September 4, 2002 2:01 PM PDT

HP restructures managed services unit

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Aiming to quell a post-merger internal dispute over how it manages its IT needs, Hewlett-Packard is restructuring a part of its services business.

Under the new structure, the part of HP Services that manages HP's internal technology decisions will report to both HP's services unit as well as to Chief Information Officer Bob Napier, who also held the CIO spot at the former Compaq Computer. The move is designed to resolve a disagreement over how the merged company should run its IT operations.

Before its merger with Compaq, Hewlett-Packard delegated many key technology decisions to its managed services unit, a strategy that let the unit tout to external customers that it ran HP's own information technology department. HP's IT department, however, carried out the tasks necessary to implement the services unit's decisions. Compaq had a more traditional structure, with its IT department having the key decision-making authority as well as the responsibility of handling implementation.

Because the leadership of both premerger Compaq's IT department and HP's services unit were maintained after the two companies married, a dispute arose.

To resolve the issue, HP is creating a new unit that will combine elements of HP's existing managed services operation with parts of the current internal technology group. The new unit, known as Managed Services Design and Delivery (MSD&D), will report initially to both Napier and managed services executive Uli Holdenried. The unit will serve both HP's internal technology unit as well as outside customers that contract with HP to manage their technology needs.

"We want to leverage our internal assets and capabilities," HP spokeswoman Dusya Broytman said. "Establishing this unified organization is the best way to do that."

HP plans to eventually have the unit report only to the services organization, according to an internal memo seen by CNET News.com.

"MSD&D will transition from a dual reporting structure to a Managed Services function as the model matures and reaches specific milestones," Napier and HP Services chief Ann Livermore wrote in an Aug. 19 internal memo. "We expect this to occur in approximately 12 months."

In merging the units, HP says it can take advantage of its own internal technology know-how for the benefit of the company's external customers. However, some within the managed services business have expressed concern that HP's cost-cutting goals for its own IT department could hurt its ability to meet customer needs.

HP aims to have the new structure in place by Oct. 31, according to an internal memo sent this week by Fred Jones, who will head the new unit.

"While the decision process took longer than any of us anticipated, Uli (Holdenried), Bob (Napier) and I are very excited about the strategy and the potential of the new organization," Jones said. "Now that we have the decision behind us, it is time to move forward as a unified team, focused on common goals."

 

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