Challenges Abound for HP Services

Hewlett-Packard Co.s HP services division has bold plans to make the unit a company leader. But the joined services arms of HP and Compaq Computer Corp. face several challenges, including the integration of two sizable operations while keeping customer disruptions to a minimum.

The battle facing HP Services, now the third-largest services provider behind IBM Global Services and Electronic Data Systems Corp., could be made more difficult by dwindling sales and efforts by competitors to bite into the merged companys installed base, experts say.

"The kiss of death of mergers is an inward vs. an outward focus," said Pat Cavaney, services integration lead for HP, in Palo Alto, Calif.

To make certain both employees and users are getting the message, Cavaney said more than 400 documents have been added to the HP employee portal, mapped into a self-help repository for customer-facing employees.

For users, the proof will be in the organizations ability to keep up current services levels.

"Our team has stayed very consistent. I dont expect to see any change in the support team," said Reggie Rusan, a manager of SAP AG systems at elevator company Kone Inc., in Moline, Ill. Rusan said he feels the strength HP added through Compaq Global Services expertise in the "Wintel" environment make the new unit a strong candidate for a new desktop outsourcing project Kone is preparing.

HP is doing similar customer outreach to introduce the new unit and has already tapped 150 services account team leaders, officials said.

Unlike the merged companys hardware divisions, where decisions had to be made to kill overlapping products, the new HP Services needs all "the capacity and capabilities we have today," said Ann Livermore, president of the combined services operation.

The business strategy for the new $15 billion unit calls for capturing market share by making a play to lead the IT infrastructure services arena by emphasizing HPs multitechnology, multivendor experience, Livermore said. HP also intends to push its ability to design, integrate and manage heterogeneous computing environments in support of mission-critical applications.

The IT infrastructure focus is a departure from HPs previous quest to beef up consulting by acquiring the business process and applications integration expertise of PricewaterhouseCoopers. HP now intends to partner with those consulting companies to gain expertise in specific areas, such as its Accenture Ltd. partnership for customer relationship management or supply chain management, said Livermore.

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