At HPE Discover 2016 in Las Vegas last week, there was a great deal of discussion surrounding the Hewlett Packard Enterprise Co. spin off of its enterprise services business, which will now merge with Computer Sciences Corp. HPE is making strategic divisions of businesses through mergers and acquisitions, and the company sees its future in solutions, hybrid cloud and data at the edge.

While theCUBE, from the SiliconANGLE Media team, was at HPE Discover 2016 last week, theCUBE cohosts John Furrier (@furrier) and Dave Vellante (@dvellante) scored a great interview with Chris Hsu, COO of HPE, who discussed the company’s M&A strategy and how accelerating growth is helping them to dominate the market.

Spin and merge = pure play

In late May, HPE announced that it was spinning off its enterprise services business and merging it with Computer Sciences Corp. (CSC). Furrier remarked that the spin/merge with CSC was dominating a lot of the conversation on Wall Street. Hsu explained the impact to HPE and its customers.

“We’re creating a pure-play IT services company. In the new merge co., we have a company that is going to be at scale. It’s a $26-billion, pure-play IT services company, and we believe there is real growth opportunities for them. Number one, they’ve got a CEO and CFO of a public company. CSC has a really good track record and really good performance. Then [add] to what we’ve built in our own enterprise services under Mike Nefkens [executive vice president and general manager of HP Enterprise Services]. He and his team have driven a real turnaround, and they have posted two quarters of constant currency, stable growth, which is outstanding in this industry, considering it’s a fairly challenging industry.

“They’ve done that through building practices and services and also go-to-market, really engineering the entire go to market. So we think that putting these two companies together creates scale; we bring together management teams of the two companies that have different skill sets … from that perspective, we think we’re setting this new company up for real success. And our shareholders will own 50 percent of that new company. So it is important to us that we set that up so that it can be strategically positioned and have long-term success.”

Separate for speed

Furrier wanted to know how HPE will move faster, and what the guiding principles are for the internal team. Hsu provided some wisdom from the top.

“I’m glad you asked about speed, because the split really allowed us to accelerate. … On our side we’ve accelerated the speed of decision making. We’re able to go much deeper on different aspects of our business. … So the speed at which we are moving … it’s that ability to focus these companies on a narrow set of customers and narrow set of products and competitors and to be able to make decisions faster because you have fewer people at the table.

“One of the things I would say is, Meg [Whitman, CEO of HPE] at the very beginning made a very smart decision. She said, ‘I want to stand up a fully dedicated separation management office, and I want to resource it separate from the business, because I want the business focused on delivery, delivery, delivery. We have to deliver on our commitment to shareholders.’ Over and over she said the first sense of credibility they will have [of] the two new management teams is whether we’re able to deliver during the course of separation.

“Then that freed us up as a separation management office to make tough decisions, fast and rapid. And then Meg and the executive steering committee completely backed us on those decisions. In a large diffuse organization with 300,000 people, in 120 countries with 800 legal entities, the ability to obfuscate or wait until decisions are made … and what we were able to do is separate the run from the [company] separation and then have decisions made quickly and stick.”

Thoughts on transformation leadership

Furrier asked Hsu how HPE is a transformational leader. Hsu explained his thought process on what this type of leadership looks like.

“On the transformation leader, I think in today’s IT world you need somebody who really can see what’s around the corner. You need somebody who is flexible. … You need a 360-approach that is flexible but also allows you to place investments that you can have mature over a multi-year period of time. That is a real challenge for most CIOs because there are very few CIOs that have budgets that are going up 10 or 20 percent a year. Most of them are being told, ‘I want real productivity. I want you to do the same with less.’

“A transformational leadership is required in an industry like this. It is moving so rapidly, and IT is not a back office anymore. It is front office; it is core. … IT is core to the fundamental business of every company.”

Competitive advantages

What are HPE’s competitive advantages? Hsu commented on two reasons and confirmed his belief in the ability to help the digital transformation.

“Number one, we have a great relationship with our customers, and we have a great relationship with our partners in go to market. We think that’s a big competitive advantage for us.

“Number two, we have a long history in a culture of deep-seated research and IP that is underpinning all of our products. And then our services arm, especially through our technology services, is an IP-based technology services arm. It’s sticky; it’s like an annuity and it’s highly profitable.

“So I think we have a great core with our infrastructure, our services and our software assets to really make that transformation.”

Watch the video below to see more about how HPE is changing as a company and is maintaining its transformation leadership.

Photo by SiliconANGLE