THE FRIDAY INTERVIEW: John Collinsinterviews Martin Murphy, managing director, HP Ireland.
PORTRAITS OF Bill Hewlett and David Packard, the eponymous founders of Hewlett-Packard or HP as it is now known, hang in the reception area of the company's facility in Leixlip, Co Kildare. On another wall is a picture of the garage in Silicon Valley where the two engineers began working on their first products on the eve of the second World War. That garage is now an official US historic monument, widely considered the birthplace of Silicon Valley, but Hewlett and Packard must never have dreamt that 70 years later their nascent firm would have close to 3,000 staff working for it in the Kildare countryside.
The numbers swelled by almost 1,000 this year when HP moved staff from an office in Clonskeagh and carried out a refit of the corporate headquarters in Leixlip. Part of the refit included creating the HP Imagine Centre, a high-tech room bathed in blue light where Martin Murphy, the managing director of HP Ireland sits down to be interviewed. Focusing on HP's printer technology, it normally acts as a demonstration suite for big customers who want to get hands-on with the products.
"You cannot underestimate the effect you have when you bring someone on to the site here, just with the scale and magnitude of the operations we have," says Murphy, with more than a hint of pride. The campus in Leixlip is home to manufacturing, finance, RD, sales and support functions as well as a large canteen, a gym, medical centre, two banks, a credit union and various other facilities to keep the staff happy.
Like the company's founding fathers, Murphy is an engineer but made the jump into sales via consultancy. Murphy took over the reins in June 2000, the year before HP engaged in a $25 billion mega-merger with Compaq (which itself was just digesting Digital, another one-time giant of the technology world which had invested heavily in Ireland). Although Murphy calls it a textbook merger, many outside commentators felt it was a bad case of corporate indigestion from that deal which led to the ousting of HP chief executive Carly Fiorina in 2005. HP globally and in Ireland has prospered under Fiorina's successor Mark Hurd.
Recent annual results showed that revenues globally grew 13 per cent, or $14.1 billion, to $118.4 billion. Net profits were up from $8 billion to $9.3 billion.
HP doesn't break out figures for Ireland but Murphy is happy to point to third-party data from analysts at IDC which confirms it is the best-selling technology brand in the local market. It is number one in servers and data storage and has also passed out rival Dell in the consumer notebook space. The cherry on top for a company which is sometimes dismissed by rivals as "the printer company" is that over half the printers sold in the country carry the HP badge.
He also points to significant recent contract wins including the eSchools project in Northern Ireland, the renewal of an outsourcing deal with Glanbia, the building of a data centre in UCD, a total overhaul of Eircom's systems, and the installation of a supercomputer for The Marine Institute.
Looking back over the financial year Murphy says corporate sales and the services side of the business grew modestly but the consumer market weakened significantly in the fourth quarter to the end of October.
The financial services market "dried up" but he says sales to Government customers, both north and south of the Border were quite strong. IDC estimates technology sales shrunk by 4 per cent this year but Murphy pegs it at 10 per cent. Murphy, however, is clearly of the glass half-full school and is already looking past the recession.
"Sitting where I'm sitting now I'm thinking about how I'm growing to grow this business to where it needs to be by 2012," says Murphy. "Where are we going to get that growth from? It will come from growing market share - we have turned the guns on our competitors and are winning market share aggressively."
Murphy has been outspoken about what Ireland Inc needs to do to develop itself and sits on the boards of the Dublin Chamber of Commerce and the Irish Management Institute. "FDI has been traditionally what comes out of the US but there are other places like India and China that are looking to move into Europe," says Murphy. He says he's unconcerned about President-elect Obama's impact on US overseas investment but is hugely impressed with the leadership he has displayed to date.
Rather than simply calling for the Republic to "move up the value chain" Murphy has a plan for continuing to win foreign investment.
"We should brand Ireland as a global hub for intellectual property, innovation and know-how," says Murphy. "If the challenge is to attract another 20 or 30 HPs, or Googles or Facebooks in here, the first thing to do is set yourself up for knowledge businesses."
That means a tax regime that favours research and development, a significant investment in infrastucture and, most importantly, spending on education to "supply demand".
Education, and in particular encouraging students to study technical subjects, has long been something Murphy has been passionate about. "If you happen to find a State agency, for example, that has a budget of €1 billion a year with a mandate to skill the workforce, and if you take €100 or even €50 million and pump it into your primary and secondary education system, you could go a long way to getting a positive outcome," he says in a thinly veiled reference to Fás.
HP has first-hand experience of major education projects, having won the contract to manage the Classroom 200O project in Northern Ireland which put the region at the vanguard worldwide of classroom technology.
Along with the €500 million deal that saw Bank of Ireland outsource its technology function to HP in 2003, they are still two of the biggest outsourcing deals ever awarded on the island.
"I think the market needed to see that big projects like that could be delivered as well as sold," says Murphy, explaining why similar sized deals didn't follow immediately.
Now he's predicting that there could be three to five very large outsourcing deals done in Ireland in the next 12 months - primarily driven by economic realities. HP is even better placed to win those contracts than before. The $13.9 billion acquisition of outsourcing specialist EDS saw 400 staff transition to HP locally, although 133 redundancies were subsequently announced as part of a post-merger cost-cutting.
Murphy believes that outsourcing and managed services could be the way for the Government to tackle public service transformation (a phrase he prefers to reform).
"People are deciding what are we good at and where should we be focusing our resources," says Murphy. "If you are going to say you are going to be focused on the front end - the customer or the citizen - then by definition you don't need to be doing everything at the back-end either."
Mark Hurd is predicting that HP will enjoy modest growth during its 2009 financial year. Ireland's unique challenges combined with the wider economic apocalypse will make it more testing for HP in Ireland but Murphy believes a downturn will actually encourage people to rely on third parties to run key parts of their business.
"I think everything we know is going to be challenged - what's going to come out of financial services after consolidation?" he asks. "The exciting thing is we don't know what we are going to read in the paper tomorrow morning."
ON THE RECORD
Name:Martin Murphy.
Position: Managing director, HP Ireland.
Age: 46.
Family:Three children.
Background: Born in Dundalk, he completed a degree in engineering and maths and a masters in electronic engineering at Trinity College Dublin, from where he was recruited to Dutch electronics giant Philips. He came back to Ireland, joining HP in the late 80s. Has held positions in consultancy, project management, marketing and sales.
Interests: Cycling, the gym and family. He tries to avoid weekend working and always takes his holidays.
Something you might expect: He believes keeping fit is "absolutely key" to succeeding in business.
Something you might not expect: Spends one day a week in the office, spending the rest with customers.
