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Internal HP Memo Details New Strategies

On the heels of its announcement that it will cut more than 24,000 jobs as it integrates outsourcing giant EDS, Hewlett-Packard (NYSE: HPQ) is also reorganizing its software and services offerings.

An internal memo from Tom Hogan, senior vice president of HP's software division, HP Software, obtained by InternetNews.com, said that HP Software will merge with "several strategic practices within HP Consulting and Integration (C&I)" to leverage the combined strengths of the company's people and products.

The memo, titled HP Software Reorganizes to Build Software/Services Organization, also talked about a new Business Intelligence Solutions unit being set up, the creation of a Communications and Media Solutions Unit by merging two other divisions, the pending departure of senior executive Ben Horowitz, and the merging of the Service and Support division with parts of C&I.

HP was not immediately available to comment.

The strategic shift makes sense, said Gartner analyst Martin Reynolds. "Buying EDS has given them a whole new set of customers to go after," Reynolds told InternetNews.com.

HP's software and services capabilities "have been scattered around HP, and, with EDS, they have a platform to build around," Reynolds added. "They're consolidating their software and services teams, and can deliver a lot of value, most likely through the EDS channel."

However, HP will not go head to head with IBM, (NYSE: IBM) which gets the bulk of its revenue from software and services.

"IBM does a lot of business consulting," Reynolds said. "HP is not going after that space because they want to leave that segment to the channel partners they work with." This will enable HP to differentiate from IBM. "Maybe HP doesn't need it and instead is focusing on the software that pulls everything together," Reynolds added.

HP's Business Intelligence Solutions unit will be headed by Kristina Robinson, currently vice president of enterprise sales and services for HP's Americas Image and printing Group, the memo said. She will report directly to Hogan and will begin working with key leadership from the C&I Information Management practice to create an organizational model for her unit that "optimizes the skills of our team," Hogan wrote.

The Communications and Media Solutions unit, created by merging the Communications, Media and Entertainment Group (CME) and HP's OpenCall unified communications platform, will be led by Erwan Menard, who joined HP three months ago from communications giant Alcatel, Hogan said. Menard will also report to Hogan.

The Business Intelligence and Communications and Media Solutions Units will move HP to "a fully integrated business unit structure," Hogan said.

Hogan also announced the departure of Ben Horowitz effective November 1, and his replacement by Robin Purohit, product lead for the HP Software Information Management Unit. Horowitz, vice president and general manager of business technology optimization for software, was co-founder and CEO of Opsware, which was purchased by HP in 2007 for $1.6 billion.

Finally, HP's Service and Support organization will merge with the service management and information lifecycle management practice areas and teams from C&I to "drive services attach around our BTO and IM software businesses," Hogan said. BTO is HP's business technology optimization software, and IM stands for information management.

HP Software will be renamed HP Software and Solutions, and the vendor's management is "working on further refinements to our organizational model," Hogan said. The changes will be implemented first in the United States, then ripple out to HP offices worldwide.

Although it's getting rid of more than 24,000 EDS staff, HP will hire another 12,000. Gartner's Reynolds said look for those hires to come in emerging markets. "The goal is to move the bias of EDS out to where the markets are," he added.