HP Partners Wrestle With Hurd 'Shock,' Wonder What Comes Next

Hewlett-Packard solution providers expressed shock and disappointment Friday following word that HP Chairman, President and CEO Mark Hurd would step down following a sexual harassment investigation.

Palo Alto, Calif.-based HP Friday said it had investigated Hurd for claims brought against him and HP of sexual harassment by a former contractor to HP. While the investigation found that Hurd did not violate HP's sexual harassment policy, he was found to have violated HP's Standards of Business Conduct, according to an HP statement. Hurd's resignation is effective immediately.

Although few would speculate on Hurd's potential replacement at HP's helm, VARs interviewed by CRN Friday conceded that the fallout would at the very least be a distraction for weeks to come -- and that Hurd's leadership and popularity among HP channel partners would be tough to replace.

"I am shocked. It's always a shock whenever someone of that stature departs suddenly for any reason," said Mont Phelps, president CEO of NWN, a Waltham, Mass.-based solution provider and HP partner.

Hurd was named president and CEO in March, 2005 and then named chairman in September, 2006. Under his leadership, HP's market value grew to $108.1 billion. Revenue for the company has grown to $114.5 billion in fiscal 2009, up from $86.7 billion in fiscal 2005.

Phelps described Hurd as a strong leader who has "left HP much stronger than when he joined it."

"He made a number of bold steps, and he was committed to doing well no matter how you wanted to measure it," Phelps said.

Most concerning to many solution providers following Hurd's departure is HP's leadership transition, in which HP CFO Cathie Lesjak will take over as CEO on an interim basis while HP examines candidates from both inside and outside the company.

The amount of time and energy Hurd spent in the field was enormous, Phelps said.

"He was a guy that spent a very large fraction of his time out in the marketplace, meeting customers, meeting channel partners just on a constant basis," he said. "The transition has a lot of uncertainty, and there will be changes reflective of the new leadership, and that's the nature of HP just like any other organization."

Bob Venero, CEO of Future Tech Enterprises, a Holbrook, N.Y.-based solution provider, was also concerned about HP's next direction.

"I'm like, 'wow,'" Venero said. "It blows my mind for a couple of reasons. You look at EDS [now HP Enterprise Services] and all the things he was in the midst of doing to integrate that. Now that leader is torn out of there. And candidly, it is torn out. Where's the direction going to come from and who's going to bring it?"

Hurd's vision will be missed immediately, Venero said.

"Mark had a clear vision of where he was going. That seemed to be his vision," he said. "Are they going to stay on that line or is whoever they're going to bring in going to change that dynamic? From a partner perspective, that's a scary thought."

NEXT: Hurd Got The Channel, But Has Cost-Cutting Gone Too Far?

Chris Case, president of Sequel Data Systems, an Austin, Texas-based solution provider and long-time HP partner, said during the Carly Fiorina's reign as CEO of HP, the company was locked in competition with Dell and was tied to the direct sales model, but that began to change when Hurd succeeded her.

"It's disappointing news because Hurd was always a huge advocate for partners," Case said. "We're hoping this doesn't have any negative impact on the channel."

Some solution providers said the channel prospered under Hurd.

"Mark was a numbers person and he understood the impact the channel has on the numbers," said Steve Harper, president of NMGI, a Hutchinson, Kansas-based solution provider. "I felt that he focused more resources on the channel as a result. He was a good friend of the channel and provided leadership through difficult times."

Not all solution providers were awed by Hurd's focus on the bottom line.

"HP also still has a lot of very serious problems today that are a direct result of Hurd’s leadership and their never-ending efforts to cut costs, at any cost," said Daniel Duffy, CEO of Valley Network Solutions, a solution provider in Fresno, Calif. "I would like to see them apply a little more logic and reason to their policies and processes. Too many are driven strictly as a cost-savings and CYA [Cover Your A**] effort, rather than doing what’s best for both customers and shareholders, and partners."

Duffy said he's seeing some decline in HP customer experience as a result of the company's cost-cutting.

"They need to moderate things just a bit. For example, I just had a situation yesterday where HP actually expected an end user to replace [his] own screen on a laptop. HP is also sending out used parts for service repairs more and more often and just generally cutting too deep in their cost-cutting efforts, and it’s been negatively impacting the customer experience for some time.

Some solution providers said that HP's success going forward will be impacted more by how they handle business during the transition rather than by Hurd's departure in and of itself.

Jane Cage, COO of Heartland Technology Solutions, a Joplin, Mo. solution provider, said that the best thing HP can do immediately is ensure business proceeds as usual while it plans for a replacement, and ensure Hurd's departure doesn't disrupt channel operations.

"Not many of us have day-to-day dealings with Mark Hurd anyway. For most of us, he's not the face that we'd see every day," she said. "It wasn't Mark Hurd's job to work with us on an operational basis. So what should we do but move forward?"

Majdi Daher, CEO and founder of Denali Advanced Integration, a top HP partner based in Redmond, Wash., expressed similar sentiments.'

’We are saddened by the news of Mark Hurd’s departure but confident in the leadership team that remains at HP," Daher said in a statement e-mailed to CRN. "HP has a global reach with tremendous portfolio of products and services that enables partners like Denali to continue to grow and win with HP."

Hurd not only drove HP's growth, but also brought in great managers and was not an autocratic leader, said David Butler, president of Enterprise Computing Solutions, a Mission Viejo, Calif.-based solution provider and HP partner.

"Partners loved him," Butler said. "He was somebody that had that leadership quality who, when [he said], 'Let's go in this direction,' people do it. He's that kind of inspirational leader."

Without the details of Hurd's sexual harassment investigation, some solution providers said all they can do is evaluate Hurd on his business record and hope for minimal disruption.

"They've got a strong management team. They're doing so well I don't foresee someone coming in and changing everything," said Greg Starr, partner and COO of I.T. Works, a Texarkana, Texas-based solution provider. "They put themselves in the No. 1 position in a lot of areas. Why would someone want to change all that? As far as he goes, I don't know the guy but I have respected what he's done at HP. He's turned them around. We don't know what happened so I can't sit here and judge the man."

NEXT: VARs Will Miss Hurd's Competitive Fire

Mark Gonzalez, president of Nth Generation Computing, a San Diego-based solution provider and HP partner, described Hurd's resignation as a "huge surprise for everyone" and remembered how Hurd had come a long way from the "Who is this guy" questions that dotted Hurd's appointment to HP's top job five years ago.

"The board did an excellent job in selecting Mark to lead HP then, and I have every confidence that they will do an equally good job this next go around," Gonzalez said via e-mail.

Gonzalez, who worked for HP and for companies acquired by HP for 25 years before joining Nth Generation in 2008, said he was often asked by customers if HP's success was due to Hurd or former CEO Fiorina.

"My answer was always the same. It was both," he said. "HP could never have become the dominant force it is in the industry today if Carly hadn't had the vision of buying Compaq. By the same token, HP could never have become the juggernaut that it is today without Mark's laser-sharp focus on operation excellence."

Hurd's achievements were many, Gonzalez noted.

"He took HP from having 85 data centers to six -- a feat that has become the benchmark for efficiency in the industry," said Gonzalez. "He oversaw several major acquisitions like EDS and 3Com, which were truly game changers for HP. Under Mark’s leadership, HP passed IBM in both size and influence. Under Mark’s execution prowess, Dell became irrelevant and Cisco’s dominance in networking was put 'in play.' I think it would be fair to say, that there probably wasn’t a stronger operational CEO in the Fortune 500."

Hurd's competitive fire came up often among solution providers interviewed by CRN Friday.

Gary Berzack, CTO and COO of New York-based eTribeca, said Hurd's rallying cry for HP to rival Cisco in the networking game punctuated the back-and-forth of the pair of tech powerhouses. Under Hurd's guidance, HP stood a chance, he said.

"He had the real ability to deliver for the first time in a long time," Berzack said. "Whether [HP] was going to win or not, it was going to be a competition. They were head-to-head at the poker table."

Berzack added that Hurd "had [brought] an incredible amount of consolidation and focus coming in at a very difficult time for HP and making significant and beneficial acquisitions." Berzack praised Hurd's ability to lead HP to strong performance despite the down economy.

And while Berzack said Hurd may not have had his entire team behind him, he was making waves and the shoes he leaves empty are big ones to fill. HP's best bet for a Hurd successor is either to poach a high-power Cisco executive or an executive from another rival company, or to hire from within to keep the ship moving.

"Come Monday, it's business as usual," he said. "Come January, that's the question. What's the succession plan? If they can't find a game-changing person, the best bet is to hire from within and have the appearance and the reality of business as usual."

Hurd's resignation is effective immediately, and he'll leave HP plenty compensated. According to an 8-K report filed with the SEC, Hurd will receive $12.2 million in severance along with other benefits.

Damage to his reputation in the short term, some solution providers reasoned, doesn't mean Hurd is down or out forever, however.

"I guarantee you that the last chapter of his career has not been written, in spite of current problems," said Nth Generations' Gonzalez. "I am certain that there are companies out there who could benefit from Mark's skills. I'm not sure whether there's another IT company that would interest him. I can think of dozens of companies who would die to have someone like Mark at the helm. We'll just have to wait and see where he lands, but I guarantee you that you haven't heard the last of Mark Hurd."

Scott Campbell, Andrew Hickey, Jack McCarthy, Kevin McLaughlin and Rob Wright contributed to this story.