I had an opportunity to meet with several HP executives at the annual industry analyst summit they held in Boston this week.  HP used this event to reveal all of the devil in the details of the massive new business unit created a few months back, CMS, which is short for Communications and Media Solutions.  This is a company that loves acronyms and always has.  CMS should not be confused with CME, which was a matrix’d organization targeting communications, media and entertainment industries and did not carry a P&L and is now gone [it was swallowed into CMS.]

The “CMS” business unit represents a first for HP, they have officially stitched together all of the various communications and media assets stashed in the company and aligned them against a P&L.  This is the first time they have organized like this for a specific vertical industry.  CMS includes the telecom network service delivery assets like OpenCall, NGOSS/BSS/SDP software, all of the EDS assets targeting C&E, and consulting and integration services and so on.

It’s a model that HP hopes will bear fruit so it may be replicated for other verticals over time, i.e. healthcare.  The big idea is to internally ingrain a solutions oriented approach when engaging the C&E market which represents the most important industry vertical for HP in terms of revenue contribution.  A key objective will be to educate their customers and prospects on the end to end capabilities of HP and believe the CMS move gives them their best shot.   Make no mistake; this is as much about internal organization as anything.  The previous structure was siloed and product focused which led to some account level toe stepping on the sales side of things and disjointed marketing messages which lacked cohesion.  A discrete BU is also less challenged in building consensus for growth activities [read acquistions] because there are less cooks in the kitchen with competing views/agendas.   The back of a napkin estimates put CMS at about 1B in revenues last year of with about a 70/30 split between services and software.  CMS represents about 2500 direct employees.  This is no small operation and it would surprise no one to see large M&A events driven by this group in the second half of this year.

The new BU is run by Erwan Menard, a former ALU executive brought in by HP’s SVP of software and solutions,Tom Hogan.  Erwan’s charter is to create the master plan to consistently win/grow in this rapidly converging marketplace.  Erwan met with myself, Jon Paisner, and Ashvin Vellody to talk about the challenges and opportunities in front of CMS.  Our first impression was a good one.  He is realistic and very much in tune with the challenges in the market, both terms of the market competition he faces and the economic challenges facing his customers and their customers.  This sense of reality permeated many of the sessions I attended, with a solid majority of solution pitches centered on on the “reducing costs/increasing efficiency” and  “getting back to the basics” messages which will surely reasonate with jittery customers.   This is exacty the approached needed for the communications and media industry right now, we’ve been blasted with the false promises represented by “massive transformation [i.e. IMS]” and the furious speculation of “web 2.0 business models” for too long.  ALU probably provided all of the lessons Erwan needed in the danger of that approach.  I am very much interested in seeing the next CMS related shoe[s] to drop.  Do you think HP has what it takes?