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June 14, 2017

HPE faces massive internal overhaul to remain relevant

CEO Meg Whitman lays out a plan for HPE Next to transform internal operations of the company.

By James Nunns

HPE’s transformation appears to be far from over according to the latest reports coming out of the company.

According to an internal memo seen, seen by The Register, HPE is planning to overhaul processes, investments, people, and overheads as part of the HPE Next initiative.

The project is said to help determine the company’s “relevance in the years ahead.” Jon Faust, SVP of finance, worldwide financial planning and analysis and global functions

will head up the initiative.

Meg Whitman, CEO of HPE is reported as saying in the memo: “The goal of HPE Next is to produce an organisation that is precisely built to compete and win in the marketplace. Through HPE Next we will clean-sheet our operating model and organisational structure to simplify and improve how we work.

“We’re going to review all of the processes of the company, as well as the accountabilities, to see where we can be more agile. We will look at how we can prioritise investments in growth areas and capabilities that set us up for the future.”

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The final part of the plan will see the company “right-size end-to-end cost structures of HPE to ensure we deliver on our financial architecture,” said Whitman.

Read more: HPE sales, revenues, profits decline – but it’s all part of the plan, says CEO Meg Whitman

These wholesale changes would not be the first time that Whitman has led the company through a transformation. After taking over HP in 2011 Whitman split the company in 2015 to create Hewlett Packard Enterprise and HP.Inc. This move separated the PC and print divisions from the typically enterprise software, servers, and everything else.

Since the split Whitman has overseen further changes of the HPE business with software and Enterprise Services sold and spun off.

The moves have been a part of a refocusing of the direction of the business and have been supported by a number of acquisitions with the likes of Aruba, SimpliVity, and Nimble Storage.

Despite these moves, HPE has struggled to turn around its fortunes. The most recent financial results saw all divisions bar Financial Services decline for the three months ending 30th April, with revenue from continuing operations dropping 13% to $7.44bn.

Whitman said of the results: “Revenue from continuing operations of $7.4 billion was down 5% year-over-year when adjusted for divestitures and currency, driven mainly by reduced server demand from a single Tier 1 customer, and lower license and professional services sales in software.”

An HPE spokesperson told the publication: “”We are taking a deep look at our end-to-end cost structure, business processes and organisational design. Building this ongoing process into our DNA will ensure that the smaller, nimbler go-forward company is set up to win in the markets where we compete.”

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