HP Services led by the other John McCain

Hewlett-Packard senior vice president discusses strategy, customer needs

Hewlett-Packard Co.'s Services division deploys some 70,000 people, half the company's total work force, to advise on IT management and to maintain HP and other equipment in data centers for customers. John McCain is the HP senior vice president charged with running that division, which contributes 17 percent of HP's revenue, US$15.6 billion in fiscal 2006, and 20 percent of its operating profit.

In his first interview since becoming head of HP Services in November 2006, McCain sat down with IDG News Service to discuss the division's strategy, customer needs and sharing a name with the U.S. Senator and Republican presidential candidate. An edited transcript of the interview follows:

IDG: What kind of trends do you see in terms of where the market for these services is going?

McCain: I've been in this space for about 20 years so I don't see this market slowing down. It ebbs and flows, growing low single-digit or midsingle digits. In general I see the IT services space continuing to grow. And we have $15.6 billion of a half trillion dollar marketplace so there is so much room to grow [market share] even if the market didn't grow.

IDG: Enterprise customers have issues with server sprawl, power and cooling, software management, a lot of concerns about network security. What are they looking for from you?

McCain: Clearly, security is a huge item today. Also the area of information management and enterprise data warehousing [EDW] is a growing beast to reckon with. The traditional ones of infrastructure management, especially with the new high-density footprints that are coming out and the power and cooling demands that they have. That's what's nice about this business: There is no end in sight of customers needing our help.

IDG: CEO and Chairman Mark Hurd says HP has to match growth with profitability and continue to cut costs. What, first of all, is the regimen within HP Services to control costs?

McCain: We have some pretty formal governance to take cost out of the business. My two favorite places for my employees to be is in sales carrying a quota or in delivery facing off with a customer with a utilization target. So I look for the individuals around them to make sure I understand how much I can afford. This is a pretty large business and it's geographically spread out so there's plenty of opportunities for us to be more efficient.

IDG: And what opportunities are there for growth?

McCain: There is a great opportunity for us to continue to grow the business in outsourcing. We have a lot of demand and our CIO customers are very happy with engaging us to compete and win that business. In the category of our consulting business, I have an information management practice, which is business intelligence and EDW. In the last quarter, we bought a company in Chicago called Knightsbridge, a professional services firm of more than 700 people in the BI space. We're really committed to that space, we have some neat products inside the business to go leverage. [HP is expected to announce new initiatives April 24 in the business intelligence space, in the wake of the Knightsbridge Solutions Holdings acquisition.]

IDG: I understand HP is building new data centers to serve its outsourcing customers.

McCain: In May, we go to production in Atlanta, with one of our 15 next-generation data centers, a high-density compute facility that is absolutely state-of-the-art and I have customers who are interested in outsourcing into that model.

IDG: So, is the senator any relation?

McCain: No, not at all. A lot of funny stories, though. When I get off a plane and have a car service picking me up, you know how they hold the name up 'John McCain?' I flew into La Guardia and I was looking for my name and I see a [driver] with a sign tucked under his arm that says 'John McCain.' I walk over, tap the guy on the shoulder and he said, 'Oh, I thought it was someone else. I knew I would recognize you'."

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