HP cuts jobs in restructuring, invests private cloud infrastructure

Summary:HP will consolidate its commercial datacenters, management platforms, networks, tools and applications to create a more automated infrastructure that it will use to serve enterprise services customers.

Hewlett-Packard said Tuesday that it will cut 9,000 jobs over three years and invest $1 billion to focus on new efforts like private cloud infrastructure and desktop-as-a-service. Think of it as phase two of the EDS integration with an emphasis on delivering IT as a service.

The move comes as HP has largely completed its integration of EDS. HP said in a statement that it will build next-generation platforms for its enterprise services business. In a nutshell, HP will consolidate its commercial datacenters, management platforms, networks, tools and applications to create a more automated infrastructure that it will use to serve enterprise services customers. With its next-gen datacenters, HP is hoping to boost services margins.

HP's plan is to take its Converged Infrastructure approach and turn it into a service via the cloud.

Among the moving parts:

  • HP will invest $1 billion in its Enterprise Services unit;
  • It will cut 9,000 positions over a "multiyear" period;
  • However, HP plans to add back 6,000 positions in sales and delivery for a net job loss of 3,000;
  • HP will take a charge of $1 billion spread over multiple years through fiscal 2013 with half of that restructuring hit to come in the fiscal third quarter;
  • The consolidation moves are expected to create annual savings of $1 billion and after reinvestment generate $500 million to $700 million in savings.

Tom Iannotti, senior vice president of HP Enterprise services said "we have identified significant opportunities to grow and scale the business."

In a presentation, Cathie Lesjak, CFO, and Ann Livermore, executive vice president of HP, walked investor through the big plan. Livermore said:

As we look at our cloud services -- that's not the primary focus of our announcement today, but it's certainly a very important part of our overall portfolio for HP. When we think of IT services delivery we think that most of our corporate and public sector clients are going to want a combination of being able to run IT on their premises with their own data centers, outsourcing some applications in areas and then also having other areas delivered to them via the clouds. So we think one of the real differentiators for HP is going to be our ability to help clients with their services all three ways. And certainly the cloud aspects of it are very important.

Among the key slides:

Related:

Topics: Hardware, Cloud, Data Centers, Hewlett-Packard, IT Employment, Storage

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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