With the exit of Hewlett Packard’s embattled chairman and CEO Carly Fiorina on Wednesday, one question is in what direction will her interim replacement, company CFO Robert Wayman or his eventual successor, steer the ship? Martin Reynolds, a vice president with Gartner’s Dataquest organization believes the company’s problems and the answers to them are centered around operational issues and not in the area strategy. Reynolds talked with Ed Scannell, Infoworld’s Editor At Large, about exactly what those operational challenges are, what the company’s technical strengths and weaknesses are, and offers one suggestion about who the right person might be to replace Fiorina. IW: Does this open a door for HP to significantly change its product strategy?Reynolds: It is clear they want to go forward with their product strategies as implemented so far. There are two solutions to HP’s problems: one is you change the strategy and the other is you change the operational basis of the company. They have chosen to go with the operational approach. They want to bring someone in who is going to drive revenues up and costs down. IW: In what areas do you expect them to focus on first?Reynolds: They will have a strong focus on the server business which needs to recover to strength they had in the past. Services needs to go up and to do so in a profitable fashion. They announced they have a problem in services because of their outsourcing. They have been a little too aggressive in growing that outsourcing business and that is an operations issue. Printers are doing okay, that is a defend type business for HP. They need to grow profit and share for PCs and that is going to be tough to do.IW: Can they be both a consumer and business company going forward and do both profitably? Reynolds: Look at GE. They do everything — consumers, business, space shots and they are very successful at most of them. It is just a question of being able to manage those disparate businesses in a successful fashion.IW: Do they need someone then like a Lou Gerstner at IBM to come in? Or will it take a new team of managers?Reynolds: Both. They need someone who can pull together the right team to get those operations working. Now obviously they have people there now who understand this stuff. Will they bring in more people? It is difficult to tell. IW: Do they need to spin off divisions of the company into separate entities?Reynolds: Well that is strategic and so not in the cards yet. But that is certainly what the stock holders have been looking for. They see this very valuable printer business being discounted because of problems in the other areas. They have to bring in someone and charter them with fixing the operations. If that CEO can’t fix that, then they have to go back to looking at the strategy again.IW: Do they need to develop a more definitive software strategy and/or establish an image as a creditable company? Reynolds: What they have now does feel like a bunch of parts, doesn’t it. They have nibbled at it with the Adaptive Enterprise that they tried and gave up on. That is something that could have a resurgence. There are tremendous opportunities in that space to do some things. They maybe were a little too early with it. But it would be difficult to turn into a software company suddenly. What they need to do is move to the next level of IT. That is the challenge and there is still a long way to go. If you are a CIO and go to the CEO with your lists that has on it new servers for this and that well……what CEO’s really want to see is 20 percent more IT capacity to accommodate the growth they have had. They just want to know their business can keep growing without constraints from IT.IW: Who do you think would have the skills to step in and make these changes?Reynolds: I think someone who has the operational skills but probably not interested in the job is (Dell Computer president and CEO) Kevin Rollins. He clearly understands what it would take to get the costs down and the revenues up. He wouldn’t be interested but what an opportunity. This is the chance to go out and beat IBM. IW: What can HP learn from IBM’s restructuring under Gerstner?Reynolds: If you look at IBM now, they are divesting anything with low gross margins. But if you are trying to work in an area where gross margins are tight and life is hard, you need someone who is very focused and skilled operationally. Gerstner was both operational and strategic. Not only did he tighten up a lot of what IBM was doing but he also said this is not what we are going to do and this is where our future lies. But he had a lot of flexibility because he was living in a company where there were 20 or 30 or even 40 points of margin. The trouble with HP’s situation is, a lot of their business units are working with single digits. It is absolutely an operational challenge and more so than most would face. It is more of a Wal-Mart thing than it is a GE thing. Technology Industry