HEWLETT-PACKARD: NEW CEO

The New CEO is a Software guy and has Prior Experience only in Enterprise Sales – A clear mismatch with the current philosophy of HP – The largest IT company in the World. Is he the right choice? 

From ethics to business. While at SAP, Apotheker helped build a global software enterprise sales unit. B2B was his frontier. He headed various divisions and revived SAP’s R&D platform, and kicked-off a glorious run of 18 quarters of double-digit software revenue growth, which ended in 2009. The agony for the hopefuls is that, at HP, none of these credentials will play the cushion. He is not known to be a people’s man – a fact which will not help inspire HP’s 30,000 employees, who have not been in the best of spirits under Hurd’s reign. To prove this, as per Thomson Reuters, HP’s revenue and net profits per employee for FY2009 stood at $406,335 (97.11% less than that the industry’s) and $28,405 (93.08% less than the industry’s) respectively. Says Sturm of EMA, “The immediate challenge facing Apotheker relates to employees. It is imperative that he takes immediate steps to improve employee morale & control key employee turnover. If he cannot do these, then his tenure with HP will be brief.” While HP is known for its hardware, distribution and B2C business, software is more of loose change (accounting for 2.8% of HP’s topline for Q2, 2010). And this is precisely what Apotheker has set out to repair. Expectedly, under him, HP’s focus on software will increase manifold. But with software, comes innovation. And Apotheker’s SAP files prove him a failure at it. Also, he has earned a reputation for establishing an environment at SAP, which focusses on high-cost and low return maintenance and support pricing, rather than profitable applications, despite the billions spent on innovation. The fact that he has also presided over product delays and has demonstrated ill-sense of pricing techniques (he angered SAP’s customers by increasing prices during the slowdown), also does not ensure better days ahead for the mass-pleasing HP; the foreboding danger being a repetition of what happened to SAP – HP might soon find competitors chiseling away its PC market share, a process which has already started. (HP’s global share during Q3, FY2010, stood at 17.5% vis-a-vis 19.3% in FY2009).

So what should Apotheker do? He has options. The most irresistible one will be not to tamper with HP’s pride – its hardware business – which he will, despite knowing that Hurd tried to give HP a software and enterprise business edge with its acquisitions of EDS, 3Com and Palm. But neither did the $13.9 billion EDS acquisition help HP make waves in the consulting & services business (where IBM is #1), nor did the $2.7 billion 3Com buy manage a dent in the network arena where Cisco rules. And as for the $1.2 billion Palm buy, everyone knows what an HP smartphone looks like (!).

Many claim that Apotheker might do to HP what Sam Palmisano did to IBM. But the truth is – the very imagination lacks logic. HP is not IBM. When IBM chose to go the software way, it was being sucked into a black hole, with its hardware business collapsing. It was then that IBM decided to shed the deadweight of its hardware unit. HP is in not in a similar situation by lightyears! It is the #1 IT company in the world (having made $114.55 billion in revenues in FY2009) and sells the largest numbers of PCs and printers in the world (claiming 37% of global market share in the printer segment as of Q3, 2010). What makes Apotheker believe that HP needs a makeover?

Whether he will take a dig on cloud computing is a wonder (as he has had his share of expensive failures in this regard while at SAP, burning $5 billion in two years), but what is inevitable, is that HP under Apotheker will join the battle to capture the enterprise space from the likes of Oracle and IBM. This would call for expensive acquisitions of players like SAP, Salesforce.com, et al, which will put big question marks on the ROI figure of HP, that is already lower than the industry’s (12.36 and 15.56 respectively).

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
 

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

IIPM : The B-School with a Human Face

Priyanka’s multipurpose acting chops

Let’s face it: Anjaana Anjaani is not going to find a place on the list of her mentionable movies. And Khatron ke Khiladi (KKK) was much better off with Akshay Kumar. (In fact, KKK plans to rope back Akki for their next season). But hey, Priyanka Chopra has just been voted the most kissable star in Bollywood! She may be training to kick some serious butt in the upcoming Don 2, but that, Ms Chopra, should give you an idea of the kind of action most would like to see you in.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
 

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

IIPM : The B-School with a Human Face

BANKS ON THE MOVE : IDBI BANK

Better late than later, IDBI Bank has finally understood the power of numbers – or rather, of Indian masses. With their renewed focus towards retail banking, the bank seems to be re-mastering age-old strategies… and quite efficiently. B&E does a snapshot insider of what’s up! by Mona Mehta

The tactical move to install point of sale (or PoS, in industry terminology) machines deserves a deeper mention. The bank intends to allow IDBI Debit Card customers a withdrawal of up to `1,000 through these PoS machines kept with small shopkeepers. Thus, with a target to install 100,000 new PoS machines over the next 3 years, the bank is aiming to get hold of the mass by facilitating higher financial inclusion. The fact is that this move is perchance the biggest ever strategic ground level move in the Indian banking industry undertaken by any bank ever to ensure direct retail consumer interaction – after the credit card inclusion program undertaken by banks, of course. Considering India as a whole, a figure of 100,000 is quite a small and insignificant figure to make a huge change. But multiply that by ten, and one starts seeing how IDBI Bank has the wherewithal to become the largest retail bank in India, and purely through ground level marketing.

As mentioned before, the parallel corollary is the bank’s intent to increase branches. And this long term strategy is not necessarily to provide ease of use to consumers (for that, the PoS and ATMs are enough), but more to reduce the cost of its lending. At present, for lending, the bank is more dependent on borrowings. Even this year, the bank is setting up around 250 new branches to increase its tally to 1,000 branches.

And Some Caution Too!
Still, it would make sense for the bank to be cautious on a few areas, where it seems (on the face of it) that logic and empirical evidence are not matching – the bank is busy in expanding itself by adopting the inorganic route – for example, the bank at present is in the process of merging IDBI Housing Finance with itself. The hope, as top management of IDBI Bank revealed to B&E, is that synergies would ensure that duplication of operations is reduced (for example, in home loans itself) and operational efficiencies are realised optimally. While most such mergers have known to fail in the industry, what might work to IDBI Bank’s benefit was that the housing finance wing was originally an offshoot of IDBI Bank itself – therefore, the danger of culture collisions is immediately reduced. While the logic for the housing wing is synergy, the bank – almost going against this same logic –has floated a wholly-owned subsidiary, IDBI Asset Management Ltd, to undertake mutual fund business. This is apart from the bank’s insurance business in partnership with Fortis (which creditably is doing wonders; see chart). Across divisions, therefore, there still exists differences of opinions on strategic imperatives and intent.

At another end, the bank has also begun its overseas operations by opening its first foreign branch at the Dubai International Financial Centre (DIFC). While the hope is that this might have a promising future in helping the bank to provide a range of corporate banking services (including the extension of commercial borrowings, foreign currency loan syndication and trade finance), the fact is that not only is Dubai the biggest recession hit area of the Gulf region, such international expansions take away considerable capital, manpower and other resources from the bank’s core focus.

Read more.....

Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

UTV’s ambitions in the mobile space

Manish Agarwal was hired to drive UTV’s ambitions in the mobile space. He defends some critical factors, including fall in revenues and employee retrenchment

B&E: You have just completed a year in this organisation. How’s the work experience different from Microsoft India?
MA: This is a start up. Microsoft started in a garage. Thank god, UTV has a plush office and we are not sitting in a garage! Here you have 10 ideas; one may work, 9 may not. You need to have a vibrant evaluation environment and you need to be nimble footed. Agility is the key in this business.

B&E: Talking about ‘agility’, UTV New Media laid off 20 people last year. What led to that decision?
MA: In a start up, each of us is very clear about our roles. So one year later, we are very well entrenched with the Telecom operators, we have multiple technology partners. In web we have been able to shed the baggage of the past legacy and built an underlying common system, which even a Yahoo and Rediff is struggling to make. So the day we have 5 million or 10 million users across 3-4 verticals, they will all be interconnected and we will thus be able to cross leverage and cross profile people.

B&E: There has been a 34% decline in revenues from UTV New Media vertical. What are you doing to improve the numbers this year?
MA: This year, we are looking at ending the number at around `30 odd crore from `12 crore that we made last year. But I can say that we already have got those numbers in our pockets and therefore we have revised our internal numbers to that effect. This quarter also looks more or less in control. In this business what matters is not the 30-40% but a 2-3 years business and the bet you are taking, the scale of business you are looking at.

Read more......

Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

His strategy seemed to have paid off

O. P. Bhatt took over the reins of sbi when private players were catching up. He decided to go slow and his strategy seemed to have paid off. With SBI’s profits two times that of its closest rival ICICI Bank, sbi is far ahead of its competitors by any means

B&E: What steps have been takn by you to bring down the NPAs?
OPB: We are making continuous efforts to bring down the NPAs and we have restructured loans for the same. Then we have our Stressed Asset Resolution Centres (SARCs), which too work towards bringing down the bad loans. They identify assets as and when they get stressed and then start working on them to ensure that do not turn bad.

B&E: The bank has been able to bring down the cost of deposits from 6.16% in June 2009 to 5.27% in June 2010. How has it been possible?
OPB: It’s because we have been able to reduce our high cost deposits. We will try to lower the cost of deposits further and if we cannot do that, we will try to maintain the low levels that we have been able to achieve.

B&E: Do you plan to raise capital in the near future? If yes, how?
OPB: We certainly plan to raise capital in the future. However, we are still working on it. In fact, we have a plan to raise about `200 billion by the end of the current financial year. The capital would be raised by way of rights issue, which will keep the government holding unchanged. If we do not raise it by way of rights issue, then the other options are preference shares and FPO (follow-on public offer).

B&E: You just said that you are upwardly biased on interest rates. Does that mean that the banks will not give good offers during the upcoming festival season?
OPB: Banks can give good offers during the festival season and they will surely do that because the festival season draws a lot of customers and no bank would like to miss that opportunity. But then, the rate that they offer will have to be above the base rate.

B&E: RBI has made it clear that they do not have issues in giving new banking licences to industrial houses? Is this a bad news for the exsisting players?
OPB: This is a philosophical thing. There are arguments both ways. In my view, if an industrial house gets a banking licence then the onus is on RBI to see that the things are done in the right manner. We all know that we need more banking facility to achieve the financial inclusion goal. Hence, we certainly need more banks in the system.

Read more.....

Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links