Lessons for HP & Other OEMs From Vermont

{complink 2376|Hewlett-Packard Co.} has had another blow dealt to its reputation. A report from the Associated Press reveals that a contract to modernize computer systems at the Vermont Department of Motor Vehicles has been canceled after more than $18.5 million dollars and six years of work toward the modernization effort.

The project, which began in 2006, has come to an end with both sides agreeing that HP will return $8.37 million to Vermont, and that the state will return to HP all “physical and virtual rights to all software and documents created by HP,” top aides to Governor Peter Shumlin told AP.

Interestingly, Robert Ide, DMV commissioner, and Jeb Spaulding, the state secretary of administration, said the biggest loss to taxpayers will likely be:

    …the nearly $5 million in state staff time DMV employees have put into trying to implement system changes that now are deemed to have failed. Other unreimbursed state expenses include money Vermont spent for “change management consulting” and other services.

Ide is also reported to have said he's not looking for a new vendor anytime soon. HP did not comment on the matter, the AP report notes.

I've cited this story, because evidently at some time during this project's implementation, there was a breakdown in communication between HP and its customer. In the eyes of the Vermont DMV, HP could not meet its IT goals and objectives. I'm hoping that in the future we don't see more of this, but looking ahead, all OEMs and IT consultants are going to have to work hard to deliver what their customers want — and in the new era of big-data, cloud computing, mobile technology, social media, and advanced data analytics, meeting the needs of customers is going to become more challenging in the years ahead.

A recent report from IDC gives us a glimpse of the complexities that companies like IBM, Dell, Apple, HP, and Cisco face as they sell hardware and software to corporate customers. The report, which gives 10 predictions for CIOs in 2013, relied on interviews with CIOs in Western Europe and the US and outlined several key findings. These are:

  • 58% of new IT investments in 2013 will involve direct participation by line-of-business executives, growing to 80% in 3 years. The expanded role of line of business executives in technology decisions is a result of the advent of cloud, social and mobile technologies.
  • In 2013, 33% of all new applications will target a mobile form factor. IDC also predicts that the increased number of mobile applications, the need to integrate them with enterprise systems and the requirement for multi-platform development will drive the creation of many new mobile apps by IT services providers in 2013.
  • 70% of CIOs will embrace a “cloud first” strategy in 2016. Today, only 23% of enterprises have a “cloud first” strategy on all new IT purchases.
  • Big data and analytics projects will be like no other IT project and CIO's will be involved in implementing technology with more experimenting and less predictive outcomes. Also, there will be a shortage of talent available to work on project.
  • By 2018, 50% of business executives will view their CIO primarily as a partner for business innovation and improvement, while 30% will still view the CIO primarily as the overseer of IT costs, risks and services. While CIOs may need to play all three roles, the key is business perception. This has broad implications for the CIO Agenda.

With more IT to install, new computing models such as cloud computing to consider, greater involvement of line-of-business executives in IT purchasing decisions, as well as CIOs moving toward innovation and a shortage of IT skills to install, maintain, and manage IT projects, Meredith Whalen, IDC's senior vice president, said during a webcast this week, OEMs have their work cut out for them.

According to Whalen, OEMs shouldn't “be talking about the technology for technology's sake.” Instead, OEMs must impress upon their clients the importance of using their technology to make the business case and should ask a series of questions that will improve corporate clients' understanding of how the technology will help them achieve their strategic goals.

Among the questions that need to be answered, Whalen said, are:

  1. What is the impact that
  2. [the technology] will have on their business?

  3. What type of return on investment will they see?
  4. What are their peers doing?
  5. How are their peers accomplishing key performance indicators?

These are the questions HP should have asked officials at the Vermont DMV.

10 comments on “Lessons for HP & Other OEMs From Vermont

  1. bolaji ojo
    December 10, 2012

    People knock specialization nowadays but sometimes a company cannot be everything to everyone. You've got to pick what you are good at doing and beat everyone else at it. HP's trying to be an IT conssulting firm didn't work in this case but perhaps there are positive stories about its activities in this sector elsewhere.

  2. _hm
    December 10, 2012

    It is surprising! What they could not deliver? If they can not, they could have purchased service from third party and should have finished project, may be with little loss.


  3. Wale Bakare
    December 11, 2012

    >>If they can not, they could have purchased service from third party and should have finished project, may be with little loss<< Would you expect HP to adopt that in executing the project? 

  4. _hm
    December 11, 2012

    @Wale: Yes, HP must. Customer promise is most important. They can recoever in subsequent project.


  5. ITempire
    December 11, 2012

    This development has far reaching effects for HP for its efforts to secure new clients esp for its new service providing role. Companies that were in negotiations with HP to secure its services will now view HP's promises with doubts and will make it difficult for HP's managers to satisfy their expectations.

  6. Wale Bakare
    December 12, 2012

    HP is a big high -tech firm – i still think issues about them would be forgetting and put to past. The only exception, if it has unworking products in the markets, that can only have damaging effects on HP.

  7. ITempire
    December 12, 2012

    Wale, you have a point. Ego issue would have stopped HP from involving another vendor and no reputable brand will commit such a mistake. If I was HP, I would have chosen to take the hit and learn for the future.

  8. The Source
    December 12, 2012


    Meg Whitman has decided to keep all of HP's business units under one roof which is different from what   former CEO Leo Apotheker proposed doing.  As you recall he wanted to spin off HP's PC business. Certainly, if HP took a page from IBM and separated its PC business it would be better able to do what you advocate.  In this case HP would specialize in providing services, servers, and software.

    Thanks for your comments.


    December 14, 2012

    These numbers do not seem that significant to a company the size of HP?  Why is it governemnt projects almost stumble, fall, get up, then fall over again?

  10. ITempire
    December 15, 2012

    @ Nicole

    I was never a fan for IBM selling its PC business and would never be pro if HP does so. IMO, if the company wants to focus on other businesses, it can surely do it without separating the PC business unless it is giving losses or reputational damage. There should be staff which is specifically focused on PC business and others can focus on other businesses so that no one gets over-burdened. Another aspect of HP's PC business is that it is a highly rated vendor by users when it comes to supplying quality machines at reasonable prices. 

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