8 Comments

Summary:

HP CEO Meg Whitman and her counterpart at IBM Ginni Rometty both took over huge companies at the crossroads but under drastically different circumstances. So who has it worse?

meg-ginni
photo: Gigaom Illustration

No question Ginni Rometty and Meg Whitman have their work cut out for them. But which of the two CEOs is worse off?

The CEOs of IBM and HP respectively lead legendary IT powerhouses that have seen better times. Both Rometty and Whitman are cutting jobs by the tens of thousands to pare costs. Both are navigating a tricky course to wring more revenue and profit out of cloud computing and related services. Both are marshaling a confusing array of software and hardware products and equally complex cloud go-to-market plans because they know they have to embrace a model that is eroding the way they used to make money.

More consumer and business workloads are fleeing to Software-as-a-Service vendors. Since more compute and storage happens off premises in “the cloud,” the refresh cycles for local hardware purchases have slowed down. And those huge big cloud providers typically don’t deploy name-brand hardware from IBM or HP — so ouch.

Both have software businesses rooted in the legacy world while new applications get built, tested and deployed on Amazon or perhaps some other cloud.

Oh, and all those fat multiyear, multimillion-dollar enterprise and government contracts that could be relied upon to fatten the bottom lines of IBM Global Services and HP Enterprise services? They’re harder to come by.

I would argue that Rometty and Whitman are contenders for the worst job in tech. Yeah, that’s right, give the woman the crappiest job. As usual.

But which of the two are worse off? In a highly unscientific survey via Twitter, Facebook, email etc. I polled folks about which CEO has the tougher gig. The responses are distilled below.

HP CEO Meg Whitman

HP CEO Meg Whitman

The advantage of lowered expectations

The one thing nearly everyone agreed on is that Whitman has it easier in one major respect. When HP named her CEO in September 2011, she walked into a gargantuan mess — her predecessor Leo Apotheker was ridden out of town on a rail after his pricey acquisition of Autonomy, a $10 billion-plus deal that has since degenerated into lawsuits and allegations of fraud.

But that was just the tip of the iceberg. HP’s vaunted R&D organization had already been gutted by Mark Hurd, who preceded Apotheker and was forced out over claims of sexual harassment and — yes — bad expense reports. Hurd was a genius at managing the company for Wall Street’s expectations, but not so fabulous for creating great products. (Although some say Hurd’s acquisition of Palm could have worked out well had HP had stuck with that game plan.)

It was as if Whitman was named captain of the Titanic after it hit the iceberg. The ship was going down, so if she manages to get it to port — even if half those aboard die and it never recovers its past glory — she’s a hero.

Rometty’s seemingly better hand took a turn for the worse

Rometty, on the other hand, took  over what seemed to be a smooth sailing ship — The Love Boat, if you will — on January 1, 2012. Her succession was nothing if not orderly, announced months before and executed like clockwork. When she took over from Sam Palmisano, it looked like she’d continue his pre-programmed cloud-and-services course.

IBM had big loyal customers that nowhere else to go, was the thinking during that transition. Small problem: Some of those clients have since discovered there are alternatives to IBM in cloud. The headline example is that Amazon beat out IBM for the CIA cloud contract even though IBM’s bid was lower. This was the sort of contract IBM used to be able to count on.

The revenue picture is bleak — in April IBM logged its 8th consecutive quarter without revenue growth. And the company remains saddled with Palmisano’s promise to hit $20 annual earnings per share by 2017, a goal that appears unlikely at best and which some analysts say is actually counterproductive at this point.

Bloom is off the rose but some beautiful petals remain

IBM CEO Ginni Rometty

IBM CEO Ginni Rometty

The heyday of IBM’s research glory days may be over, but the company still has some shiny gadgets to get excited about. Watson fans love its gee-whiz natural language skills and think IBM can make a business out of it — if it hurries up. HP may have its energy-sipping but powerful Moonshot server, but at its core, that’s just a big honking piece of hardware. Watson could show that artificial intelligence, a field that always seems to be on the cusp of taking off, may finally do it this time.

And while big multimillion tech contracts are harder to come by, for the foreseeable future IBM still has the sort of C-level relationships that could pay off — maybe not at the CIA — but elsewhere. Said one VC exec who follows both companies but who did not wish to be named: “IBM has IGS and HP has EDS. Nothing more needs be said.”

IBM did well in buying SoftLayer, a well regarded managed hosting provider and cloud company, last year. And the good news is Rometty is letting SoftLayer’s Lance Crosby — who will be speak about IBM’s cloud transformation at Structure on June 18 – run the show. Now it has to guard against Softlayer brain drain and the IBM-ification of SoftLayer going forward.

At the same time, some argue that maturity has its benefits. For example, IBM’s venerable middleware business has given it a strong developer base, as Gartner cloud analyst Lydia Leong pointed out on Twitter.

Whitman acknowledges the company “is managing a portfolio of declining businesses.” The company still relies heavily on those legacy printer, PC and server units as it builds its cloud, software and services roster.

But, the company still falls prey to weird snafus: Last week, for example, part of HP’s earnings release — with news of 16,000 additional layoffs — was mistakenly posted a half hour before the close of market. That’s the sort of thing that just should not happen in the big leagues.

And while you have to credit Whitman for setting expectations from Day One when she portrayed her plan as a long, multi-year transformation, a key deadline is in sight. The company had promised revenue growth by its fiscal 2015, which kicks off November 1. So tick tock. At the Sanford Bernstein Strategic Decisions conference this week, Whitman said it’s too early to give additional guidance on that target.

… so the winner (loser?) is …

Rometty. She has the tougher gig because she seemingly has much further to fall given the aforementioned high expectations. This is not necessarily her fault. My guess is that IBM is so huge she inherited a lot of problems long in the making but not visible at first. I agree with the correspondents who said that if Whitman can get HP out of this mess alive, albeit smaller and less powerful than it once was — she’ll be viewed as a savior. But with IBM, which has reinvented itself three or four times in its 105-year-old existence, Rometty has a much bigger challenge.

  1. In order to wring more revenue and profit out of the cloud computing they are cutting jobs by the tens of thousands to pare cost. They should take a note from Henry Ford who realized that his own workers could also be his best customers if he paid them decent wage. Also if you gut your research and development you lessen the chance of the discovery of new products and services. It is almost like the EU trying to stimulate its economy by enforcing austerity. Who’s the bigger idiot at the helm?
    Leslie

    Reply Share
    1. I wonder what Henry Ford would have done if he had to manage the current crisis at GM? By comparison, Ms. Rometty and Ms. Whitman have a difficult but not impossible turn-around objective — I’d guess that neither would want to be Mary Barra, CEO at General Motors.

      Reply Share
      1. So true, but they aren’t.
        Leslie

        Reply Share
  2. Giulio Campobassi Friday, May 30, 2014

    “Yeah, that’s right, give the woman the crappiest job. As usual.”

    Excuse me? So, Marrissa Meyer and Sheryl Sandberg have crap jobs ? I think you should loosen your feminist blinkers. They’re on a bit too tight.

    Reply Share
    1. Giulio – you’ve heard of hyperbole? Take a chill pill.
      Barb – awesome piece and right conclusion.

      Reply Share
  3. At HP Web OS have been a great start to something better.

    Reply Share
    1. Sorry:

      At HP Web OS could have been a great start to something better.

      Reply Share
  4. IBM sales execution model is still the envy of every business ( not just IT) .. I think that’s what will make it come good in the end — Also there is so much inefficiencies and overbearing processes that needs to be reimagined, gives a great opportunity to take lot of cost out of the business.

    Reply Share