HP to transform Enterprise Services arm: cost US1b & 9000 jobs

Stuart Corner
Wednesday, 02 June 2010 09:13

IT Industry - Strategy

HP says it will invest $US1 billion transforming its Enterprise Services business, shedding 9000 staff in the process.

It says the transformation, to be built around its own technology and software, will benefit clients through new offerings and improved service delivery. The company hinted at this strategy when it announced plans to acquire 3Com.

HP has given no indication of a timeframe for the planned transformation, other than to say it will take several years.

HP says it will consolidate Enterprise Services' commercial data centres, management platforms, networks, tools and applications to create a more scalable, modernised and automated IT infrastructure that will better serve its clients' needs.

It adds that, "As a result of productivity gains and automation, HP expects to eliminate roughly 9,000 positions over a multiyear period to reinvest for further growth and to increase shareholder value."

To fund the investment, HP says it will take a charge of approximately $US1 billion over a multiyear period that will be included in its GAAP financial results. It expects the transformation to generate annualised gross savings of approximately $US1 billion and net savings after reinvestment in a range between $US500 million and $US700 million.

HP says it will "invest in fully automated, standardised, state-of-the-art commercial data centres built on its converged infrastructure and operated by its industry-leading management software."

The announcements suggests that the transformation will be centred around giving HP the ability to deliver more services from within 'the cloud'.

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