HPE comms CTO: Our unit is growing even if our customers aren't

But reorgs yet to translate to growth across biz

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MWC Interview On the basis of its first quarter results last week, HPE still seems to be in troubled waters. Despite numerous major reorgs to dramatically shrink the biz, revenue still fell 10 per cent in the last three months to $11.4bn (£9.3bn).

To that end, chief technology officer for communications and media Jeff Edlund's unit is somewhat an anomaly, having posted modest growth for a number of years.

Edlund looks after software services for mobile operators and carriers, a subdivision within the Enterprise Group's Data Centre Infrastructure Group (DCIG).

DCIG sits within the servers and storage unit, revenues for which were down 12 and 13 per cent respectively in the last quarter.

HPE doesn't break out the overall numbers of Edlund's division, but presumably it is still small in comparison to the overall business.

But Edlund reckons it is a "very meaningful part of the Enterprise Group and DCIG from a revenue and profit perspective".

He notes that his customers in turn have been posting flat to negative growth for a while. "But I have been able to maintain single-digit growth for five to seven years, even though they are struggling," he told The Register at Mobile World Congress in Barcelona.

That's due to being software and sector-focused, rather than just simply flogging kit, he says.

As CTO of the comms group, he also oversees the various components of HPE's software-defined networking and Network Function Virtualisation architecture. Last week HPE announced updates to its NFV portfolio including new integrations with the Red Hat OpenStack Platform, which Edlund says will help "service a broader customer base".

Strong market

He says the UK is a strong market for working with operators to "have a better footprint across the country so there are less places where they don't have service". He won't confirm if he is referring to the major Emergency Services mobile network deployment by EE to increase mobile connectivity to 97 per cent of the country.

The unit has to some extent been passed from pillar to post over recent years, reflecting HPE's huge organisational changes.

His group used to be a standalone business before it was made part of Enterprise Services, which was then spun out with CSC, and now sits in HPE's Enterprise Group. "They took a look at us and determined we are actually a high value asset that is actually growing... so decided to bring us into that group," said Edlund, adding that it has helped make the DCIG unit more buoyant.

Nevertheless, the Enterprise Group underwent a major restructure during the quarter. The raft of new hires included a global head of sales, sales leads in each of HPE's geographical regions, a leader for the Technology Services business, and a new leader for the channel program.

Such was the extent of the changes that chief exec Meg Whitman apologised in the investor call for having disrupted the business.

Shrinking pains

"While these changes were the right changes to make, it was a lot for the organisation to take in. Frankly, as we headed into Q1, we overloaded many of our top people and disrupted the day-to-day cadence of our business more than we should have," she said, adding that HPE has now identified the problem and is fixing it. "More importantly, once the dust settles, the changes we've made will leave HPE in a much better position."

Regardless, all the divisions in the vitally important Enterprise Group fell during that quarter, with networking plummeting 33 per cent.

But Edlund remains upbeat. "I am already seeing evidence of the ship turning," he said.

"The change in the last four years has been stunning. If you'd walked around Mobile World Congress four years ago, you'd find everyone talking about hardware widgets. But people aren't really talking about that anymore. They are talking about software problems."

Of the organisational changes, he said: "I think it is settling down for the broader business, my group we were relatively unaffected by it.

"Meg is really focused. We got rid of HP Software, we spun it out into another entity. We spun out Enterprise Services, we separated from PCs, printers a year ago. And I think all of that is part of the strategy to refine and get focused and produce results that [Wall Street] is looking for." ®


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