Standardization floats HP's next wave of services growth

Cheaper, standardized services--an outcome of IT giant's plan to transform its enterprise data centers over three years--will be particularly attractive in Asia, says exec.

SINGAPORE--Hewlett-Packard's move to consolidate and modernize its enterprise data centers will bring about standardized, effective service offerings that may win over customers particularly in Asia, according to a company executive.

Elaborating on HP's plan to invest US$1 billion over three years to transform its services business, David Gee, vice president of worldwide marketing at HP Enterprise Services said the company's service offerings have historically been more customized than standardized, with "lots of different versions of the same thing going on in lots of different places".

Speaking to ZDNet Asia here Thursday, Gee noted that the lack of standardization led to a number of inefficiencies or problems. "Every time you have duplication or non-standard [services], the cost of running them, the points of failure, the opportunity for human error, the network effect is exponentially larger than it would be if you had more standardized, consolidated offerings," he pointed out.

Among the duplication that HP is looking to address is its nine current service management platforms, which will be whittled down to just one by the end of the exercise, he said. The company will also eventually have one flavor of network management, server management and storage management.

With the push toward standardization, HP can provide a better service level profile and deliver "economically more attractive" offerings, said Gee. In addition, it will help the company to provide private cloud services "with a standardized toolset [and] standardized security profile".

This approach, noted Gee, would be particularly well-received in many parts of Asia, where the notion of large, long-term contracts are not the norm. "Most of the emerging markets [in Asia], if you can package everything down into bite-size chunks…[which are] cloud-ready, secure and standardized--[the customer] can have red or green or blue but not purple--I think that's going to be very attractive," he said.

However, Gee acknowledged that not every customer will be suited for shared services or infrastructure, and there will always be some clients, particularly in the government sector, who "want to hug their data centers" and keep others out. Yet, the majority of enterprises will benefit from standardized offerings, he insisted.

"Everybody thinks [they are] really different…actually 85 to 90 percent of what clients ultimately want can be far more readily standardized," he said.

EDS 'underinvested'
Gee noted that part of the reason for the services makeover was due to the realization that the EDS business, which HP subsumed into its services portfolio over the last 20 months, had been "underinvested in" during the last few years. This, he said, was due to capital and cash constraints.

According to him, the initiative is essentially about applying the company's own IT transformation to its IT services business. The company underwent a datacenter consolidation from 2006, which saw facilities shrink from over 80 to just six.

But unlike HP's own consolidation, customer-geared delivery and data centers will only dip from "one end of the hundreds spectrum to the lower end of the hundreds".

Part of the US$1 billion will also go to retiring "a lot of assets" and pouring new concrete to build new, modernized facilities. The goal is to "move clients from old stuff that is expensive to run and maintain into state-of-the-art, highly-secure, highly-dense, green, sustainable infrastructure", built on HP's converged infrastructure suite of products and services, he explained.

The company also announced earlier this month it will cut 9,000 jobs and at the same time, add 6,000 as part of the services restructuring. Gee said there will be no geographical breakdown of the job cuts, and new delivery centers will be spread globally.

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