Migration Woes Cause HP Backlog

Two years into the Compaq merger, ERP integration issues continue.

Over the past year, Hewlett-Packard Co. Chairman and CEO Carly Fiorina has held up her companys successful merger with Compaq Computer Corp. as a model for the companys Adaptive Enterprise concept.

/zimages/4/28571.gifEric Lundquist says HP needs to be more "adaptive." Click here to read why.

But behind the scenes, multiple breakdowns in the massive HP/Compaq IT integration effort were causing serious delays in order processing and delivery, resulting in a major revenue shortfall that the company is still scrambling to fix, HP officials said.

In fact, problems with the IT overhaul, which began in earnest immediately following the May 2002 merger, ultimately resulted in a $120 million backlog of orders in its Enterprise Storage and Server Group last quarter, according to Gilles Bouchard, HP CIO and executive vice president of global operations, in an interview last week.

HP, of Palo Alto, Calif., discovered the problems and effects after conducting an internal retrospective that was completed early this month.

HP ran into trouble in the 35th migration of more than 70 supply chain systems and the migration from separate HP and Compaq legacy SAP AG R/3 order management systems to a new, broad-based SAP ERP (enterprise resource planning) system.

/zimages/4/28571.gifRead also "HP Still Working Out Compaq Kinks."

That migration was bungled in large part because of ineffective program management across historical silos of business teams, Bouchard said.

In addition to the project management issues, Bouchard said the creation of the backlog in particular was due to problems with data integrity and a simultaneous spike in server demand.

"We are very aware of [the difficulty of integrating systems and business processes] and are taking steps to fix it, but we werent aware of this in time," Bouchard said.

Next Page: Is backlog issue close to resolution?