

So some degree of consolidation will have to be permitted. And we have to take another look at the regulation and the legislation that impinges on the telecom industry. It's not a popular view right now, but I think that's what's required.

Where do you want HP to focus its research and development efforts over the next five to 10 years? Let me parse it into two parts. First, if you look at the set of businesses we are in -- imaging and printing, particularly; enterprise systems -- those are both R&D-intensive, and we need to continue to stay on top of what's required there -- we need to continue to make those investments.

But beyond that, at a higher level, what we really are focused on in terms of R&D is manageability and interoperability, both of which are critically important. We are making some investments in core technologies that we think have the opportunity to change the game. Core technologies like nanotechnology, like atomic-resolution storage -- really applying biology to the process of microprocessors and storage.

What sorts of technology advances do you foresee over the next 10 years that will have the greatest impact on the way corporations conduct their business? The next great step forward in productivity is all about connectivity and interoperability, and I think that's going to drive a whole wave of changes in how companies do business and a whole wave of IT purchases over the next five to 10 years. What it's all about now is connecting up what are today separate systems, connecting up what are today separate companies. And that's why we think interoperability, manageability, security, connectivity are so important.

You've had a pretty monumental task in executing the merger. What has been the most difficult part so far, and what do you see as the most difficult issues ahead? Before I answer the specific question, let me just say that I know the perception of the outside world is of this incredibly draining, difficult task, and I don't want to minimize the difficulty of merging these two companies. But on the other hand, I have to tell you, at many levels we're having a hell of a lot of fun here. We are really excited about what we are building here. So this is a great time for HP, in many, many ways.

Having said that, first I would tell you I am very pleased with our progress to date. The most important measure of our success and our progress is how customers see us doing. And I think most of our customers have been pleasantly surprised by how quickly we moved out of the gate and how focused we remain on their issues, which is what it's all about. I guess that's what I would say is the most important aspect of our integration -- that is, to keep the customer and the marketplace in mind. It's really easy to get very internally focused. This is a big job, and if we don't maintain our external focus at all times by making our customers and what's happening in the market fundamentally our tiebreakers for how we proceed to integrate, then we're going to miss it. And I think we've done a good job of that so far. We've really driven our priorities for integration around our customers and around our markets, and we need to keep doing that.

What advice do you have for corporate IT executives whose companies are involved in these huge sorts of mergers? I guess the first thing I would say -- and this, by the way, applies to any IT manager, not just someone who's involved in a big merger -- IT managers need to be almost business managers first and IT managers second. It really is all about the application of technology to business problems, and the understanding of how to connect up various processes inside a business and various processes between partners who do business together. So if an IT manager doesn't understand the business context, they can't be successful.

Secondly, I guess I would say particularly when you're involved in a big merger, IT priorities need to be driven by business priorities. A very simple example of that in our own case is a decision we made early on: One of our No. 1 priorities was to get our Web sites integrated on day one, so customers knew how to do business with us.

Do you have any visions of life after HP? Are there goals or challenges to be met outside the IT vendor environment for you? You know what? I think of HP as a life's work. So I'm totally focused on HP.

Copyright © 2002 IDG Communications, Inc.

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