HP plans huge internal changes

Hewlett Packard is to fold its services and technology businesses into one division as part of changes to improve its market reach.

The restructure will come into effect during the first half of 2004.

It will see HP's existing Enterprise Systems Group - which includes the firm's software, storage, server and networking businesses and research and development - combined with its services division, to create a new Technology Solutions Group.

In an internal statement to employees seen by vnunet.com, Carly Fiorina, HP chairman and chief executive, said: "These moves will accelerate our ability to deliver high tech at low cost with the best customer experience."

The new division will be the largest within the company. Ann Livermore, currently vice president of HP Services, will manage its $9bn-quarterly business.

HP sales will also be brought together under the Technology Solutions Group banner in the newly created Customer Solutions Group, which will be led by Peter Blackmore, currently vice president of the Enterprise Systems Group.

Duane Zitzner, the current Personal Systems Group head, will lead a consolidated global channel team that will report to the Customer Solutions Group.

Details of this channel reorganisation are currently being worked on. But a spokesperson for the company said: "On the regional side, HP wants there to be as little disruption to its channel as possible."

Two new public sector segments will join Financial Services to provide vertically focused packages for education and healthcare and defence and security.

Tony Lock, Bloor Research chief analyst, said the shake-up was a natural consequence of customer demand and the Compaq merger.

"The bringing together of Enterprise Systems Group and Services has been in evidence for some time now," he said. "It's only logical to formally combine them to make the company more effective.

"Very few organisations buy technology on its own nowadays. They don't want a jigsaw of pieces that they have to fit together themselves.

"Instead, they want what is a rather overused term at the moment: a solution. And as long as these changes are managed and executed well, HP should be fine."