RealTime IT News

HP to Unite Server, Service Divisions

HP's newest enterprise division is scheduled to announce "a major alliance and an HP Services deal with a global industry leader" in New York Tuesday, according to a company spokesperson.

The company also confirmed that chairman and CEO Carly Fiorina will be on hand to cement the partnership. While executives are keeping mum, suggestions range from a financial services house to a partnership with a software vendor as part of a Linux desktop distribution deal.

The Palo Alto, Calif.-based computer and printer maker is timing the announcement with the official news that it has combined two of its enterprise divisions.

As previously reported, HP has been working since June 2003 to unite its billion-dollar HP Services and HP Enterprise Systems Group (ESG) into a new HP Technology Solutions Group (TSG).

Executive Vice President of HP Services Ann Livermore has been tapped to run TSG, with former ESG head Peter Blackmore focusing on sales. Livermore is expected to introduce her staff as part of the event at The Pierre Hotel on Fifth Avenue.

This is not the first time that HP has revamped its divisions to address market changes. Following the merger, HP moved fast to bring the Compaq brands in-house, trimming redundant personnel and products from its lineup. But the combination of HP Services and Enterprise Systems does mark a new direction for the company.

The Services division, which boasts 65,000 employees serving 168 countries, scored more than $1 billion in major new contracts in the last two years from clients such as Nokia, Novell, Land O'Lakes, the U.S. Postal Service, and a $600 million contract with the Bank of Ireland.

"HP has been very successful getting themselves to the table for these mega-deals. One has only to look at the P&G deal and the deal with the Bank of Ireland for evidence of that," Forrester Research Vice President and Research Fellow Julie Giera told internetnews.com in a recent interview. "They are building a reputation for being able to capably manage the large, international data center."

Giera said much of the push comes from the top.

"CEO Carly Fiorina and Ann Livermore decided that HP Services should be competing for those multi-hundred-million-dollar, billion-dollar outsourcing deals," she said. "Up until this point, because HP did not have a robust applications practice, and their infrastructure outsourcing practice was predominately managing HP equipment, HP was naturally excluded from many of the big deals."

Now HP's Services division competes heavily for IT services contracts against other top-tier players like Electronic Data Systems, Sun Microsystems, and IBM For example, IBM said Monday that its $42.6 billion Global Services division had landed part of a $1 billion outsourcing contract with oil giant Royal Dutch/Shell.