Hewlett-Packard Co.’s decision to replace board chairman Patricia Dunn with CEO and president Mark Hurd is being viewed by some HP customers with concern, while others see the scandal as unrelated to their use of HP technology.
n interviews earlier this month, 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 mean 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 in September announced that Hurd will take on the role of board chairman from Dunn, who will remain on the board. The move follows the recent 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 (U.S.)’s Infrastructure Management World event this month 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 the 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 eight on a scale of one 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, he said.
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 (its) 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.”