THINK IT Services

I’ve had the privilege of publishing my point of view on Sandhill.com regarding two of the blockbuster announcements over the past week,

• Will Google’s Purchase of Motorola Be a Path to Greater Android Success or Pandora’s Box?
• HP’s Software Transformation Cloudy without Consumer Channel to Market

Yesterday’s NY Times included a good article discussing the new challenges facing Google as it enters the smartphone business, echoing my concerns with this terrific quote,

“When Google decides to evict a small Web publisher from its ad service, it sends a computer-generated form letter with the bad news. It says the Web site “poses a risk of generating invalid activity.” Why, the publisher might ask? You will never find out from Google. The only appeal is to fill out a Web form. Good luck. You can’t talk to an algorithm.”

There was also a seminal commentary by Marc Andreessen, a member of the HP board of directors, in Saturday’s Wall Street Journal about how today’s Cloud-based Software-as-a-Service (Saas) is transforming nearly every industry, as well as the way we live and work, as a justification for HP’s dramatic strategic move to become more software centric.

Both announcements have significant channel implications and make our Cloud Channel Summit on November 7 even more timely.

Cisco Systems’ decision this past week to shut down its Flip video camera business generated plenty of attention because of its implications on multiple levels for the networking company and the IT industry. Here are a few of my perspectives on the meaning of this event and the lessons to be learned.

Cisco deserves credit for the boldness of its acquisition of Pure Digital, the maker of the Flip camera, in 2009 and its equally brave decision to walk away from the over $590 million investment (acquisition, development and marketing costs) in a two year span. It had hoped to use the Flip camera and other home entertainment products as catalysts for additional consumer demand for its network connectivity capabilities and its service providers’ transmission services. Although Cisco didn’t sell as many Flip cameras as it hoped, it certainly can be credited to contributing the rise in video transmission volume during the past two years and growing expectations for more video services going forward.

Few could anticipate that the popularity of simple and economical video camcorders would quickly be give way to a new generation of smartphones with built-in video recording capabilities in such a short time after Cisco’s Pure Digital acquisition. In the same way digital cameras were made nearly obsolete by embedded cameras within smartphones, the video camcorder is becoming a thing of the past as a result of a similar bundling process. It is truly amazing to consider how many formerly standalone functions of a decade ago are now merely assumed features of today’s cellphones.

The power of the smartphone has grown so strong that Cisco didn’t even publicly offer its scuttled Flip camera unit to a potential buyer. In hindsight, Cisco may have been better off buying a smartphone developer, like Motorola, rather than a videocam manufacturer to better compete in today’s increasingly competitive market.

Cisco made this move because it recognized that it had to refocus on its core networking business to fend off escalating challenges from Juniper Networks and a wave of new, offshore clone manufacturers who are threatening to commoditize its market.

But, Cisco’s mistake shouldn’t dissuade it, or others, from continuing to bridge the gap between the consumer and corporate worlds. The consumerization of IT continues to reshape the tech industry as ‘prosumers’ become more of the norm and the enpowered end-user weilds greater influence over IT corporate decision-maker. As more corporations encourage their end-users to work from home or the road, these end-users are making their own decisions about the network, storage and other IT gear, as well as the service providers, that will best support their needs.

Cisco succeeded in bridging the gap between enterprise and service provider (SP) markets in the 1990s when others like 3com and Lucent abandoned this dual market strategy. By selling to both, Cisco has persuaded xSPs that it was an essential supplier to their customers. The same value proposition holds in the consumer market which is increasingly an extension of the corporate world.

But, Cisco also recognized that it was at risk of attacking too many markets and allowing its core business to be undercut. Over 25 years ago, Novell’s demise made a series of acquisitions, including WordPerfect and Borland, to spread into new markets only to have its core business attacked by Microsoft, which led to its eventual demise.

Cisco’s failure to capitalize on the Flip camera is the most obvious example of the company’s recent acquisitions falling short of expectations. Cisco has also failed to leverage its WebEx acquisition to accelerate the adoption of its videoconferencing solutions and collaboration software. Now, WebEx is being threatened by a myriad of cheaper and easier to deploy web conferencing services.

Cisco hopes to refocus its resources on selling its Unified Computing products which promise to transform the way data centers operate to meet the growing demand for Cloud Computing services. But, Cisco’s push in this direction has only helped to galvanize HP’s efforts to strengthen its own server and system sales. Ironically, despite its own leadership problems HP continues to benefit from its growing presence in the consumer market. Meanwhile, not only is Cisco trying to determine how to gain a foothold in this market, but IBM is probably lamenting its decision to relinguish its PC business which removed it from the consumer market as well.

So, Cisco’s move doesn’t mean that there isn’t a synergy to be found between the consumer and corporate worlds. It just means that you need to focus on the right set of products and services to exploit.

The recent flurry of major vendor announcements regarding their new Cloud Computing initiatives, latest acquisitions and offerings clearly shows that the “Cloud Rush” is in high gear.

Here’s a quick list of the announcements which have caught my attention over the past few weeks in chronological order since HP unveiled its Cloud ‘vision’ last month, and my views regarding their significance,

• Cisco Announces Intent to Acquire newScale, 03/29/11  – Cisco Systems has been pushing into the ‘new data center’ environment for a while with its Unified Computing solutions. It acquired newScale to improve its provisioning capabilities to make it a more viable Cloud vendor for enterprise customers and service provider partners.
• Salesforce.com to Acquire Radian6, 03/30/11  - Now that Salesforce.com has succeeded in popularizing its Chatter social networking capabilities, it wants to give its customers the necessary tools to monitor, manage and measure the effectiveness of these new features.
• Intuit, Salesforce.com Announce Strategic Alliance, 04/01/11  -  Despite its investment in FinancialForce.com and support of numerous integration tools vendors that link salesforce.com’s CRM solution with QuickBooks, salesforce.com is seeking to strengthen its position in the SMB/SME market by building a closer working relationship with Intuit which is also working with Microsoft. Intuit is also trying to reinforce its position within the SaaS/Cloud ecosystem.
• SugarCRM Acquires iExtensions, the Market-Leading CRM for Lotus Notes, 04/05/11  – SugarCRM’s growth is further proof of the growing acceptance of Open Source solutions in the market. Its acquisition of iExtensions strengthens its ties with Lotus Notes which is a pivotal part of IBM’s SaaS/Cloud efforts. And, its growing relationship with IBM illustrates how SugarCRM hopes will gain an even greater foothold in mainstream businesses. Don’t be surprised if this alliance evolves into an acquisition in the months to come.
• SITA Launches Dedicated Air Transport Industry (ATI) Cloud, 04/06/11  – I’ve been saying for the past year that the SaaS/Cloud market is entering a third stage in its evolution, moving from broadly focused horizontal business and IT management apps to a new generation of industry-specific SaaS/Cloud solutions. This new stage is a clear indication that the SaaS/Cloud movement is gaining acceptance across nearly every industry and is now viewed as an important mechanism for reengineering the fundamental business processes within various sectors. SITA has been supporting the operating needs of the airline industry since 1949, and is among the latest industry-specific providers to launch a strategic initiative aimed at Cloud Computing.
• IBM Joins Forces With Over 45 Organizations to Launch Cloud Standards Customer Council for Open Cloud Computing, 04/07/11  - IBM has been aggressively pursuing Cloud opportunities since the concept first gained attention. It made an initial effort to spearhead the Cloud standards process which caused a lot of controversy because many people were suscipious of IBM’s motives at the time. Today’s announcement will generate a more positive response because it is supported by an impressive cross-section of enterprise organizations and Cloud vendors. It also recognizes and endorses the existing Cloud inititives of various standards bodies, the most recent of which was announced by the IEEE on Monday. IBM also rolled out another wave of Cloud products and services today that further expands its portfolio of hardware, software and service offerings, and puts additional pressure on its competitors.
• Dell Invests $1 Billion in Technology Solutions and Services to Help Customers Drive Business Results Today and in the Future, 04/07/11  – Dell is not about to let IBM, HP or Oracle outpace its own Cloud initiatives. The company tried to demonstrate today the magnitude of its efforts to develop and deliver Cloud solutions and services aimed at enterprises and end-users. Dell can tell a good Cloud story because of its long history of delivering automated systems and offering Ecommerce services. It has also done a surprisingly good job leveraging its Perot Systems professional services and systems integration services to create vertical market solutions. Click here to read my initial vision of Dell’s Cloud capabilities two years ago.

These announcements and initiatives illustrate the significance of the Cloud Computing phenomenon. They also show the scalability of the market opportunities, extending from SMBs/SMEs to major industries. And, they demonstrate how the Cloud is fundamentally changing the competitive landscape and customer expectations.

HP’s new CEO, Leo Apotheker unveiled the company’s latest corporate strategy yesterday with plenty of fanfare, but little flourish.

The theme of his talk and HP’s new mantra is providing “connectivity” to the Cloud to move “Everyone On”.

While the picture he painted of this new world order and HP’s strategic response covered all the bases, there are still plenty of pieces which must come together in order to make it a reality.

Apotheker’s ‘vision’ was certainly well-conceived and his presentation was well-scripted. No one can argue with his view that,

“We see clearly a world in which the impact of cloud and connectivity is changing not only the user experience, but how individuals, small businesses and enterprises will consume, deploy and leverage information technology.”

I would also agree that ”HP is well positioned to be the trusted leader in addressing this opportunity.”  But, it faces plenty of problems capitalizing on this opportunity.

Apotheker’s four-point strategy to capture this opportunity includes:

1. “Extending its leadership in managing and optimizing today’s traditional environments;”
2. “Leveraging HP’s core strength in cloud to build and manage next-generation cloud-based architectures;”
3. “Being the trusted partner to customers by enabling the seamless transition to hybrid computing models; and”
4. “Defining and delivering the connected world from the consumer to the enterprise.”

That just about covers every angle of today’s rapidly evolving marketplace. And, HP has been inching in this direction for a while. It is not only the largest IT vendor, but also boasts a very loyal consumer, SMB, enterprise and channel following.

But, HP is also burdened with legacy products, both hardware and software, as well as cumbersome business processes. Many of its systems are too expensive. Nearly all of its software is too complex. And, too many of its business processes are too disjointed. So, attacking all of these market opportunities simultaneously in an cost-effective and profitable fashion isn’t going to be easy.

The good news is that Apotheker and HP recognize these issues and are promising to address them. Even more promising is Apotheker’s statement that they are not going to acquire more legacy systems and software to solve their problems. This will hopefully put to rest the persistent rumors that HP will acquire SAP.

Instead, HP needs to build and acquire new functional capabilities which will quickly automate its systems and SaaSify its software and services.

HP must carefully traverse the three segments of the Cloud Computing world — Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS).

While Apotheker suggested that HP must play in all three areas, I would suggest that it concentrate on SaaS and IaaS, and limit its PaaS efforts to inviting third-party developers to add onto its OpenView IT management suite via application program interfaces (APIs) which can enhance and accelerate the evolution of OpenView. I call this the “tugboat” strategy.

In order for HP to outduel IBM, I believe it must capitalize on its consumer market presence; focus on its IT management capabilities, and keep its corporate infighting to a minimum.

IBM gave away its PC business and has no handheld device or consumer market presence. It has put its software emphasis on cloud enablement rather than cloud management. Middleware is important, but so is controlling the chaos created by the Cloud. And, IBM continues to contend with political battles between its hardware, software and services divisions which not only retard its responsiveness to rapid market changes, but also compounds its costs as each group seeks to maximize its revenue streams.

HP is certainly suscepitable to the same organizational issues, but can counteract them by exploiting its channel relationships and consumer orientation.

While Dell can match HP on the consumer front, it is still playing catch-up at the enterprise level with its Perot Systems services and automated systems. And, it hasn’t been able to overcome its historic channel issues.

When Lou Gerstner took over IBM as it was coming apart at the seams and many called for its divestiture, he proclaimed that the company’s competitive advantage was its broadbased portfolio of hardware, software and services, and asserted it didn’t need a vision it needed to execute.

Apotheker also sees the benefit of a multidisciplinary corporate portfolio, but believes that it needs to be guided by a new vision to fuel its continued growth.

Converting a vision into execution doesn’t happen overnight. In fact, it will probably never be entirely fulfilled. Instead, HP will be measured by how quickly it can demonstrate it is making tangible progress in its efforts.

[Disclosure:HP, IBM, and Dell have all been THINKstrategies clients.}

Dell’s acquisition of Boomi today is the latest example of the tech industry’s herd mentality.

In the same way that Dell followed HP’s example when it purchased Perot Systems after HP acquired EDS, Dell is now copying IBM’s acquisition of Cast Iron Systems with its own move into the integration business.

Besides trying to keep up with other ’systems’ vendors, Dell is also attempting to fortify its Cloud Computing capabilities which hinge on helping potential customers cost-effectively migrate and integrate data from various legacy applications and databases into a new set of cloud services.

Dell indicated at an analyst briefing in Boston last week that it wants to ‘move up the stack’ and build a platform which can help enterprises and independent software vendors (ISVs) develop and deliver applications. Dell can’t compete with the other major Platform-as-a-Service (PaaS) vendors — including Salesforce.com, Google and Microsoft — from a software development standpoint. But, it can challenge them and others, such as Amazon and IBM, from an Infrastructure-as-a-Service (IaaS) point of view.

Why Boomi?

Because it is small enough for Dell to digest easily to test the integration market opportunities and requirements. It is still assimilating Perot Systems into its operations and corporate culture, and may not have been ready to acquire a bigger player, like Informatica or Pervasive.

Why is Boomi selling at this time?

My sense is they were at risk of becoming a victim of their own success and their rapid growth was creating operational strains which would take significant new investment to offset. Rather than make this investment, Boomi’s investors and management team felt that the Dell deal would not only give them a solid ‘exit’ but also the corporate resources necessary to ‘cross the chasm’.

It will be interesting to see if Dell is able to do a better job assimilating and growing Boomi’s business than it has with some of its previous Software-as-a-Service (SaaS) acquisitions — Everdream, SilverBack Technologies and MessageOne.

By coincidence, I heard about today’s news while attending Pervasive Software’s IntegratioNEXTconference, down the road from Dell in Austin, TX. You can bet there were a lot of smiling faces among the Pervasive staff who expect Dell’s move to trigger additional integration vendor acquisitions. I’m sure Pervasive’s counterparts at Informatica, which is also hosting a partner conference this week, were equally excited about Dell’s move.

While speculation about a Boomi acquisition has been rising since the Cast Iron Systems purchase by IBM, Dell was not high on the list of potential suitors suggested by various industry observers, including myself. Instead, the clearer candidates seemed to be HP, SAP, Oracle, EMC or even Microsoft.

All these companies continue to be likely acquirers for the handful of remaining integration vendors, including Hubspan and SnapLogic, in addition to Pervasive and Informatica. Not to be overlooked as potential buyers are also Google and Cisco Systems.

When Oracle announced its intention to acquire Sun Microsystems in April 2009, CEO Larry Ellison proclaimed the acquisition, “transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems.”

Although he was not ready to use the term at the time, it didn’t take long for Oracle to refer to its combined capabilities as a Cloud Computing solution set, which it recently put on full display at its annual OpenWorld conference.

The event was also a coming out party for its new President, Mark Hurd, the high flying former HP CEO who departed in disgrace only a month earlier. Hurd’s appointment wasn’t hard to understand given his hardware experience at HP and NCR, and now gives Oracle’s move into the system business even more significance.

HP has retaliated by announcing the appointment of Leo Apotheker as its new CEO, along with Ray Lane as its non-executive chairman of the board. Apotheker comes to HP with extensive experience in the software industry, suggesting that the company is ready to counter Oracle’s move by escalating its own efforts in the enterprise software business.

But, Apotheker comes to HP with far less success as a software executive than Hurd achieved in his comparable time in the hardware business. Apotheker resigned as CEO of SAP AG in February after the company had fallen into a deep malaise of slow sales coupled with low customer satisfaction and employee morale.

Despite his dismal record, HP has swapped a successful hardware executive for an unsuccessful software executive.

Like nearly every other industry watcher, my friends at Triple-Tree and I didn’t see this coming when we generated our own list of potential candidates, although we were half-right in suggesting Ray Lane would be a good candidate for the top job at HP, but we didn’t necessarily mean the board chairmanship role.

Apotheker’s appointment is not only aimed at attacking Oracle’s rising threat on the systems side, but is also intended to fend off IBM’s continued push into the software business as well. Big Blue has been on a software buying spree and has done more than HP to position itself in the cloud. CA Technologies has also been acquiring an assortment of young software companies squarely focused on the cloud computing phenomenon. HP also has to reexamine its relationships with Cisco Systems and Microsoft because of their moves into the server and services businesses as well.

HP has also been engaged in an escalating battle with Dell, most recently in its fight-to-the-finish bidding war for 3PAR while it was CEO-less. In addition to competing in the server market, both companies have also deepened their services capabilities by acquiring EDS and Perot Systems respectively. I’ve questioned these moves because they are focused on the old world of IT outsourcing rather than the new world of cloud computing.

But, Apotheker’s appointment also raises serious questions about why senior executives within HP continue to be passed over for the CEO job as outsiders seem to come and go. My guess is that some of these executives will be jumping ship shortly, leaving Apotheker with the additional challenge/opportunity of building a new leadership team.

So, can Apotheker transform HP into a software-driven company? More specifically, can he transform HP’s current software business into a competitive player in the Software-as-a-Service (SaaS) market? And, can he combine HP’s software, hardware and service capabilities to create a viable cloud computing portfolio which can compete on an even broader battlefield?

If the past is any indication, the odds are against him. However, anyone who is familiar with the controversy which surrounded Bill Belichick’s hiring as the New England Patriots’ head coach in 2000 knows that he arrived with plenty of skeptics because he had failed dismally in his only other head coaching experience. Yet, he proved the skeptics wrong by leading the Patriots to three Super Bowl titles in his first five years and has continued to be a contender for the better part of the past five years as well.

Maybe Apotheker can pull off a similar surprise at HP. But, he’ll be facing far greater challenges and failure could have far greater consequences.

Some are already suggesting that one of Apotheker’s first moves should be to acquire SAP, which boasts an attractive installed base of customers who currently rely heavily on IBM systems to power SAP’s enterprise applications. Acquiring SAP would enable HP to square off against Oracle and dislodge IBM from many of these accounts. But, it could also burden HP with an aging set of on-premise applications and the same set of disgruntled customers who were happy to see Apotheker leave SAP before. (I’d be more comfortable seeing HP acquire Symantec, which would fill its security and storage management void, and would fit better into HP’s product portfolio, channel strategy and corporate culture.)

Companies often make bold moves to serve as a catalyst for change. This is certainly the intent of Apotheker’s hiring. However, HP’s board better be sure they found the right guy before they compound their past mistakes by trying to become an enterprise application vendor as well. It wasn’t too long ago that Carly Fiorina was in the midst of a series of highly publicized internal battles trying to prove the logic of her proposed acquisitons of Compaq and PwC.

The Compaq acquisition, in addition to EDS, has made HP the biggest company in the tech sector. But, they haven’t made it a leader in the rapidly evolving Cloud Computing market which is transforming the tech industry.

Apotheker refused to comment about Oracle’s strategies in response to a question during his introductory press conference, but acknowledged that the technology industry is in the midst of a very disruptive transition period as demand for cloud computing services explodes. His ultimate challenge will be transforming HP into a company which can capitalize on this extraordinary opportunity.

Years ago, I considered the week leading into Labor Day as the final hurrah of the Summer and tried to preserve it for an end of season vacation to cap off the warm weather months in New England. Then my kids became school age and schools started kicking off before the holiday weekend. (Don’t get me started on this silly practice.)

Now, the tech industry is also making a habit of getting back into stride for the new Fall season before the dog days of August are behind us. One of the important annual venues for kicking off the new season of activity is VMworld.

This year’s event is generating plenty of news, especially regarding cloud-oriented acquisitions and alliances. Here’s a quick sampling:

• VMware Acquires Integrien and TriCipher 
• Verizon and VMware to Launch Enterprise-Class Hybrid Cloud Solution 
• BlueLock Introduces VMware vCloud Datacenter Service with CloudConnector 
• EMC Transforms Management of the Private Cloud, Ionix Unified Infrastructure Manager 2.0 Now in Customer Beta
• Citrix Acquires Virtualisation Firm VMLogix 

Why all the buzz surrounding this event?

Virtualization is one of the critical building blocks for creating cloud computing environments and VMware has become a key player in the cloud computing marketplace. As a result, a widening array of tech companies, service providers and channel organizations are aligning themselves with VMware. At the same time, other virtualization vendors are trying to keep pace with VMware’s capabilities and strategies.

This week’s acquisitions, alliances and other announcements are just the latest illustrations about how this marketplace is evolving and the competitive landscape is shifting.

For instance, performance and access management are pivotal pieces in a public or private cloud computing environment. This is the reasoning behind VMware’s acquisition of Integrien and TriCipher, and part of the thinking that drove Citrix’s acquisiton of VMLogix.

So, while the Dell/HP bidding war over 3Par has captured plenty of attention, other industry players are staking their own claims on a share of the rapidly expanding cloud computing market opportunity.

Mark Hurd’s sudden resignation as HP’s CEO has opened a floodgate of speculation regarding who the company will select to succeed him.

Because his departure wasn’t anticipated, there are no clear-cut internal candidates. And, because Hurd himself was a surprise selection for the post in 2006, it is possible that another little-known industry executive may be tapped again for the position this time around.

So, this creates a wonderful opportunity for anyone with a passing interest in HP’s future, and the future of the technology industry as a whole, to throw a few names in the hat.

The HP CEO position is particularly intriguing in part because it has grown to become the largest IT vendor in the industry through a series of acquisitions of Compaq, EDS and others. More importantly, HP like the rest of the IT industry is at a pivotal crossroads brought on by the disruptive forces surrounding cloud computing, globalization, the consumerization of IT, mobility and the economy.

As a consequence, HP and every other established technology (and software) company has to re-think their corporate strategies, redesign their products and services, and restructure their go-to-market tactics.

For HP, this means realigning its hardware, software and service capabilities to more effectively leverage the ‘cloud’ so it can more effectively responding to customers’ rapidly changing requirements and expectations, and compete in an increasingly competitive marketplace.

I was first prompted to think about potential HP CEO candidates immediately after Hurd’s resignation when I was asked by a top-flight headhunter for my quick suggestions and came up with the following names off the top of my head:

• Joe Tucci, EMC’s CEO who has transformed the company from a hardware-centric to a software-driven business model and pulled off a similar feat at Wang Computer where he moved the company from hardware to services. EMC and HP’s corporate capabilities and challenges have many similarities.
• John Chambers, Cisco Systems’ CEO who has successfully transformed the company from a corporate network infrastructure vendor into a multidimensional technology supplier to everyone from major service providers to small office/home office (SOHO) workers. Under Chambers’ leadership, Cisco has withstood every economic and competitive challenge, and is now moving into the data center where HP has made much of its living.
• Marc Benioff, Salesforce.com’s CEO who has transformed the software industry by leading the Software-as-a-Service (SaaS) charge and evangelizing about the added business benefits of moving to a broader array of cloud computing alternatives. If Salesforce.com isn’t going to be acquired by Oracle and Benioff made CEO under Larry Ellison, he would be a great candidate to push HP’s legacy software business into the new world of SaaS and its hardware business into the cloud.
• Steve Mills, IBM’s Software Czar, who has used an aggressive acquisition strategy to recast the company into a powerful middleware vendor within a similar set of hardware, software and service businesses which HP possesses. As a result of his success with the software division, Mills was recently given responsibility for managing IBM’s IBM hardware, storage, and operating systems businesses. But, Mills is also facing a mandatory retirement barrier to further advancement and could put his experience to good use at HP.

My friends, Chris Hoffmann and Scott Donahue at TripleTree, where I am a senior advisor, suggested that we put our heads together to broaden the candidate list. Here’s what we came up with:

• Michael Capellas- He has successfully stepped into even tougher situations at Compaq (now part of HP) and MCI/Worldcom, and is well respected in the tech industry and beyond.
• Bill Campbell - Current Intuit Chairman and former CEO, but more importantly he has been a key advisor at Google and Apple, and is also very well respected in the tech industry.
• Kevin Johnson- Former rising star at Microsoft now running Juniper Networks who understands HP’s products and channels.
• Anne Livermore- Runs HP’s Enterprise unit which brings together its hardware, software and services businesses. He’s been passed over many times but might be the safest best as an inside pick.
• John Thompson- Former CEO, and current Chairman of Symantec, recognized the importance of moving to SaaS but couldn’t overcome channel resistance.
• Meg Whitman - If the Governor thing fizzles…she’s a proven, capable leader who will be looking to prove herself again.
• Ray Lane- Ran Oracle as President, then became an early proponent of the virtues of SaaS as a top-tier VC.
• Charles Philips- Has been driving Oracle’s acquisition strategy and runnng a major portion of its operations. He’s just beginning to learn about the hardware business as a result of the Sun acquisition, but he’s a quick study and forward-minded.
• Jon Rubinstein - Ex-Palm, Ex-Apple…might be too much of an engineer but interesting match for HP. Understand mobility which is where the world is heading, and can help HP fully exploit its Palm acquisition.
• Ed Whitacre- Just announced his resignation from GM where he quicklygot the behemoth back on track with no prior industry experience. Before that, he also pulled together SBC and AT&T, and could bring HP’s far-reaching assets together. He’s in his early 60’s, so it might be a stretch to see him as a long-term CEO at HP. However, he could bring stability until HP cultivates a new leader for the longhaul.   
• Diane Greene- Former CEO of VMware revolutionized IT with virtualization, a key component in HP’s future. Might be too techie, but certainly understands the opportunities and challenges.
• Shantanu Narayen - Well respected, but not well known CEO of Adobe which is a key player in the web development world which is driving cloud services.
• Vivek Paul- CEO of Wipro, known as a visionary in outsourcing, now in private equity, with the global experience which will be essential going forward.

If these industry stalwarts seem too mundane, here are a few frivolous ideas to think about for fun:

• Brett Favre – nominated by my Minneapolis-based friends at TripleTree who worship the indecisive quarterback as a brilliant turnaround artist.
• Joe Montana – my football oriented alternative because of better winning record and Bay Area roots.
• Simon Cowell – he is a tough-minded task-master with time on his hands since he left American Idol.
• Oprah Winfrey – knows how to build businesses and a worldwide following, and might be willing to put aside her upcoming year of long goodbyes as she departs her syndicated talk show.
• Tony Blair- the consummate negotiator who would be a perfect candidate to address the myriad of channel issues which will arise if HP adopts an aggressive SaaS/cloud computing strategy.

As you can see, Mark Hurd’s resignation has given us a great way to while away the dog-days of August with various ideas. I hope this gives you plenty of food for thought for the weekend and welcome your suggestions as well.

For the past two weeks, I’ve been debating whether to respond to a commentary in InfoWorld by Neil McAllister which asked, “Is the SaaS Experiment Finally Over?”

But, I couldn’t hold back any longer when one of the many online publications where I’m a contributor, eBizQ, posed the question in a more provocative fashion, “Is SaaS Dead?”

I couldn’t bring myself to respond to McAllister’s column when it was first published because his argument was so ludicrous. He alluded to a variety of past SaaS and cloud vendor service outages to raise concerns about the overall viability of these rapidly expanding markets. And he used a series of Gartnerisms to warn against developer migration to the SaaS model.  

Yet, McAllister ignores the pervasive failures of traditional on-premise software which has inspired organizations of all sizes to explore and increasingly adopt SaaS alternatives to better meet their corporate needs.

The truth is that Gartner has been wrong about SaaS since the beginning. Even today, it has failed to fully recognize the current rate of SaaS adoption because they only talk to their traditional IT clients who are still trying to resist today’s trends because they see them as a threat to their jobs.

For instance, I reported earlier this year about Pacific Crest’s CIO survey which found that they expect to spend approximately 30% of their software budgets on SaaS in 2010, while Gartner is still predicting that organizations will only spend 25% of their budgets on SaaS by 2012.

Gartner also refuses to recognize the growing array of customer success stories which clearly illustrate the tangible and measurable business benefits being generated by SaaS and the broader cloud computing services.

Meanwhile, THINKstrategies has been recognizing SaaS and cloud computing providers nearly every week for the past year and a half which are delivering these business benefits worldwide through our Best of SaaS Showplace (BoSS) and Cloud Computing Business Value Award programs.

Rather than acknowledge the benefits of SaaS, and other cloud computing services, Gartner prefers to publish endless warnings which simply propose commonsense vendor selection and management principles.

The fact is that the SaaS ‘experiment’ is definitely over. It is now a mainstream movement.

Just take a look at the growth of Salesforce.com and SuccessFactors. Or, check out how NetSuite and Workday are encroaching on SAP. Listen to CIOs who are frustrated with being in the server business and want to shift into the services business.

And, pay attention to the major moves which the ‘legacy’ hardware and software players–led by IBM, HP, Microsoft, Oracle and SAP–are taking to transform and even cannibalize their traditional business to respond to rapidly escalating customer demands for change.

Yes, the SaaS experiment is over. It is now for real.

Yesterday’s announcement by HP that it is cutting 9000 workers and hiring another 6000 as part of a $1 billion multi-year effort to redesign its data center operations and automate its enterprise services is the latest indication of the traumatic impact which today’s cloud computing phenomenon is having on the tech industry.

HP readily admitted in its announcement that its goal is to,

“…Consolidate Enterprise Services’ commercial data centers, management platforms, networks, tools and applications to create a more scalable, modernized and automated IT infrastructure that will better serve its clients’ needs.”

Although the company didn’t specify where its cuts would take place, I suspect that the bulk of the downsizing effort within the Enterprise Services division will involve offloading the legacy data center facilities and staff which came from the EDS acquisition.

My sources within the company have confirmed my original concerns about the acquisition that the EDS deal brought more baggage and little innovation to HP’s oldline outsourcing business.

Anybody who follows the traditional IT outsourcing business knows that it has suffered as a result of the emergence of more cost-effective and less risky cloud computing alternatives.

Like the incumbent software vendors (ISVs) who have had a tough time keeping pace with the rapid rise of Software-as-a-Service (SaaS) insurgents, traditional hardware (“systems”) vendors are facing a similar challenge in the Infrastructure-as-a-Service (IaaS) segment of the cloud computing market.

After years of internal infighting, which did little to bring about a clear cloud computing strategy or set of solutions, HP is now forced to make dramatic moves in order to ensure that it doesn’t fall significantly behind the cloud computing leaders–Amazon, Google, Rackspace, etc.

Unfortunately, HP’s housecleaning efforts will likely cause even more internal strife and distractions among the company’s employees before it produces tangible business benefits for its customers.

However, if HP doesn’t take these painful steps it risks far greater consequences as the cloud computing movement becomes mainstream.

HP’s efforts to rearchitect its operations and retool its staff is not only an important bellweather for tech vendors, but should send a clear message to CIOs and corporate executives with enterprise organizations as well. They should be taking a hard look at the way they operate to ensure it is relevant in today’s rapidly changing business environment.

I recently recorded two podcasts for TechTarget’s SearchCloudComputing web portal regarding the new IT skills and vendor management requirements which are critical in cloud computing.