HP has outlined the results of its three-year IT transformation and laid out the company's IT strategy to support future growth for fiscal year 2009 and beyond.
As a result of the effort, HP has reduced its IT operating costs by approximately half; provided more reliable information for executives to make better business decisions; and, established a more simplified and dependable IT infrastructure that provides improved business continuity and supports the company's future growth.
"HP's IT transformation was not just a technology initiative within the IT organisation, it was a business strategy adopted throughout the company," says Randy Mott, HP executive vice-president and CIO. "We commend our IT team for building a world-class infrastructure and organisation, but we're just getting started. We're now in a great position to enable future business growth."
The initiative began shortly after Mott joined HP in July 2005. Starting in fiscal year 2009, the transformation will lower IT costs by more than $1-billion per year from fiscal year 2005 levels – and HP has added $25-billion in revenue during the three years since the transformation began.
The transformation focused on five major initiatives: next-generation global data centers, portfolio management, workforce effectiveness, building a world-class technology organization and a true enterprise data warehouse. Through aligning its entire global organization on these five initiatives, HP has reduced complexity and added significant capability and quality of service.
"For the transformation to work, we had to invest money to save money," says Mark Hurd, HP chairman and CEO. "With a lower IT cost structure we are able to reinvest dollars into go-to-market efforts. This challenge isn't unique to HP. Most companies have the opportunity to create an IT cost structure that is at least half of today's average for their industry. We can, and do, share our experiences with our customers."
The transformation should to enable HP to:
* Reduce spending on internal IT from approximately 4% of revenue in 2005 to less than 2% in 2009;
* Consolidate more than 85 internal IT legacy data centres globally to six next-generation data centers in three geographic locations equipped with new, standardized and automated technology. These data centres have 342 000 square feet of computing "white space" – expandable to more than double that amount – to accommodate growth, including acquisitions such as EDS;
* Consolidate more than 6 000 applications running the business to approximately 1 500 standardised applications;
* Reduce annual energy consumption in its data centers by 60%;
* Decrease the number of servers by 40% while increasing processing power by 250%, by using HP virtualization and energy-efficiency technologies;
* Reduce networking costs by 50%, while tripling bandwidth;
* Eliminate more than 700 data marts and create one enterprise data warehouse where employees are accessing consistent data to make business decisions; and
* Through portfolio management, deliver hundreds of high-priority business innovation projects while transforming the company's IT infrastructure and operations.
The HP IT organisation now operates under a strategic framework in which teams are deployed to deliver more business innovation through a smaller number of global and common applications. These applications are running in the next-generation data centers, where the technology is constantly refreshed in modular-designed white space.
By creating global and common applications, HP IT is able to focus on new capabilities and devote 80% of IT employees to innovation that is aligned with business strategies and future growth opportunities.