HP and OpenText: Harbinger of Disruption or Status Quo?

by Ken Stewart | 7/3/16

In what has become a continually developing saga, the recently reminted HP Inc. divested several business assets to enterprise information management firm OpenText, announcing the first batch in April and the second in June. Timing on the June deal coincided with a coolly received shift in HP’s channel inventory, but perhaps is even more interesting given the fact that HP Inc. pulled these assets over from HPE during the split. With HP Inc. and OpenText continuing to reshape (and dare I say, refine) I have to wonder just what this means for players in the market?

Harbinger of Disruption

The HPE and HP Inc. split was all about focus, right? Yet it seems that months later — and in the face of flagging performance — HP Inc. is grasping for ways to cut weight. By stepping down into the top end of the next weight class, could this beleaguered fighter gain advantage over its opponents? But I believe that HP Inc. may be signaling a larger pivot that most haven’t realized.

How do you gain advantage in major market shifts?

While it’s hard to predict specific market disruptions, collaborative economy expert Rachel Bostman outlines five key indicators of disruption:

1. Complexity
2. Waste
3. Redundant links
4. Constrained access
5. Broken trust

In a recent analyst call, President and CEO of HP Inc. Dion Weisler spelled out many of these in one key phrase: “The end customer can now have multiple outlets from which to purchase. … As a result of that, the growing trend of online transactions, and the global nature of business, there’s a lot more transparency in the market with regards to pricing.”

I have long held that only two models ultimately prevail in mature markets: “lower-volume and high-value” or “high-volume and low-margin.” While I’m sure it will seek to hold on to its margin as long as it can, HP is signaling that it may be preparing for the latter.

OpenText or Bust

While HP Inc. looks like it’s getting out of the customer experience business, OpenText is eager to snap up the languishing software assets to add to its harem of business units. Reading more like a financial “rollup” plan than an over-arching market strategy, OpenText will likely be bullish on capitalizing upon the captured customer base, but will also add respectable revenues to its own annual portfolio tab in the process.

While OpenText won’t openly comment on suspicions around the acquisition, more than one analyst prognosticates that more notable acquisitions (erstwhile interwoven assets) will be kept on life support until such time as no usable organs are left to harvest.

Perhaps the firm can innovate around some of its product mix and satisfy the increasingly aggressive tempo customers expect. Suffice it to say, OpenText reads as if its focus is less on innovation than opportunities for accretive revenue and customer conversion. Customers may not need to worry in the short term, but they should expect calls from their “new account” team in the near future.

Disruption Management?

Many markets are maturing and decision cycles are accelerating, requiring a considerate approach to unified customer experience. HP Inc. certainly seems set more on managing printers and PCs than it does with what it considers fringe customer elements. On the other hand, I have to wonder whether OpenText is really up to the challenge of providing a unified and responsive answer for customers?

HP Inc. may have one thing right; focus is critical to effective execution. From my perspective, both firms seem to be retrenching their existing ideologies rather than truly innovating. I suppose only time will tell how successfully this tack will take.

I think we are in the midst of sea changes — fundamental ideology and approach should be increasingly viewed as shifting sands. Yet, these companies seem content (perhaps even giddy) to stick with the status quo.

Ken Stewart is a principal consultant, author and speaker at ChangeForge. Recognized as a 2015 Difference Maker and one of the Top 40 most influential people in his industry for 2013, Stewart has worked with organizations of all shapes and sizes to identify opportunities, as well as create and execute market-leading strategies.