HP reorganizes server division

IDG News Service

Almost a year to the day after it acquired Compaq Computer Corp., Hewlett-Packard Co. (HP) will consolidate several departments in its Enterprise Systems Group (ESG) into one new hardware unit, and create two other groups to focus on strategy and sales, the company said recently.

The company had previously been organized around specific technology hardware, with different groups based around HP’s Unix servers, its servers based on Intel Corp.’s processors, and storage products. Those hardware groups will now be combined into a single division known as Enterprise Storage and Servers headed by HP Senior Vice-President Scott Stallard, said Peter Blackmore, executive vice-president for ESG, during a press conference.

The acquisition of Compaq’s server business was seen as one of the keys to the deal when it closed last year. The ESG group has been unprofitable since the merger closed, but has attained the top share of various market segments due to the combination of Compaq and HP’s products.

The decision to reorganize the hardware business wasn’t reached due to the recent unprofitable quarters, but to “accelerate growth” within the group, Blackmore said. With independent enterprise hardware business units, the merged company found it more difficult to present a common message on how to use its hardware across different types of environments, he said.

HP is trying to emulate rival IBM Corp., said Gordon Haff, an analyst with Illuminata Inc. in Nashua, New Hampshire. “IBM successfully brought their product lines under the eServer umbrella, and there’s a tremendous amount of technology-sharing there,” he said.

With integrated server groups, HP’s various groups can work together on decisions that affect all types of servers, such as interconnect strategies, Haff said.

Bringing storage in under the rest of the enterprise group also takes a page from IBM’s book, said Mark Melenovsky, an analyst with IDC in Framingham, Massachusetts. Enterprises are attaching storage to their hardware purchases more and more, and the move recognizes the need to integrate those products, he said.

A new group for developing business strategy will be headed by Howard Elias, currently head of the network storage solutions group. Several departments within ESG will now report to Elias, including IT, strategy and business planning, enterprise marketing, and operations. The supply chain group will now report both to its functional executive vice-president, Jeff Clarke, and to Elias.

The sales organization will also get a refresh with the creation of a Global Accounts position, to be headed by Senior Vice-President Airton Gimenes. Gimenes will report to both Blackmore and HP Service Executive Vice-President Ann Livermore, tackling corporate accounts from both a hardware and a services perspective, Blackmore said.

The software group will be left unchanged with the new reorganization.

Mary McDowell, formerly senior vice-president and general manager of HP’s Industry Standard Servers group, will be taking a short sabbatical and returning to HP in a senior vice-president role, the company said. McDowell led Compaq’s server group prior to the merger. HP refers to servers with Intel processors as industry-standard servers.

Blackmore did not directly address the possibility of more layoffs as a result of the restructuring, but didn’t close the door on it, either. “We will continue to make investments and look for efficiencies like any company. We are beyond the stage of merger-related workforce reductions, and we’re now making sure we have investments in the right places,” he said.