HP Realigns Global Operations

Continuing CEO Mark Hurd's sweeping restructuring plans, the company is integrating its global operations into its business groups in search of greater accountability and efficiency.

Hewlett-Packard is taking another step in its companywide restructuring plans with the integration of its global operations into its business groups.

The realignment, announced June 20, is designed to give each of the three business groups—Imaging and Printing, Personal Systems, and Technology Solutions—greater accountability over their operations while still maintaining companywide involvement for greater efficiency.

The move is the latest in the restructuring plan announced in July 2005 by President and CEO Mark Hurd, who said he wanted to create a more nimble HP with expenses that more closely matched its revenues and which was more responsive to customer needs. That plan included laying off 15,300 people.

"This realignment [of] operations will enable us to build on this momentum while enhancing accountability and enabling greater focus and customization of operations based on the needs of our customer segments," Hurd said in a statement.

The realignment of the Palo Alto, Calif., companys global operations—from logistics to procurement to marketing—is expected to be completed by November.

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Under the plan, each business group will have authority over parts of the overall operations, but those operations will still have a companywide reach.

One example HP gave was the Personal Systems groups hosting of central direct procurement. The personal systems unit will be responsible for procuring goods used by all parts of HP. Similarly, IPG will host the worldwide logistics duties and handle companywide procurement logistics, the managing of freight costs and customs operations.

The operations announcement follows a move in May, when HP announced that it was consolidating its 85 global data centers into six centers based in the United States. The company said the consolidation plan, which will take several years to complete, will save HP $1 billion in IT costs over the next few years and give it a showcase for its adaptive enterprise technology.

Rob Enderle, principal analyst with the Enderle Group, in San Jose, Calif., said overall response to Hurds restructuring plans has been positive from financial analysts outside the company and from HP employees themselves.

Hurd has done a good job of outlining a plan that people are buying into because its about not just reducing the head count, but also fixing problems inside the company, Enderle said.

"When [former CEO] Carly [Fiorina] was undertaking a series of sequential layoffs, it effectively was the only idea she had," he said. "She was terrific in her vision, but she didnt understand operations."

Hurd also has done what Fiorina didnt in that he is surrounding himself with executives who not only are competent but who are loyal to him, which is enabling him to carry out the work he needs to do without having to worry about resistance from the inside, Enderle said.

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The analyst added that Hurds focus on improving the IT operations within HP has helped it narrow the advantage rival Dell has had in this area. Dells growth over the years in part is attributable to its ability to get its executives the necessary information on industry trends and customer needs more quickly than its competitors. Both HP and IBM have lagged in this area, Enderle said.

Part of Hurds restructuring activity at HP has been to improve its IT operations, an effort that has included hiring away Dells CIO, Randy Mott, in 2005.

"HP has begun to look a little bit nimbler," Enderle said. "Finally, people are getting excited about HP again."

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