HP CIO: Too much money spent on IT support

More should be poured into innovation instead, says Hewlett-Packard IT chief Randy Mott, adding that the tech giant is itself looking to tilt the balance.

SINGAPORE--Businesses today are still spending too much money on IT maintenance, when they should be channeling their resources toward more innovative initiatives, says Hewlett-Packard's top IT guy.

HP CIO Randy Mott

According to HP's executive vice president and CIO Randy Mott, IT costs continue to escalate faster than the world's economies and the amount of support dedicated toward IT is also on an upward trend. The number of people involved in IT in the United States, for instance, is at its highest levels--this, despite the country's strong move toward offshoring activities, he noted.

And most of these IT professionals are involved in support work, not innovation, Mott said. The CIO was in Singapore today as a guest speaker for Singapore's Infocomm Development Authority's Distinguished IT Speaker Series, which in the past included other industry luminaries such as Sun Microsystems' Scott McNealy, Salesforce.com's Marc Benioff and more recently, Dell Computer's Michael Dell.

Formerly the CIO of Dell, Mott said HP currently spends 54 percent of its resources in IT support, while the remaining amount goes to innovation. The IT giant intends to tip this scale next year, projecting to spend 60 percent of its IT resources on innovation, he said. By 2008, HP is targeting for the figure to hit 75 percent.

Mott also said that HP is aiming to reduce its IT workforce from over 19,000 to some 8,000 IT professionals by its fiscal year 2008.

A key component of HP's "IT transformation" is an ambitious three-year plan which will see the company consolidate the number of data centers that support HP's internal IT operations from the current 85, to six by fiscal year 2008, he said.

Mott said the company is looking to reduce its server farm by 30 percent, cut networking costs by 50 percent while growing its bandwidth capacity by 30 percent, and retire 60 percent of its legacy applications.

When completed, the data centers--along with HP's other initiatives to reform its IT operations--are estimated to yield annual cost savings of US$1 billion for the company, he said.

The decision to take a more "radical" approach to implement changes across its internal data centers within three years is an important one, even if the move requires a higher capital investment, Mott said. He explained that stretching the deployment of the data centers to seven or 10 years would involve a lower capital, but would also result in a higher run-rate cost.

Stressing the need to identify a right timeframe for any IT project, Mott quipped: "Considering the life expectancy of a CEO is about 4.5 years, any IT project that goes for longer than that is not going to be very interesting [to the CEO]."

Mott's role in streamlining HP's IT operations is part of CEO Mark Hurd's focus on cost-cutting measures since he took over the helm in March last year.

Mott joined HP in July 2005 with a US$10.3 million-pay package last year, according to filings to the U.S. Securities and Exchange Commission, which puts him as the highest-paid CIO in the United States this year.

During his address today, Mott made no reference or mention of HP's ongoing controversial leak probe which led to the resignation of several key company officials including Chairman Patricia Dunn.


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